Author: Big Gav

The SMH has an article on comments by Origin Energy CEO Grant King predicting power prices in eastern Australia will triple over the next 10 years if climate policy remains deadlocked – Power price surge fuelled by stalemate over policy.

The chief executive of Origin Energy, Grant King, says uncertainty about energy policy is driving up industry costs, but without a carbon price Australia will fail to meet a government target to cut 2020 emissions by 5 per cent from 2000 levels.

In a sweeping attack on the stalled debate over emissions trading, Mr King said indecision on carbon trading was deterring business from investing in all but the safest power plants, which are those powered by wind and gas.

Building these new plants requires hefty spending on infrastructure such as new power wires and poles.

But he said these costs had not been factored into the price of electricity.

''We think it's quite possible that by 2020 the cost of energy to consumers could be two to three times what it is today,'' he said at a business lunch in Sydney yesterday.

''Increases in transmission and distribution costs, driven by current policy settings, will substantially increase the cost of electricity to consumers.''

A trebling in power prices would push the average annual bill for Energy Australia customers to $3771, compared with $1257 now.

Energy Australia is the dominant government-owned retailer of electricity. NSW power prices are already set to jump by as much as 60 per cent in the next three years because of transmission and carbon costs, the Independent Pricing and Regulatory Tribunal said last month.

At the same time, Mr King said higher power costs would bring few environmental benefits, because emissions would remain stubbornly high until business received a clearer signal from government.

Relying solely on renewable energy and attempts to cut household power consumption was not enough to cut 2020 emissions by 5 per cent compared with 2000 levels, he said.

For example, meeting the 5 per cent target would require households to cut energy use by 20 per cent by 2020 and a doubling in the amount of renewable energy generation installed by 2020. This was a ''huge'' challenge for Australia, he said.

''We will fall well short of that target unless we go back and put in place policies designed to change the way we generate energy,'' he said.

The comments come as the federal government prepares to introduce the twice-rejected carbon pollution reduction scheme to the Senate as soon as next month.

Origin is viewed as a beneficiary of the scheme because it does not own any coal fired power plants, which are the biggest polluters.

National Geographic has an article on Google's power meter and initiatives to make smart meter data visible to end users –
Google Searches For Key To Energy Savings

Deep in the dark of the Minnesota night, some appliance was kicking on to rob Ed Kohler of hard-earned cash. He'd look later and see nighttime energy spikes reported by PowerMeter, Google software that monitors home electrical use.

“All the lights were out, but something's cycling,” said the 36-year-old Kohler, marketing manager at a Minneapolis web-development firm. “So I think about it and, aha, figure out it's the refrigerator.”

A 19-year-old refrigerator, a real energy hog by today's standards. It was easy to calculate that a new, energy-efficient model would pay for itself.

Kohler’s revelation is typical of “Aha!” moments that consumers enjoy when they can monitor their energy use, say Google executives. PowerMeter is an early hint at how new technology can give home dwellers more control over their energy use. It was developed by the search giant’s charitable arm, Google.org, which has made energy one of its prime areas of focus. And PowerMeter is free, easy to use and available to anyone worldwide to install.

If only it were that simple.

As software, PowerMeter can’t provide the homeowner with energy use data unless it is linked to the home's electrical power system—and that requires a piece of hardware. But it will take the utilities that deliver electricity to homes years–maybe a decade–to blanket the country with new “smart” meters that can gather and transmit useful data. Then, the power companies must decide how to transmit that data to customers–perhaps through software like Google's that is being tested by several utilities in the United States and Europe, or perhaps through software and hardware being developed by other companies, like Microsoft, Intel, and a number of start-ups.

Utilities cautious on smart meters

From the standpoint of the utilities, the meters raise a myriad of technical questions, not the least of which is just making sure the darn things are accurate. So they are moving forward cautiously. Too cautiously, in the view of Google and 45 companies and organizations that sent a letter to President Obama this week urging that the administration set a goal of giving every U.S. household and business access to “timely, useful and actionable” information on their energy use.

“By giving people the ability to monitor and manage their energy consumption, for instance, via their computers, phones or other devices, we can unleash the forces of innovation in homes and businesses,” the letter said.

The smart meter advocates say if U.S. households saved 15 percent on their energy use by 2020, the greenhouse gas savings would be equivalent to taking 35 million cars off the road and would save consumers $46 billion on their energy bills.

The Business Spectator has a look at the latest salvoes between domestic Australian natural gas users and LNG exporters in WA   – The WA gas supply war.

Neither side will take a backward step in the battle over domestic gas supply in the Golden West.

In one corner we have the DomGas Alliance, speaking for big consumers, complaining that Western Australia “has the most anti-competitive gas market in the country” and in the other the upstream petroleum producers arguing, in the words of a recent newspaper headline, “we can’t afford to hand the industrial giants a free ride.”

