Red-Hot Mapping

In something of a coincidence with the event described in the previous post, I have created a new map which covers nuclear power reactors in North America.  Most of these are in the US, of course, as America is the global leader in nuclear power generation.  But Canada has its own independent nuclear industry centered in Ontario, which lacks Quebec's massive hydropower potential, and I've included those plants.  Mexico also has one lone plant, which it imported from America.

In the period after the 2011 Tohoku earthquake and the subsequent Fukushima Daiichi incident, I published an number of posts on nuclear power.  I've largely lost interest since then because the industry seemed destined to become moridbund, which largely happened.  But in the past few years there has been an increasing amount of hype around "small modular reactors," which promise to solve the problem of the massive up-front costs required to build large reactors such as the AP1000 units in Georgia or the EPR units at Flamanville and Olkiluoto.  On the map I have noted 8 different SMR projects from 7 different vendors as being reasonably firm, given the amount of subsidies flowing to them at this point.  The currently authorized subsidies won't be enough to get the projects to completion, but for now I am assuming the subsidies will continue to flow.  But past history indicates that costs will escalate rapidly, and politicians will balk at some point, most likely after considerable concrete has been poured.

Time will tell, of course, but until then enjoy the new map.

First of a Kind or Dying Gasp?

On July 31, 2023, Unit 3 of the Vogtle Nuclear Power Plant entered commercial service.  It is the first new reactor to be brought online in the United States since 2016, and only the second since 1996.  It is a Westinghouse AP1000, which is a two-loop (of primary coolant) design derived from the Combustion Engineering System 80.  It is classified as a Generation III+ reactor, which is a somewhat arbitrary marketing designation used by the nuclear industry to indicate the design has some passive elements in its safety systems.  An additional reactor of the same design is under construction at the Vogtle plant, and should become operational within a year.

The probability of Vogtle 3 and 4 being safe reactors is quite high.  The fundamental design is not new, and China has operated four AP1000 reactors since 2019 without incident.*  The Georgia plant is located inland, so there is no risk of tsunamis flooding the site.  Georgia Power and the American nuclear industry as a whole have a lot of operational experience at this point - far more than when Three Mile Island Unit 2 was operated incorrectly, causing a major accident in 1979.  The first large power reactor in America went online in 1968; the industry has an additional 44 years of experience since the TMI meltdown.

What the nuclear industry has not improved since 1979 is the cost of constructing reactors.  I am not going go down the rabbit hole of attempting to compare costs between different sources of electricity in this post, but it is very safe to say that Vogtle 3 was not cheap to build, and neither Unit 3 or 4 were as cheap as was promised by Westinghouse back in 2013 when construction started.  Why costs escalated so much is hotly debated, but Westinghouse and its subcontractors are responsible for a good portion of the blame.  The nuclear industry also has to compete with other power generation technologies, and the shale gas "revolution" made the economic case for nuclear power difficult even before the cost overruns at Vogtle and Summer were known.

The cost of large plants is why the nuclear industry has shifted to promoting "small modular reactors" - some of which aren't all that small, and none of which will be any cheaper than large reactors if the companies developing them don't get enough orders to justify building the factories that would enable serial construction using transportable modules.  However, the SMR vendors have yet to prove themselves to be failures, so the hype surrounding them continues.  This contrasts sharply with the prospects for new large reactors.  The Nuclear Regulatory Commission website indicates there are active combined licenses for six more large reactors, but none of those are under construction, and six previous licenses have been withdrawn by the license holders.  Two of those licenses were for AP1000 reactors at the V.C. Summer Nuclear Generating Station in South Carolina, which were so far over budget that the power company building them canceled them in 2017.  So Vogtle Unit 4 is likely to be the last large reactor to go critical in American in the next 15 years, at the very least.

Below is a chart showing all of the commercial power reactors built in America sorted by date of commercial operation.  It does not include the 43 reactors that were canceled after construction was started, nor a number of small reactors that were not intended for commercial operations despite being connected to the local grid.  Despite a number of announcements, there are no SMRs under construction as of today (2023-08-02).

* That we know of, of course.  But there has certainly been no major accidents, as those are subject to detection by remote monitoring.

Pattern Recognition

Humans brain are frequently overly aggressive when searching for patterns.

Is there a tradable pattern here? The long-term and recent average says yes; the 1998-2003 average says no.

Update: I took 2007 and 2008 out of the long-term average because prices were so much higher in nominal terms than any other year. This flatted the long-term line and shifted the peak into the fall. I also added the following graphs.

Looking at the average can be deceiving.

This graph shows that some of the price increase is due to weakening of the dollar. Note that WTI Spot is not the price paid in these foreign countries due to variations in grade, contracts, origin, etc.

A Willing Suspension of Disbelief

I've been slowly working my way through a textbook by a certain hack economist, and I was inspired to make these slides.

