Thursday, October 20, 2011

Nuclear Power & Offshore Drilling May Keep Oil Prices Artificially High

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With gasoline prices at record highs in 2008, 2009 and 2010, 2011 has looked like a microcosm of the longer oil-market trend: consistent increases in pricing, fuel costs hurting small business and the middle class, slowing the pace of economic growth in the US, and—maybe most strangely of all—no national policy to motivate a rapid, comprehensive transition away from fossil fuels and the volatility and cost inefficiency of their products to the wider marketplace. Instead, we have seen a recommitment to ramping up production, expanding drilling and exploration, and prioritizing local importation (from Canada and Mexico), instead of real coordinated policy planning to end dependency on foreign-sourced fuels.

With the oil strain on an already precarious American economy at an historic extreme, Pres. Bush in 2008 pushed Congress to hold an “up-or-down vote” on renewed exploration of the Outer Continental Shelf (OCS) before its August recess. Opponents protested vocally that none of any oil found there would be available for production for 10 to 15 years, the total amount would do little to ease the overall dependency on foreign-sourced fuels, and that the OCS plan was little more than an aggressive attempt to deliver to hugely profitable oil firms an unjustifiable gift, taking advantage of the pressurized situation of exorbitant prices.

The Energy Information Agency (EIA), evaluating the OCS strategy, found that opening offshore sites in the Pacific, the Atlantic and the Gulf of Mexico would still not produce enough oil and natural gas to have a significant effect on domestic reserves, even as far out as the year 2030. In July 2008, as the debate raged over drilling, CNN reported that Democratic members of Congress were saying a preliminary investigation was attributing more than 50% of the soaring oil prices to speculation, while traders were saying OPEC had deliberately held production low in order to drive prices up. Dependency on speculation-susceptible foreign-sourced fuels was building unaffordability into the US economy. 

So, after three years of prolonged economic malaise, with the energy and fuel sectors continuing to extract massive amounts of wealth from our local and regional economies, transferring economic leverage away from the middle class and spontaneous job creation, we must face the underlying truth: that fossil fuels work on the marketplace in ways that are corrosive to the long-term health and stability of democratic societies conducive to a vibrant middle class. And given the massive negative externalities, which all of us are funding all of the time, and the unaffordability of so much of the stagnant, status-quo industrial economy, we must also face the increasingly clear economic reality that carbon emissions are not just destructive to the health of our natural environment, but that they have real economic costs not directly related to ecosystem resilience, such as human health, and the cost of industrial activity related to clean-up and to the obsolescence of devices running on combustible fuels.

Devoting increasing amounts of our energy economy to combustible fuels at a time when prices are soaring—a periodic reverse trend of a few months of gradually easing prices is not a reversal of the long-term trend—has a multiple-negative economic effect. The key to understanding what is happening, and which looks likely to make recourse to nuclear and carbon-based fuels counterproductive, is to understand that we are no longer living in a traditional industrial energy economy. We are now dealing with the consequences of that economy’s exploration and combustion burden. The “carbon footprint” is not merely an environmental ethics concern, but a serious economic factor potentially mitigating future productivity, or added long-term costs on a scale never before seen

Sen. John McCain (R-AZ), the 2008 Republican nominee for president, proposed building 45 new nuclear plants across the country in order to bring down energy prices overall. The idea was borrowed, to a large extent, from then Vice President Dick Cheney, who had long been close to the nuclear lobby and who included nuclear energy as part of his initial proposals for a new national energy policy. Yet the economic reasoning behind such proposals is dubious: no plants have been built in the US in three decades, and environmental and cost concerns, including pending court rulings, make the strategy unlikely to be implemented.

The state of California—the world’s 5th largest economy—has only two nuclear plants, so the amount of energy sought in producing 45 plants is more than ambitious, especially when compared to the promise of new alternative fuel and energy-production options. That each plant could ulimately cost taxpayers tens of billions of dollars in construction, maintenance, security, decomissioning, insurance, health and environmental costs, makes the proposition seem like an ill-informed proposed detour into fiscal collapse.

