The Cost of Natural Gas [was Re: The Cost of California Liberalism]

auto58194 at hushmail.com auto58194 at hushmail.com
Tue Dec 19 10:15:09 PST 2000


I wrote:
> > California's importing power from elsewhere, so why didn't these other 
generators
> > commit to natural gas suppliers?
> 
Mac Norton wrote:
> Perhaps because they don't burn gas at their stations. Duh.

My response to Raymond was in reference to natural gas price increases. 
 Again, if they're not burning gas, how are they causing shortages leading 
to price increases?  Who's burning the gas?  Where'd it go? 


I wrote:
> > Hint: transmission losses aren't a recent discovery.
> 
Mac Norton wrote:
> No shit. That's why line loss is taken into account in prices.
> So, er, what?

So if line loss is taken into account in prices it should also be taken 
into account in figuring out how much power to generate and should also 
be taken into account when figuring out how much natural gas needs to be 
committed to.  It doesn't matter where the plants are.


Raymond's pointed out that some gas plants normally idle are now running 
full-time to meet demand.  To me this reads the same as using idle plants 
instead of building new ones.  Perhaps not a bright move in terms of safety,
 efficiency and reserve capacity, but nothing that should have changed natural 
gas commitments.  


"Raymond D. Mereniuk" wrote:
> This power plant sits there mainly unused.  The local tree hugger
> types whine too much about the pollution.  The facility is not small,
> probably enough capacity for a city of 250K.  It is used only at peak
> times and in emergency situations.  When there are low reservior
> levels (which is part of your problem) it is used more often.
> 
> In a properly planned electrical system this type of extra capacity is
> considered essential.  These plants were never intended to be
> used fulltime so they tend to have low natural gas storage capacity
> and smaller inbound pipelines.  In your system you are using
> facilities such as these for full-time power generation.
> 
> In your state these plants has a quota of pollution they are allowed
> to produce on an annual basis.  A number of these facilities had
> reached their annual quota of emissions so they shut down for
> maintenance.  Since they were never intended to be used full-time
> they require some down time.  Within the last two weeks your state
> government lifted the pollution quotas and pressured the operators
> to bring these plants back on stream.

OK, but do you deny that natural gas suppliers and pipeline operators are 
responsible for making the call for sizing their supply and their pipelines? 
 Does California need to step in and do that for them?  They sized for the 
expected usage from these plants and actual usage has ended up higher.  
Oops.  The gas suppliers and operators could have also figured that without 
more power plants being built, these plants might need to run more (even 
despite regulations) and taken appropriate actions.  Perhaps the suppliers 
aren't dumb and actually figured that out but ran some numbers that said 
they'd make more money by allowing a shortage to occur?    (And hey, we 
can make it look like California's fault and get some good press in B.C. 
while ripping them off too!) 

In your eastern vs. western pipeline example, you showed a case where some 
supply problems would have been solved by connecting the two systems but 
then pointed out that the company didn't do that so they can charge a premium 
in the western system.  Is that a cost of California Liberalism or a cost 
of Capitalism?

> Energy production is big business in western Canada and a lot of
> people are making big dollars from the consumers in the northwest.
> The actions of the California voters have made this possible.  

The actions of California voters have helped to make this possible.
The cold weather has helped to make this possible.
You and I heating our homes has helped to make this possible.
Not connecting the eastern and western pipeline networks helped to make 
this possible.

Lots of other things have helped to make this possible, but above all, Capitalism 
has made this possible.  
California's not responsible for making commitments to put the magic demand 
number over the limit to build new pipelines.  Is it also God's fault for 
not committing to a cold winter?  I'll let Tim make the causality rant if 
he feels it necessary.

Californians don't want to live near power plants but have a huge electricity 
demand.  Great!  I smell opportunity for neighboring states to get lots 
of tax revenues from plants supplying California electricity.  Why haven't 
they been built?  Nevada liberalism?   Oregon liberalism?  Why not build 
plants in Mexico?  Is Mexico a bastion of liberalism with stringent pollution 
laws?  

Why are natural gas suppliers and electric utilities not meeting demand? 
  Are they morons or have they calculated that they make more money by risking 
and allowing shortages rather than by increasing capacity?  This whole thing 
is no different than OPEC deciding to leave oil in the ground to raise prices 
except that instead of being honest bastards like OPEC, they're being dishonest 
bastards by babbling about California Liberalism.

If anything it's the cost of not being liberal enough!  Damnit, they told 
us we'd all become rich by investing in all these glorious deregulated energy 
companies and now look what's happened!  We forgot the profit was going 
to come out of our pockets first.  Those bastards told us competition would 
lower prices!  We forgot all our anti-trust lawyers were busy with Microsoft 
and not making sure the energy industry wasn't acting in collusion.  What 
hath we wrought?
  
> I just wish I was still in the energy business rolling in dollars rather 
than
> whining about paying an extra $1,000 per year for heating.

Shame on you.  Bad capitalist!  Bad capitalist!  


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