The basic idea is that in a hypothetical "free" market the supply and demand will find an equilibrium at a certain price. Movements in the "curves" will change the equilibrium price. Changes might be caused by increasing raw material costs, more efficient production methods, waxing and waning popularity, appearance or disappearance of competing producers, or other factors.

In reality the supply and demand curves are not linear, and there is always some kind of tax in the mix. Demand or supply is considered elastic if it is very sensitive to price changes. Inelastic supply or demand is the opposite.

This is a terribly simplistic model of the global oil market. Demand is inelastic at lower prices and elastic at higher prices. Supply is the opposite. There isn't one production cost for oil because there are many sources, each of which required different levels of investment to develop. Ghawar, the world's largest field, has extremely low production costs, meaning the Saudis can make money even at very low prices. Tupi, the new ultra deepwater find off the coast of Brazil, is still being analyzed for viability and may never be put into production. On the consumption side, there isn't one price to end users due to different contract lengths and different levels of taxation. Venezuela, a major producer, takes the rather stupid step of subsidizing gasoline prices, pushing up demand which reduces the amount available for export. Norway, another major producer, was the poorest Scandinavian country until oil was found in the North Sea. Given their history, Norwegians are very conservative with their oil use and oil revenues.

Here's the basic argument for the gas tax: current prices don't reflect true costs. Some of the costs are immediately related to the production of oil, such as spills, or its consumption, such as smog. Other costs have a less direct connection, such as 9/11 or the Iraq War, or won't be felt for a while, such as global warming or potential scarcity. Costs that are not reflected in the price of a good or service are called externalities, and oil use has a lot of them. Raising the gas tax would "price in" some of those externalities, even if the revenues didn't flow directly towards solving them.

It's a no-brainer to me and other people who care about the future.

Habits If Not Resisted Soon Become Necessity

That quote is certainly true about oil consumption. (NB: I have some questions about the data sets, so this post may be changed in the future.)

Here's per-capita use for some countries. America and Canada, two countries with large indigenous supplies, really drink in the black gold

Most countries are getting more efficient, producing greater amounts of goods and services for each barrel used. America, Canada, and Mexico are the least efficient users, along with Korea, which is once again an outlier. The UK is currently the efficiency champion.

This graph shows efficiency verses the United States. Germany, France, and Italy each produce about 60% more per barrel of oil consumed.

This graph is a plot of GDP per barrel vs. the cost of a gallon of gasoline. The relationship seems strong and is much stronger without Korea in the mix, but correlation is not causation.

Correlation of gas prices directly to per-capita GDP is weak with the full data set. After removing Korea and Mexico, the correlation becomes a moderately strong inverse one. But, once again, correlation is not causation. For instance, both the US and Canada have lower gasoline prices and higher per-capita output. However, the average workweek in the two countries is longer than in Japan, Germany, France, and Spain. And on the other side, workers in both Italy and Korea put in more hours than their counterparts in the US.

An important problem with these comparisons is that they are exclusively about oil. People and industries in other countries might be substituting other energy sources for petroleum. I will follow up on total energy soon.

Real Wealth Is Ideas Plus Energy

A few posts back I promised to see if people were substituting other fuels for petroleum to power the various modes transportation. The answer is definitely no.

Way back when, coal was a major transportation fuel, but this data series shows just the tail end of that era. Since the 1950s, petroleum has never provide less than 95% of the energy used by the sector.

Here's the bigger picture, as in energy use for whole country. Fossil fuels dominate, of course.

This graph shows the importance of fossil fuels even better. In 2007, petroleum, natural gas, and coal provided 39%, 23% and 22% of all energy respectively. The much ballyhooed but always "just around corner" technologies of solar and wind continue to provide only infinitesimal amounts of power.

Similar to the per-capita use of petroleum, total energy use has been flat for a while, this time since the 1970s. Ideally, the total should be going down.

If You Do Not Scale the Mountain, You Can Not View the Plain

I haven't commented much on Peak Oil because I decided that it would be impossible to see the peak until we are well down the far side. Couple that with most Americans' belief that cheap gas is a gl0d-given right, and you have a recipe for frustration. But I'm in a graphing mood, and energy happened to be the folder I clicked on today.

We're still climbing here. But you can see how the overall growth slowed in after the "oil shocks" of the 1970s. The most noticeable downtrend is in domestic production.

Gasoline dominates consumption, growing from about 38% to 43% of the total. Other modes of transportation consume 24%. Home heating oil, a common fuel in Vermont, commands only 3% of the total.

There are two pairs of lines - onshore/offshore and Lower 48/Alaska - each of which add up to the total. America has clearly reached a top for the oil production rate. Productivity has declined, too.

Update: I was remiss in not including the follow graph at the outset.

The graph contains some okay news: consumption per person has been roughly flat since the early 1980s. That means Americans are using less oil for each dollar of GDP created. Whether efficiency has gone up or a different primary fuel substituted for oil will be the subject of another post.