Belinda Robinson, chief executive of the Australian Petroleum Production & Exploration Association, is hammering away at DomGas in response to the Alliance’s warning that a domestic gas shortage will last until at least 2020 – while the gas producers pursue international LNG markets – and that the prices being asked will preclude development of “a lot” of future mine projects.

From APPEA’s perspective, the problem is that large energy-using companies receiving international market prices for their products do not want to pay global parity rates for their gas. Don’t ask our industry to subsidise the input costs of other businesses, argues Robinson.

Tony Petersen, chairman of the DomGas Alliance, wants the WA government to “give teeth” to a policy to reserve offshore gas for domestic use, claiming a 300 per cent increase in North-West Shelf Joint Venture prices to distributor Alinta. Petersen argues that WA customers are being forced to pay premiums to producers in excess of any obtainable by the gas suppliers from overseas customers.

Not dealing with the issue, he says, will lead to thousands of job losses among industrial users of gas because, at existing prices, major resource processing and gas-fired generation will not be sustainable.

Robinson retorts that, if the Alliance gets its way, every WA householder and small business will bear the consequences, forecasting that gas production investment will falter, supply will shrink and prices will rise still further.

Gas is a bigger deal in the west than it is on the eastern seaboard. It provides half of the State’s energy and fuels 60 per cent of its electricity generation. ACIL Tasman say gas prices in the State have risen four-fold in a decade and may keep rising until adequate supply becomes available.

The NYT has an article on <a
href="http://peakenergy.blogspot.com/2008/05/solving-our-water-problems-desalination.html">solar
power desalination</a>in Saudi Arabia, somewhat surprisingly using
concentrating solar PV (CPV) rather than <a
href="http://peakenergy.blogspot.com/2008/04/concentrating-on-important-things-solar.html">solar
thermal energy</a> – <a
href="http://greeninc.blogs.nytimes.com/2010/04/07/i-b-m-and-saudi-researchers-collaborate-on-solar-powered-desalination-technology/">I.B.M.
and Saudi Researchers Collaborate on Solar-Powered Desalination
Technology</a>.
<blockquote>I.B.M. and a Saudi Arabian research institute are
collaborating to develop a desalination plant powered by a new type of
solar technology.

The goal is to build a desalination project in the Saudi city of Al
Khafji capable of producing 7.9 million gallons of water a day that
would supply 100,000 people.

Desalination is an energy-intensive process, which has limited the
deployment of such plants outside desert regions like the Middle East.
But I.B.M. and the Saudi research institute, the King Abdulaziz City
for Science and Technology, plan to dramatically reduce the
electricity costs by building a 10-megawatt solar farm that deploys
ultra-high concentrator photovoltaic arrays.

The technology will concentrate the sun 1,500 times on a solar cell to
boost efficiency. That's about three times the solar concentration of
most concentrating photovoltaic panels currently in operation.

Sharon Nunes, vice president of I.B.M.'s Big Green Innovations
division, said in an interview Tuesday that the key to increasing the
solar panels' efficiency was a device called a liquid metal thermal
interface. A legacy of Big Blue's mainframe computer work, the liquid
metal thermal interface acts as a heat sink to cool the extreme
temperatures generated by concentrating photovoltaic systems.

"The solar component is something we've been implementing and that we
have done testing on for the past two years," Ms. Nunes said. "We're
quite confident with the results."

I.B.M. has not yet revealed the efficiency of such a solar system at
converting sunlight into electricity. But Jenny Hunter, a company
spokeswoman, said it was expected to be a significant increase over
current concentrating photovoltaic technology.

I.B.M. has had discussions with solar developers about using the
technology, Ms. Nunes said.

The researchers are still exploring options to run the plant when the
sun is not shining, looking at technologies to store solar electricity
as well conventional power sources. To further cut energy costs, the
company and Saudi researchers said they had developed a nanomembrane
that desalinates water and removes toxins while using less
electricity.</blockquote>

The SMH had an interesting profile of WikiLeaks founder (another big
fan of <a href="http://peakenergy.blogspot.com/2007/06/shockwave-rider.html">transparency</a>)
Julian Assange on the weekend – <a
href="http://www.smh.com.au/technology/technology-news/international-man-of-mystery-20100409-ryvf.html">International
man of mystery</a>.
<blockquote>On the Al Jazeera television network, an overbearing host
was grilling Julian Assange, one of the founders of WikiLeaks, the
online drop zone for whistleblowers.

Assange, an Australian who rarely makes public appearances and
shuffles around the world with little more than a rucksack and a
laptop, quickly dealt with his haughty inquisitor. Lean and tall with
a handsome, distant face, long grey locks and dressed in a a dark
suit, Assange, in his late 30s, is a commanding presence.

He has a deep broadcaster's voice and gave measured, drum-tight
answers about the blow he had just dealt the US military with
WikiLeak's release of footage of an American helicopter gunship
killing Iraqi citizens and two Reuters journalists on a Baghdad street
in July 2007.