The entire nation has only 104 nuclear reactors, so the commitment to 45 new nuclear power plants—under McCain’s 2008 plan—would be serious, even as new options become available. What’s more, the history of accidents and near accidents is widely unknown among the public. We know the word “Chernobyl”, but most people don’t know that the V.I. Lenin Memorial Chernobyl Nuclear Power Station had four reactors, only one of which exploded in the cataclismic disaster of 1986. The other three reactors were finally shut down only years afterward, in 1991, 1996 and 2000, respectively. And, the Ukraine’s largest nuclear plant, also Europe’s largest, at Zaporizhzhia, has six pressurized light-water reactors.

We saw this spring what kind of unrelenting social, economic and biological catastrophe can result from the failure of multiple reactor cores, containment strategies and engineering and regulatory mechanisms, when Japan’s Fukushima Daiichi complex went into meltdown, after being struck by a tsunami. That crisis has yet to be fully contained, and no government agency in Japan or elsewhere, seems willing to publish definitive statistics detailing the full scale of the radiation released into the air and water. We know that contaminated rain has fallen on the other side of the Pacific Ocean—which covers half the globe—and so the US is living with fallout from the ongoing Fukushima Daiichi disaster. 

We have heard of the serious nuclear accident at Three Mile Island, Pennsylvania, in March 1979, in which partial core meltdown in one reactor led to the release of 43,000 curies of radioactive krypton (1.59 PBq), and 20 curies (740 GBq), considered a relatively small amount of the especially dangerous iodine-131 isotope, into the surrounding environment. But few people are aware of the major explosion, following core meltdown, in January 1961, at the National Reactor Testing Station in the Idaho desert. All three people working the plant during the explosion were killed and the radioactivity levels were so intense, they were required to be buried in lead coffins.

A massive 890 square-mile complex, now known as the Idaho National Laboratory, was the site of the first success in producing electricity from nuclear reactions, and is in part a national historic landmark. But among its 52 reactors, only three are currently operational, and there are reported to be plans to use at least one to produce plutonium-238 for classified national security purposes.

Now, given the intense security concerns related to nuclear power, rapid construction is literally impossible. Federal public health and environmental laws also require fastidious attention to detail, which has intensified since the last plant was constructed 3 decades ago. Failure to meet with absolute precision all the security requirements can result in catastrophic accidents and/or major cost-overruns in relation to federal regulatory fines and/or takeovers. This means that entirely new systems for construction need to be designed and tested before even the first construction of any new plant can begin.

There is, simply put, no way that new nuclear plants can affect current gas prices.The timeline here has also been pushed back as far as 2030 for any significant shift on percentage of national energy production derived from nuclear power, if the massive new construction project were undertaken.

With both offshore drilling and new nuclear construction likely to delay the infusion of new supply into the domestic energy economy, the real economic result of committing to these strategies for expanding domestic energy production may actually be the increase in prices for oil and automotive gasoline, as it becomes clear that overall supply depends heavily on these resources for the foreseeable future. Over the last few years, as carbon pricing legislation has stalled, discussion about future economic development has shifted to the need for funding the broad expansion of national infrastructure for renewable resources, like wind and solar power.

It is fair to say that given the revolutionary advances in cost-effective construction and comparable end-user cost for renewable resources—we now know existing wind and solar technologies can power the entire US economy—, there has not been enough attention given to the potential for rapid infrastructure development that could bring new sources of energy production online within 2 to 3 years. 

We face a stark choice, at this moment of economic division, confusion and peril: we can continue to heavily invest in the old, dirty, costly energy paradigm, or we can deploy smart policies to price carbon accurately, in a way that is designed to return economic influence to the middle class, to innovators and communities, and build a local, user-centered smart energy economy

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A version of this report was originally published July 31, 2008, at CafeSentido.com

Notes

  1. wordsagainstchaos posted this