Why I think energy prices will climb

by: simonstl

Mon Sep 17, 2007 at 08:53:34 AM EDT

[Cross-posted from Living in Dryden, but with the focus shifted to Upstate.]

I've had a few people question one of my underlying assumptions, one that makes a huge difference to what I see happening in Upstate in the future. In general, I see energy prices going up, especially gas prices.

Ethanol won't save us from this problem, because the crops we're using for it (corn) require energy-intensive inputs, from tractors to fertilizer and pesticides. Brazil has a better approach with sugar, though I worry how well that can work in the long run because of soil issues. Cellulosic ethanol sounds better still, but despite the enthusiasm of venture capitalists it isn't nearly here yet - and it's not an easy thing to do.

There used to be lots and lots of natural gas, but utilities burning it to generate electricity means less for the rest of us, and natural gas fields have a nasty habit of stopping suddenly. Hydrogen won't save us either, because it only changes the form of the energy, and doesn't ever earn us free energy. We've already burned the best and most easily reached coal, so that's not going to get any easier. Nuclear power remains the one wildcard out there, though it lacks a critical ingredient right now: trust.

So what's wrong with oil? Aren't oil price hikes just a conspiracy of OPEC and oil companies?

No, not really. Those could cause short-term shocks, but not long term increases. There are two basic problems: increasing demand, and flat - eventually declining - supply. Both of those lead to higher prices in the long term.

This interview with the retired chairman of Shell does a better job of summarizing than I can:

Andrew Cuomo Continues to Impress

by: Roatti

Sun Sep 16, 2007 at 14:19:11 PM EDT

He is now using the Martin Act (the same law AG Spitzer plucked out of obscurity to clean up Wall Street) to combat global warming of all things.  The gist is that 5 utilities failed to disclose to their investors the possible future financial risks of coal power that are posed by the strong likelyhood of near-term anti-CO2 governmental regulations.

In letters accompanying the subpoenas, the attorney general's office asked whether investors received adequate information about the potential financial liabilities of carbon dioxide emissions that exacerbate climate change.

"Any one of the several new or likely regulatory initiatives for CO2 emissions from power plants - including state carbon controls, E.P.A.'s regulations under the Clean Air Act, or the enactment of federal global warming legislation - would add a significant cost to carbon-intensive coal generation," the letters said.

They added, "Selective disclosure of favorable information or omission of unfavorable information concerning climate change is misleading."

Once again, I'm very impressed by Mr. Cuomo.

Finding a Path for Upstate New York

by: simonstl

Mon Sep 03, 2007 at 13:41:44 PM EDT

Upstate New York is trapped by its past and offers a glimpse of the rest of the country's future.

Its past was one of wealth and innovation, providing a place where the ideas and commerce of New York City melded with that of the rest of the country. Canals and railroads brought people, goods, and ideas through it and to it. The "Empire State" was more than just the city that shares its name, a much larger place that grew wealthy in prosperous times and developed its own sense of place.

That glorious past came to an end after World War II. At least symbolically, Upstate's decline can be marked from the opening of the St.Lawrence Seaway. What had been a vibrant transportation corridor since the Erie Canal's opening in 1825 began a slow drift into a world of uncertainty. The Port of New York's steady decline, the rapid growth of road networks, and the shift of manufacturing toward ever-cheaper places took away Upstate's powerful position as a good place to start or run a business.

The place most obviously damaged by these shifts in transportation was Buffalo, the city where the grain elevator was invented to ease the transfer of grain between the Great Lakes and the Erie Canal. Its decline as a transfer point reduced its advantages dramatically, though Niagara Falls still provides hydropower. It's not just Buffalo or even the "Thruway cities" (formerly "canal cities") - Hornell's Erie Railroad repair shops shut down, as did shops across the state. Manufacturing now had less reason to be here, as new transportation corridors opened all over the county. New York agriculture found it harder to compete against California produce, which could break the seasonal cycle thanks to cheap transportation.

As hard as current New York residents may find it to believe, an intricate web of business relationships used to connect Upstate and Downstate tightly together. The New York Central might have been most famous for Grand Central Station, but its core routes roughly followed the old Erie Canal route before shifting south of the Great Lakes. Goods flowed to and from the Port of New York, and to and from the incredibly diversified manufacturing that flourished in New York City. As both of those keys to New York City's importance declined, the value of placing businesses along those routes declined too. New York City doesn't have any intrinsic need to get much - except for its water supply - from Upstate. (Connections to the midwest simultaneously declined in importance, as did the old ties to Pennsylvania coal transport.)