The video, shot from the helicopter, includes the voices of soldiers
urging a gravely wounded Reuters photographer to pick up his weapon
(they apparently did not realise it was a camera) so he could be
lawfully finished off with the aircraft's deadly 30mm cannon. When a
beaten-up van slithers to a halt and its passer-by occupants tumble
out to aid the wounded, they too are gunned down. Only two maimed
children survive.

It becomes clear why the military has resisted the demands of Reuters
and others for the release of the video; the military had long claimed
it did not know how the Reuters journalists had died and it initially
withheld the fact that children were present.

Assange resisted Al Jazeera's invitation to savage US authorities for
their years of dissembling, remarking simply: ''There was certainly
spinning the message and it does seem like there has been a
cover-up.''

He didn't need to say more; by week's end the video had been viewed
4.8 million times. Its impact upon the reputation of US servicemen in
Iraq is devastating. Another US military video – showing last year's
bombing of Afghan villages as they siphoned fuel from a tanker
hijacked by the Taliban – is also coming to WikiLeaks.

Clearly someone inside the military has begun leaking, elevating
WikiLeaks and Assange overnight from mainstream journalism's fringes
to a must-see news breaker. ''This is a whole new world of how stories
get out,'' declared Sree Screenivasan, a professor of digital media at
the Columbia University journalism school in New York.

Yet for all its ideals in support of openness and freedom of
information, those behind WikiLeaks – especially its key founder,
Assange – dwell in shadows and intrigue. …

He has rarely spoken of his upbringing in Australia or life outside of
his work, arguing that to do so may assist those who want him and
WikiLeaks silenced.

But the trail of his life is across the internet, as coded and
mysterious as the man he is today. It begins – publicly at least – in
October 1991 when Assange, then a teenager, was charged with 30
computer hacking offences.

Prosecutors alleged he and others hacked the systems of the Australian
National University, RMIT and Telecom. They had even managed to
remotely monitor the Australian Federal Police investigation into
their activities, Operation Weather.

Assange admitted 24 hacking charges and was placed on a good behaviour
bond and ordered to pay $2100. The investigation in Australia began
after an audacious attack on NASA's computers in 1989.

The word ''WANK'' appeared in big letters on NASA monitors, an acronym
for Worms Against Nuclear Killers. Underneath was an Australian
connection – lines from a Midnight Oil song. Whoever did it was never
identified.

In 1997 an astonishing book was published in Melbourne. It sold a
respectable 10,000 hard copies but, when it was made available free on
the internet it was downloaded 400,000 times within two years.

Underground told the riveting inside story of the city's computer
hackers and Assange was prominently billed in it as a researcher for
the book's author, Dr Suelette Dreyfus, now an academic researcher. It
opened with a detailed account of the NASA attack.

Dreyfus wrote glowingly of Assange's efforts: ''Julian had worked
thousands of hours doing painstaking research; discovering and
cultivating sources, digging with great resourcefulness into obscure
data bases and legal papers – not to mention providing valuable
editorial advice.''

The book did not name the Melbourne hackers but used their online
identities and told their story. The records of Assange's court case
and his biographical details on WikiLeaks match the story of Mendax –
one of the hacker's online identities in Underground. …

For his epigraph in the online edition of Underground, Assange used an
Oscar Wilde quote: ''Man is least himself when he talks in his own
person. Give him a mask, and he will tell you the truth.''

Is Mendax the real Julian Assange?</blockquote>

The Guardian has an article looking at a new <a
href="http://www.jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf">US
military report</a> (pdf) which mentions peak oil – <a
href="http://www.guardian.co.uk/business/2010/apr/11/peak-oil-production-supply">US
military warns oil output may dip causing massive shortages by
2015</a>.
<blockquote>The US military has warned that surplus oil production
capacity could disappear within two years and there could be serious
shortages by 2015 with a significant economic and political impact.

The energy crisis outlined in a Joint Operating Environment report
from the US Joint Forces Command, comes as the price of petrol in
Britain reaches record levels and the cost of crude is predicted to
soon top $100 a barrel.

"By 2012, surplus oil production capacity could entirely disappear,
and as early as 2015, the shortfall in output could reach nearly 10
million barrels per day," says the report, which has a foreword by a
senior commander, General James N Mattis.

It adds: "While it is difficult to predict precisely what economic,
political, and strategic effects such a shortfall might produce, it
surely would reduce the prospects for growth in both the developing
and developed worlds. Such an economic slowdown would exacerbate other
unresolved tensions, push fragile and failing states further down the
path toward collapse, and perhaps have serious economic impact on both
China and India."

The US military says its views cannot be taken as US government policy
but admits they are meant to provide the Joint Forces with "an
intellectual foundation upon which we will construct the concept to
guide out future force developments."

The warning is the latest in a series from around the world that has
turned peak oil – the moment when demand exceeds supply – from a
distant threat to a more immediate risk.

