Here's a thought, or a question really, on whether the system of energy production and use is being forced to change by market realities. Brent crude prices went over US$72 last night and light sweet crude in New York closed near US$70. In a world where there are only a few dozen producers of hydrocarbons and everyone else (6 billion) is a consumer, oil prices are only going to go higher. Oil, gas, and coal have to be found, produced, transported, and turned into various transportation and industrial fuels.
That's the world we live in. The supply of energy is confined to a few relatively scarce sources and an even fewer number of producers with the capital and the expertise to deliver energy to the markets. And frankly, it's worked pretty well so far for everyone. Efficiency was based on centralised production and distribution. But is this still the case?
All hydrocarbons got their original energy from the sun. The sun shines down on the planet everyday, bathing the globe in energy that mostly goes unused. With the political cost of oil and gas rising - not to mention the possible environmental (or at least regulatory) cost of hydrocarbons - what would the world look like if more people produced energy and sold back what they didn't use to the centralised distributors?
If more people sold electricity back to the grid-from fuel cells, solar cells, wind, or hydro power-you begin to have a less centralised, more distributed system for power generation. Of course, fuel cells and solar cells are probably not going to keep the lights blinking on the Vegas strip. But a change at the margin is a start.
Of course, oil's chief use is for transportation fuels. And until we have an electric power system that can generate enough juice for electric or hybrid cars, oil will not be replaced by the sun, the moon, earth, wind or fire.
But if electric cars could plug into cheap juice on a decentralised grid- with both large scale nuclear generation at one level and small scale, home- power system generation at another level...well at the very least you have another model for how the world might evolve to meet its power and transportation needs.
Dan Denning
The Daily Reckoning Australia
Is decentralised electricity the answer to the looming energy crisis? Leave a comment below.
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
Comment by William K. Lowry on 20 August 2007:
We purchased a $40,000 photo-voltaic generating systen several abour 5 years ago.. A special California governement fund paid about half of it. We have our 3,000 sq ft home plus two, 2 bedroom mobile homes supported by our electrical system. All use LP gas for cooking and heating (heating is supplemented by wood in the main house - about 50%.) Our electricity costs average about $75.00-$80.00 per month or about
$700 per year. Of course we would have earned almost that much in interest on our part of the investment.
At current prices one can economically justify installing a PV system only to address the need for environmental and fossil energy supplies. The cost of the equipment remains prohibitivally and needlessly high.
So many, particularly in government, talk loudly about the need but only a marginal few
people like us have made the sacrafice to do something about it. It took all of our savings to do this. Our blow hard politicians should lead by example and favorable legislation.
We, as a nation, could easily lick the impending shortage of fossil fuels...we have ample technology but not the values or the will.
I grew up in an Oklahoma family who was fourtunate to have had several oil wells. I think most have been plugged by state requirements by now but at the time, 5-10 years ago they were still producing 10 or so barrels per day but not enough for the greedy oil companies to maintain them. These wells could be reopened and at today's oil prices could likely produce some oil economically. There are literally hundreds or thousands of such wells. Our companies seemingly would rather go to Venezuela or Arabia in search of easily recoverable oil than to fully utilize what still exists at home.
Finally, we own two cars, a 2002
Kia that gets 25 miles per gallon and a 2001 Toyota Prius that gets at this age 41 miles per gallon. Our American desires seem to ignore this kind of fuel savings in favor the greedy gas consuming autos.
Comment by William K. Lowry on 20 August 2007:
A move from people like yourselves who would help lead all of us to an energy saving political power that could influence politicians and
public attitude would be a great asset to us and the world.
Comment by FriedBourbonnCoke on 23 December 2007:
The only danger is the upkeep on decentralised energy systems... CSIRO has come up with a microwave(hence domestic) sized device to harvest hydrogen and oxygen from water.. the only problem with that is storing these gases in homes is asking for tragedy, the same reason we dont have bowsers in our back yards. Even with the new" ultra batteries" touted by CSIRO to store energy from renewables will need some kind of maintainence that normal householders will just not follow through.. until they have a battery explosion/fire