Open Letter: CAFE Regulations

Dear Congressmen and Senators,

I am writing today to urge you to support the strongest possible CAFE requirement, one that makes no exceptions for so-called 'light-trucks' or for the use of alternative fuels. Various amendments have been offered in the Senate which would alter the deadline for meeting the rather modest standards that have been proposed in S.357. I urge you to reject those amendments and keep the bill clean from unrelated amendments.

Truth be told, CAFE is rather poor policy. It is complicated for manufacturers to calculate and meet. It allows for several exceptions, and it fails to regulate the fuel efficiency of larger vehicles. And it does nothing to alter the fundamental pattern of urban development in America that drives the nation's incredible appetite for oil.

A far better approach would be to replace CAFE with a constantly increasing federal motor fuels tax (aka a gas tax). A gas tax that increased by $0.03 per month (and more after several years) would give consumers a clear reason to reduce their fuel consumption. They would be able to do so in the way that suited them most, be it buying a fuel efficient car, moving closer to work, telecommuting, car-pooling, or many other means. Such a tax would be easy to collect – a federal gas tax already exists - and would eliminate the paperwork created by CAFE. A new gas tax would not cause significant financial hardship because it would give people plenty of time to adapt, as well as clear incentives to do so.

Many people claim to object to a gas tax because it would fall hardest on poorer Americans. However, a gas tax is hardly the only tax that poor people face. A gas tax could easily be offset by using the revenues from it to replace the FICA tax on the first few thousands of dollars of wage earnings. A gas tax plus such an exemption would give poor people a reason to reduce their use of fuel, along with more reasons to work, while still preserving their FICA contributions. A gas tax could also be used to fund improvements in mass transit.

But I am a realist, and recognize that increasing the federal gas tax would be very unpopular. Most Americans are totally uninformed and unrealistic about the viability of our current level of oil usage. Most Americans expect that their grandchildren will drive huge cars everywhere anytime, just like everyone does today. This expectation will certainly be proved terribly wrong. Until the time that Americans support an increasing gas tax, CAFE will be the best policy that can be implemented at the federal level. I look forward to seeing the small improvement that CAFE represents passed soon.

Thank you for your time.

Open Letter: 2007 Vermont Legislative Session

Dear Representatives and Senators,

I am writing today to express my hope that you will strongly support efforts in the Vermont legislature to address the important and potentially catastrophic issues of Global Warming and Peak Oil. Though the two issues are different in focus, they both have to do with the over-use of fossil fuels by industrial nations such as the United States. While actions by Vermont alone will do very little in and of themselves to reduce global fossil fuel consumption and carbon emissions, strong leadership by our wonderful state could allow other states and countries to follow, and is the moral thing to do regardless of actions elsewhere.

Below is a non-comprehensive list of policies I hope you pursue in the legislature this year.

Electricity Generation and Transmission

• Encourage building of large-scale wind generation projects by reducing regulation
• Support the license renewal of Vermont Yankee as a state policy
• Support programs encouraging the development of a “smart” electrical grid which would allow for time-of-day pricing, and appliances that could communicate with this grid

Household Conservation

• Enact requirements that new homes meet the highest standard for energy efficiency
• Support programs for weatherization of older homes through loans and grants
• Support programs for re-purchasing old and inefficient refrigerators

Transportation Conservation

• Enact a graduated annual vehicle registration fee based on fuel consumption or engine displacement on both light and medium duty vehicles (up to 11,000 lbs)
• Relax pollution standards on automotive diesel engines under 2.0L in displacement from California to Federal standards
• Provide further support for the freight rail network through funding of capital projects which resolve speed, clearance, and weight issues, and which help develop more intermodal terminals

Land Use Planning

• Enact policies that further discourage the conversion of cropland to residential developments

Please contact me if you have any questions about the important issues of Global Warming or Peak Oil. I look forward to seeing concrete progress from Montpelier this year.

Thank you for your time.

Excerpt from "The End of Oil"

I'm slowly working through Paul Roberts' The End of Oil: On the Edge of a Perilous New World (Amazon, Powell's) and I came across a passage so good I had to share it.

In this context, it is hardly surprising that the Bush administration's energy policy has been so lopsidedly slanted towards oil. Whereas many energy experts, particularly those in the left-of-center advocacy community, saw 9/11 as a prime opportunity to renew the effort to move away from oil altogether, the Bush administration drew the opposite lesson. For Bush, the lesson to be learned about energy insecurity was not that the West should use less energy as it did in the early 1980s, but that the West should be willing to make energy more secure and less unpredictable, as American had tried to do during the first Gulf War. During that war, rather than simply retreating into a defensive energy policy, the West had taken a bolder, more muscular approach and had simply removed the threat to price stability.

Insanity, pure and simple. I opposed the first Gulf War because I thought that America had no business fighting a war over oil, and argued afterwards for an increased tax on gas so that we wouldn't have get involved in a war for oil again. Was I ever proven right, and how.