The Wicks Review on UK energy policy published last summer effectively
dismissed fears but Lord Hunt, the British energy minister, met
concerned industrialists two weeks ago in a sign that it is rapidly
changing its mind on the seriousness of the issue.

The Paris-based International Energy Agency remains confident that
there is no short-term risk of oil shortages but privately some senior
officials have admitted there is considerable disagreement internally
about this upbeat stance.

Future fuel supplies are of acute importance to the US army because it
is believed to be the biggest single user of petrol in the world. BP
chief executive, Tony Hayward, said recently that there was little
chance of crude from the carbon-heavy Canadian tar sands being banned
in America because the US military like to have local supplies rather
than rely on the politically unstable Middle East.</blockquote>

Sustainable Business news has an article on an interesting experiment
in small scale solar thermal power generation in Hawaii - <a
href="http://www.sustainablebusiness.com/index.cfm/go/news.display/id/20086">Hawaiian
Solar Thermal Project Incorporates Geothermal Technology</a>.
<blockquote>A new hybrid power plant to be built in Hawaii will
combine solar thermal technology for harnessing the sun's heat with a
power-generating turbine designed for geothermal applications.

Solar thermal company Albiasa Corporation (Albiasa) announced a letter
of intent for the project with utility Pacific Light & Power (PLP).

Traditionally, solar thermal plants focus the heat of the sun to
create steam which then drives a turbine to produce power. These power
plants are generally designed for dozens or even hundreds of megawatts
in capacity, which allows them to operate more efficiently.

However, using geothermal turbine technology thta is designed to
squeeze extra energy out of lower-heat liquids, engineers think they
can make equally efficient solar thermal plants at smaller scales.

The Kauai 1 project in Hawaii will be only 10 megawatts (MW) in size,
and Albiasa will supply equipment for solar collection and thermal
energy storage.

Albiasa and PLP are working with Ram Power, Inc. (RPI) to incorporate
the company's geothermal technology, which combines traditional steam
turbine equipment with an organic rankine cycle to extend power
production and enhance part-load performance.

Situated on 100 acres of dormant farm land between the towns of Kekaha
and Waimea on the Hawaiian island of Kauai, PLP Kauai 1 will be the
first utility scale renewable power generation facility in Kauai and
the largest solar project in Hawaii. PLP is currently negotiating a
long term power purchase agreement with Kauai Island Utility
Cooperative (KIUC).

Construction of the project is scheduled to begin late this year and
could be completed as early as the end of 2011. PLP Kauai 1 will
include up to three hours of heat transfer fluid storage with the
flexibility to shift power generation during the day. </blockquote>

Technology Review has an article on Suntech's increasing focus on research – <a href="http://www.technologyreview.com/business/25016/?nlid=2885">China's solar giant shifts its strategy</a>.
<blockquote>The solar industry is entering a new era in which investment in R&D–and the new technologies it produces–will be crucial for solar companies to survive, says Stuart Wenham, the chief technology officer of Suntech Power Holdings, based in Wuxi, China, one of the largest solar panel manufacturers in the world. But don't expect radical changes to solar panels, at least for the next several years, he says. The best new technologies will be those that can easily be integrated into existing production lines and work with existing suppliers.

The solar-power market is undergoing radical reorganization. Countries such as Germany and Spain are scaling back solar incentives even as other countries, such as the United States and China, are implementing new ones. In the next few years, the United States and China are expected to become the largest markets for solar panels. Suntech, for one, is well positioned for the new markets, as one of few Chinese companies that have established themselves in the U.S., says Sam Jaffe, an analyst with IDC Energy Insights, in Framingham, MA. The solar market, which has been doubling every couple of years, exists today almost completely as a result of government incentives such as "feed-in tariffs" that guarantee that solar power can be sold for high prices. These incentives, put in place during the past decade, caused demand to ramp up quickly, too fast for suppliers of the high-grade silicon needed for most solar panels to keep up. But now a big increase in the number of silicon suppliers, paired with the economic downturn, has helped balance supply and demand. …

Now, however, even if the solar market were to double this year and next, the silicon suppliers would have no trouble keeping up, which will help keep prices for solar panels relatively low, Wenham says. In that scenario, only the companies with the best technology will be able to sell their products at prices that are high enough to make a decent profit. "Those that don't have good technology will probably end up being bought up by companies that do," he says.</blockquote>
<center><a href="http://www.flickr.com/photos/7781445@N08/4479251193/"><img src="http://farm5.static.flickr.com/4010/4479251193_cfda7f0899.jpg"/></a></center>

Apologies for the absence of posts this week – I've moved house and my internet connection still hasn't been reconnected, so things will likely remain quiet until early next week…

Strange Maps has a great example of how we could reduce our population footprint, if we chose to – The United States of Brooklyn, NH.

