It’s now cheaper to invest in renewable energy than coal in all major markets around the world—and more than half of existing coal plants are also more expensive to keep running than building new renewables, according to a new report. By 2030, the think tank estimates that new renewables will be cheaper than existing coal plants in all major markets....Milestone.
The first summit earlier this month between US President Donald Trump and his Chinese counterpart, Xi Jinping, focused on the North Korean nuclear threat and trade accords between the two global superpowers. The impact of the two-day meeting will also affect fossil-fuel and related energy policy for Asia and the world more than any action by Opec or the prices set by major oil producers.
China is now the largest buyer of US oil exports, accordingto Bloomberg. And since Beijing has blocked North Korean coal imports to sanction Pyongyang for its nuclear and ballistic missile programs, China is buying US coal instead. The coal blockade indirectly helps Trump fulfill a continued pledge of “putting US coal miners back to work.” China’s economy is still dependent on the country’s coal-fired power plants, and the move to buy more US coal in support of UN sanctions against North Korea illustrates how geopolitics will drive energy policy....
As gasoline prices spike, consumer durable spending decreases. And vice versa. The widely recognized soft spot in 2011Q1 is seen here as a run up in gas prices and a decrease in consumer durable spending. We seem to be seeing a similar pattern this year, though consumer durable spending appears already to be recovering. If I have any short term hope for this economy, this graph is its parents. If gasoline prices continue decreasing, PCEDG will increase and help the economy grow. And vice versa.
The mechanism operates because gasoline expenditures are very price inelastic in the short run, and consumers are budget constrained. More spending on gasoline, less on durables, and most of those are manufactured in the US, so it depresses economic performance. This is a very demand-oriented story.Read it at Naked Keynesianism
Generally speaking, we're finally living in the world of peak oil. Or call it plateaued oil if you like, since we seem to have hit a rough plateau in oil production that's likely to continue for quite a while. This is the world of the vicious circle: when the economy gets better, demand for oil goes up and oil prices spike. This causes the economy to tank, which sends demand for oil down. Rinse and repeat. Add to that the effect of external events on oil prices (the Arab Spring, pipeline breakdowns, embargoes on Iran, etc. etc.) and world economic growth is likely to remain both sluggish and unstable for the foreseeable future, held hostage to OPEC oil production until we get serious about alternative energy. And since, in this brave new world, the price of oil gyrates frequently and erratically, it's hard to get people serious about this. If oil were, say, permanently above $200 per barrel or so, we'd be building wind farms and installing PV solar at breakneck speed. But whenever the price of Brent falls below $90 or so, everyone gets nervous and wonders if wind farms and solar arrays are really such a good investment after all.
The uncomfortable truth is that we'd probably all be better off if the federal government simply taxed oil variably at a rate that set the all-in price at $200 no matter what the market price was. That would be high enough to get everyone serious about more reliable energy sources and stable enough that investors would be falling all over themselves to fund alternative energy projects. And since it's oil price spikes that hurt the economy more than high oil prices per se, this probably wouldn't even have a major impact on growth.Read it at Mother Jones