The New York Times reports that US government agencies have set new “emissions and mileage standards that would translate to a combined fuel economy average for new vehicles of 35.5 miles per gallon by 2016” – U.S. Issues Limits on Greenhouse Gas Emissions From Cars.

The federal government took its first formal step to regulate global warming pollution on Thursday by issuing final rules for greenhouse gas emissions for automobiles and light trucks.

The move ends a 30-year battle between regulators and automakers but sets the stage for what may be a bigger fight over climate-altering emissions from stationary sources like power plants, steel mills and refineries.

The new tailpipe rules, jointly written by the Transportation Department and the Environmental Protection Agency, set emissions and mileage standards that would translate to a combined fuel economy average for new vehicles of 35.5 miles per gallon by 2016. Most drivers will see lower mileage figures in actual driving.

The rules are expected to cut emissions of carbon dioxide and other heat-trapping gases about 30 percent from 2012 to 2016.

Officials said the program would save the owner of an average 2016 car about $3,000 in fuel over the life of the vehicle and eliminate emissions of nearly a billion tons of greenhouse gases over the lives of all regulated vehicles.

Reaching the new efficiency figure will add about $1,000 to the cost of the average new car by 2016, according to industry and government estimates.

The tailpipe rule reflects a truce between the auto industry and state and federal governments, which have been feuding over emissions and mileage standards since the 1970s. It is the first time the federal Clean Air Act has been applied to carbon dioxide and other global warming pollutants.

Renewable Energy World has an article on the need to expand transmission capacity to handle increased generation from offshore wind farms in Europe – Transmission Stalls European Offshore Wind Power.

Germany’s first offshore wind farm has been built and is now generating electricity. Dozens more wind farms are slated for construction over the next few years – as part of the German government’s push to install 10,000 megawatts (MW) offshore wind capacity by 2020. But all of them will need to plug into powerful grids, both offshore and onshore, to transport the thousands of MW of additional renewable energy across the country and possibly beyond, and these may be slow in coming.

Germany’s first offshore wind farm has been online since the end of last year. The twelfth and last wind turbine in the Alpha Ventus park, off the North Sea island of Borkum, was built in November. The park is the first to employ a dozen 5-MW-class wind turbines, located 45 kilometers (34 miles) offshore in waters 30 meters (33 yards) deep. It will provide enough electricity to power 50,000 homes.

Alpha Ventus is the first of many planned wind parks in Germany. The government has approved plans to dedicate special zones off its northern coast to house up to 40 offshore wind parks that could provide electricity to more than 8 million households. The plan calls for setting aside zones between 12 and 200 kilometers of the northern shores. Of the 40 wind farms, 30 will be in the North Sea and 10 in the Baltic Sea. More than 25 of the planned farms have already received approval, with the bulk of them in the North Sea.

In total there will be more than 12,000 MW of offshore wind electricity by 2030, the equivalent of 12 medium-size nuclear plants, according to the German Federal Transport Ministry. The government’s plan is to double the current amount of energy supplied by wind in the country to 12 percent by 2020. Indeed, wind plays a big role in the energy plans of German policymakers to satisfy 30 percent of the country’s energy needs with renewable energy resources by 2030.

The NYT’s Green Inc blog has a post on a concentrating solar PV (CPV) project at a California University – Concentrating Photovoltaic Project Under Way at California College.

The nation’s first big concentrating photovoltaic power plant is under construction in the California desert.

SolFocus, a Silicon Valley startup, is building the one-megawatt solar farm for Victor Valley College in Victorville, a desert community northeast of Los Angeles.

The company builds large solar panels that contain small mirrors that concentrate sunlight onto tiny, high-efficiency solar cells. Though more expensive than conventional solar cells, they use a fraction of the silicon and produce more electricity. That means less land is needed for a SolFocus power plant than one deploying conventional photovoltaic panels.

The SolFocus panels are mounted on trackers that follow the sun throughout the day. While SolFocus has built power plants in Europe, the California project is its first solar farm in the United States. Victor Valley College selected SolFocus after receiving competitive bids from several companies that install conventional photovoltaic panels and thin-film solar systems.

“After reviewing several options for a solar provider, SolFocus demonstrated that it could deliver the best value in solar energy for the college,” Robert Silverman, Victor Valley College’s president, said in a statement. The SolFocus power plant will supply about 30 percent of the college’s overall electricity demand.

SolFocus’ technology needs strong, direct sunlight to maximize electricity production. “If this deployment had been in somewhere in Northern California or Washington or Oregon, we probably wouldn’t have won the battle,” said Nancy Hartsoch, a vice president of marketing at SolFocus. Ms. Hartsoch added that in desert regions, the company’s technology generates electricity at prices competitive with traditional photovoltaic panels.

The 122-panel arrays will cover six acres at the college and the project is expected to be completed by early May. Ms. Hartsoch said SolFocus also has two other megawatt-size power plants undergoing permitting in the desert that have not yet been announced.

Business Week reports that NZ geothermal power company Might River is expanding across the Pacific to Chile – N.Z.’s Mighty River Plans to Open First Chilean Plant by 2013

Mighty River Power Ltd., operator of the world’s largest single-turbine geothermal generator, expects its Chilean venture to start operating by 2013.

Drilling next summer will help refine the concept for a 70- megawatt, $220 million project at Tolhuaca, southeast of Concepcion, Mighty River Chief Executive Officer Doug Heffernan said in an interview in Wellington today. Construction may take three years, assuming some time is lost to winter snow, he said.

“Three years from the end of this year you could have a plant operating,” Heffernan said. “A minimum of two years and likely three years.”

Chile is encouraging development of new power sources after suffering shortages as Argentina reduced natural gas supplies. Mighty River, working through Denver, Colorado-based associate GeoGlobal Energy LLC, has gained access to five potential steamfields in competition with rival developers including Italy’s Enel SpA, state-owned refiner Empresa Nacional de Petroleo and London-based miner Antofagasta Plc.

TomDispatch has an article by Michael Klare on China’s growing appetite for resources – Shopaholic China.

Think of it as a tale of two countries. When it comes to procuring the resources that make industrial societies run, China is now the shopaholic of planet Earth, while the United States is staying at home. Hard-hit by the global recession, the United States has experienced a marked decline in the consumption of oil and other key industrial materials. Not so China. With the recession’s crippling effects expected to linger in the U.S. for many years, analysts foresee a slow recovery when it comes to resource consumption. Not so China.

In fact, the Chinese are already experiencing a sharp increase in the use of oil and other commodities. More than that, anticipating the kind of voracious resource consumption that goes with anticipated future growth, and worried about the availability of adequate supplies, giant Chinese energy and manufacturing firms — many of them state-owned — have been on a veritable spending binge when it comes to locking down resource supplies for the twenty-first century. They have acquired oil fields, natural gas reserves, mines, pipelines, refineries, and other resource assets in a global buying spree of almost unprecedented proportions.

Like most other countries, China suffered some ill effects from the Great Recession of 2008. Its exports declined and previously explosive economic growth slowed from record levels. Thanks to a well-crafted $586 billion stimulus package, however, the worst effects proved remarkably short-lived and growth soon returned to its previous high-octane pace. Since the beginning of 2009, China has experienced significant jumps in car ownership and home construction — along with worries about the creation of a housing bubble — among signs of returning prosperity. This, in turn, has generated a rising demand for oil, steel, copper, and other primary materials.

Take oil. In the United States, oil consumption actually declined by 9% over the past two years, from 20.7 million barrels per day in 2007 to 18.8 million in 2009. In contrast, China’s oil consumption has risen in this same period, from 7.6 to 8.5 million barrels per day. According to the most recent projections from the U.S. Department of Energy, this is no fluke. The Chinese demand for oil is expected to continue climbing throughout the rest of this year and 2011, even as American consumption remains nearly flat.

Like the United States, China obtains a certain amount of oil from domestic wells, but must acquire a growing share from overseas suppliers. In 2007, the country produced 3.9 million barrels per day and imported 3.7 million barrels, but that proportion is changing rapidly. By 2020, it is projected to produce only 3.3 million barrels, while importing 9.1 million barrels. This situation has “strategic vulnerability” written all over it, and so leaves Chinese leaders exceedingly uneasy. In response, like American officials in decades past, they have moved to gain control over foreign sources of energy — and similarly many other vital materials, including natural gas, iron, copper, and uranium.

China Binging on Energy

Chinese energy companies initially started buying up foreign firms and drilling ventures (or, at least, shares in them) as the twenty-first century began. Three large state-owned oil companies — the China National Petroleum Corp. (CNPC), the China National Offshore Oil Corp. (CNOOC), and the China Petroleum & Chemical Corp. (Sinopec) — took the lead. These firms, or their partially privatized subsidiaries – PetroChina in the case of CNPC, and CNOOC International Ltd. in the case of CNOOC — began gobbling up foreign energy assets in Angola, Iran, Kazakhstan, Nigeria, Sudan, and Venezuela. On the whole, these acquisitions were still dwarfed by those being made by giant Western firms like ExxonMobil, Chevron, Royal Dutch Shell, and BP. Nonetheless, they represented something new: a growing Chinese presence in a universe once dominated by the Western “majors.”

Then along came the Great Recession. Since 2008, Western firms have, for the most part, been reluctant to make major investments in foreign oil ventures, fearing a prolonged downturn in global sales. The Chinese companies, however, only accelerated their buying efforts. They were urged on by senior government officials, who saw the moment as perfect for acquiring crucial valuable resources for a potentially energy-starved future at bargain-basement prices.

The SMH has an article on another customer signing up for LNG from Australian coal seam gas developments – Lean burn as Tokyo Gas signs 20-year Curtis deal.

JAPAN has signalled its willingness to buy liquefied natural gas converted from coal seam methane, with Tokyo Gas becoming the first Japanese utility to sign a deal to receive the unconventional gas.

In a further sign that energy-hungry countries will increasingly accept the lean gas, Tokyo Gas has announced a deal with BG Group for 1.2 million tonnes of LNG a year for 20 years from 2015 from the Queensland Curtis project.

The deal also continues the trend by international LNG buyers to acquire equity in Australian projects. Tokyo Gas will receive a 1.25 per cent interest in reserves and resources of some tenements in Queensland’s Surat Basin and a 2.5 per cent equity interest in BG’s second processing train. No value was put on the transaction but some estimates value it at between $13 billion and $26 billion.

The deal will be a headache for Woodside’s Don Voelte, an ardent critic of east-coast coal seam gas projects. He has said the coal seam gas industry in Australia will stall because buyers of liquefied natural gas, such as Japan and Korea, will not accept the lower calorific value of gas converted from coal seam methane.

The deal also trumps BG’s rival Santos, which UBS last week said had narrowed the list of potential customers from its neighbouring Curtis Island project to Tokyo Electric Power, Tokyo Gas and Korea Gas.

PhysOrg has an article on some research which suggests “when faced with a choice that could yield either short-term satisfaction or longer-term benefits, people with complete information about the options generally go for the quick reward” – Armed with information, people make poor choices, study finds. The unfortunate implication of this is that if you want people to act in their best long term interests, you probably need to manipulate them. It does make sense though – I suspect people decide that the future may not turn out as expected (or they may not necessarily be around for that long) and thus going for short term rewards has a higher chance of making them feel good.

The findings, available online in the journal Judgment and Decision Making, could help better explain the decisions people make on everything from eating right and exercising to spending more on environmentally friendly products.

“You’d think that with more information about your options, a person would make a better decision. Our study suggests the opposite,” says Associate Professor Bradley Love, who conducted the research with graduate student Ross Otto. “To fully appreciate a long-term option, you have to choose it repeatedly and begin to feel the benefits.”

As part of the study, 78 subjects were repeatedly given two options through a computer program that allowed them to accumulate points. For each choice, one option offered the subject more points. But choosing the other option could lead to more points further along in the experiment.

A small cash bonus was tied to the subjects’ performance, providing an incentive to rack up more points during the 250 trial questions.

However, subjects who were given full and accurate information about what they would have to give up in the short term to rack up points in the long term, chose the quick payoff more than twice as often as those who were given false information or no information about the rewards they would be giving up.

In a real-life scenario, a student who stayed home to study and then learned he had missed a fun party would be less likely to study next time in a similar situation — even if that option provides more long-term benefits.

“Basically, people have to stay away from thinking about the short-term pains and gains or they are sunk and, objectively, will end up worse off,” says Love.

TOD has a post from Nate Hagens, who has had an epiphany and renounced his previous views on peak oil and economics – There and Back Again – The Opening of Cornucopia LLC.

Dear theoildrum.com readers. Many of you may have wondered about my absence here over the last 6 months or so. Suffice it to say that I’ve had a sea change of understanding about both our situation and on the opportunities it presents. As such, I’ve made some career change decisions, which Kyle and Gail are allowing me to share with you here (based on my prior efforts at TOD). Starting May 1, I have accepted an offer from Goldman Sachs to become a Managing Partner in a new energy and resource hedge fund where I’ll be one of three people responsible for security selection and risk management. Details, and the story of how I came to ‘see the light’ on resource depletion opportunities are below the fold. Basically I feel like a kid in a candy store.

OK – here it is in a nutshell – though I used to think the main problem with economic theory was that it ignored biology on the demand side and ecology on the supply side, I now see the reality is that neither biology nor ecology has incorporated enough economic theory. Basically, my efforts at falsification of positive economics even down to the day to day micro level have come up wanting. There are more people, more wealth, more stuff and more novelty in the human sphere of influence then ever before. After all humans are separate from and above all others in the animal kingdom and as such adhere to different rules. …

First, let me say that I’ve learned an amazing amount talking with energy and ecologically minded folk on this site – they (you) are truly a great bunch of people, though in the end, I think a bit misguided about resource depletion prospects. My key ‘aha’ moment was when I was in a conversation last year with new TOD contributor Art Berman discussing the amount of affordable unconventional natural gas in the US. He has (mostly convincingly) debunked the standard view that there are 100 years of natural gas remaining by hypothesizing that it will be extremely costly to produce. His, (and others) logic is then, that we won’t be able to procure this resource because consumers won’t be able to afford the $10, $15, $20 etc per mcf needed to pay the energy companies. But guess what – technology is getting better. But much more importantly, even were tech improvements to stagnate, we can print the money to pay for it.

Some other sea changes in my thinking are:

1. The ‘decreasing returns to complexity theory’ just falls down. a)we aren’t Roman or beavers and b)complexity is needed to grow. Ergo growth feeds complexity and vice versa in a virtuous cycle.

2. I used to think reserves were more relevant than resources in oil and gas until I realized that the resource has to be found first!. There is a sequence of events here. Duh.

3. Those that think we are headed for eventual currency reform due to debt overshoot are missing three fundamental truisms: a)more debt satisfies our evolved need for hierarchy, b)of the houses with mortgages in US, in aggregate they are almost at 100% loan to value right now, meaning people NEED more debt. Aand the zinger: c) new credit/dollars require very few natural resources – some paper (forestry product), ink and machinery, most of which is already built!

4. Those attached to abstractions of the ‘trillions of yet unborn humans and other species’ (I’m thinking of that moonbat commenter Greenish), and hypothetical damage to the earth via human activity are not grounded in the reality of mortgage and car payments, and vacations.

5. I used to think markets represented liquidity only and not predictors of future earnings stream but I now realize that liquidity creates its own wealth and earnings stream. And we have nearly unlimited liquidity! (I’m embarrassed that I missed this, but sometimes we get tunnel vision)

Even though I now fundamentally believe that resources, at least on the scale of my lifetime are unlimited, that doesn’t mean that I’ve not picked up some valuable things from the contributors here over the years, like cool stuff about phosphorous, algae and cows, and by living modestly during this time, I have reset my brain for a multiplicity of dopamine surges as I ratchet back into conspicuous consumption.

Basically I’ve spent 5 years learning really interesting stuff, attempting to share knowledge with other civically minded citizens of the world, and with what was in retrospect naive optimism tried to push our cultural metric away from Veblen goods and conspicuous consumption towards something more in balance with future solar flows. What a load of crap. All on a graduate stipend of $21,000 a year. Sure I’ve had more free time than ever before in my life, met all kinds of interesting people, learned how to grow and store food, and experienced nature at a level never available to those who work 50 hours a week, 50 weeks a year. But screw all that – given the opportunity cost of money think of everything I’ve missed. …

I’ve decided that while there are plenty of resources, the distribution of those resources is likely to be increasingly uneven ((which is an opportunity if I ever saw one). I also like hot food, hot tubs and large wattage stereo systems, amongst other gadgetry, particularly if I know other people don’t have as much of this stuff. Really, let’s be honest, relative wealth is the very best kind since it’s the most satisfying. Ive figured out my minimum threshold of personal household kilowatt requirement and a graduate student salary just isn’t going to cut it. Irrespective of future electricity per capita, I’ve basically chosen the 93.5 percentile of electricity usage as ‘nates minimum’, which is part of the reason I’ve succumbed to Goldmans advances. And since I’m now aware of the hedonic ratchet, I have a plan for negotiating this level higher (in my contract) by bumping that percentile a bit each year.

Another reason is I want to leave a large nest egg to my progeny. (not for them, actually, but for the way it makes me feel now as I brag about it). Though I currently don’t have any children, my new ‘aha’ that we can print our way out of the limits to growth corner has kickstarted what I refer to as my ‘No condoms – No standards’ policy. So I’m guessing I will have over a dozen kids due in about 7-8 months. Mom get ready. Moreover, in an homage to the future of globalism I’m “outsourcing” my reproduction to the third world by awarding $500 grants for each genetically verified child conceived with the sperm I’ve sent to various third-world refrigeration facilities. In that way I intend to finally embrace the the agenda of my genes. …

Though this isn’t really public yet, my (new) colleagues were fortunate to hook me up with not only with great lawyers but great administrative/marketing people as well. We are going to securitize the future profits of Cornucopia LLC. Basically it will work like this. Given the background and expertise of everyone involved, on a ProForma basis we expect to make around 50% net in profits per year on an initial seed of $100 million. If we discount that income/trading stream back to the present, the net present value of our fund is about $500 million – we are offering people shares of this $500 million entity at a 20% discount! (total of $400 million). If you do the math, we those of on the inside are going to do very well. Hey, life is about reallocating resources away from others and the future towards oneself in the present- if you can’t beat em join em!

The Economist has a look at the European olive oil crisis, with Russia now having a stranglehold over supplies – Peak olive oil.

PEAK-oil theorists, who claim that oil supplies cannot keep rising to meet global demand, have long been dismissed as scaremongers. But in one area they are being proven right. It is becoming clear that reserves of olive oil will peak in the coming decade, as climate change wipes out most of the groves in the Mediterranean, the main production zone. The likes of Turkey will struggle to make up supply. Russia, however, expects to profit handsomely: its steppes, freed of permafrost, will soon host vast olive groves; a series of pipelines will send extra-virgin supplies westwards. Yet not all are happy. A Russian deal to pipe oil directly to Germany has caused dismay in central European countries that will be bypassed, potentially leaving salads undressed. On Thursday April 1st several leaders in the region released a statement dismissing the German move as the worst sort of “pal for oil joke”.