If Indian Point Nuclear Closes, Plenty of Profits (for natural gas suppliers)
Matt Wald of the New York Times has finally figured out why there is such a strong push from well connected political types to close the Indian Point Nuclear Power Station. Unfortunately, he and his editor have chosen to put that answer at the very bottom of his recent article titled If Indian Point Closes, Plenty of Challenges.
When the demand for natural gas increases, the balance between supply and demand shifts in favor of the sellers, so price inexorably increases.
Here is the closing paragraph of that article. It should raise alarm bells for anyone who is a power purchaser instead of a power seller. That description applies to the vast majority of us; part of the challenge is that it only costs each of us a little while concentrating the spoils in the hands of a few victors.
Closing the Indian Point reactors would, however, hardly be gloom and doom for everyone. Any company that runs a generator in downstate New York ends up selling its output at a higher price, and would share in the $1.4 billion a year that Con Edison says its customers will pay if the nuclear plant closes.
Actually, Matt only mentioned a minor segment of the potential beneficiaries and also probably underestimated the windfall that the beneficiaries of the closure will share. That is because he neglected to mention that nearly all of the generators that would run to replace the output of Indian Point will be fueled with natural gas.
When a generator runs on natural gas, 80-95% of the levelized cost of electricity from that generator comes from purchasing fuel. Stated another way, 80-95% of the money paid out by the generating company shows up as REVENUE on the ledgers of the multinational oil&gas companies that sell fuel to the power stations.
When the demand for natural gas increases, the balance between supply and demand shifts in favor of the sellers, so price inexorably increases. In other words, the estimated cost to electricity customers might be $1.3 billion, but what is the cost to natural gas customers who use the fuel for home heating, commercial heating, fertilizer and chemical manufacturing and industrial production?
Just three short years ago, the US Department of Energy’s National Energy Technology Laboratory issued a white paper titled Natural Gas and Electricity Costs and Impacts on Industry that did a good job of highlighting some of the risks to the entire economy of an excessive dependence on natural gas.
Within months after that report was issued, the economy tanked, demand fell by about 5-10% and natural gas prices dropped by a factor of 3 – from $12 per million BTU to $4 per million BTU. They drifted down to just a bit below $3 per million BTU before rising back to their present level at about $4 to $5 per million BTU. The oil&gas suppliers are not happy with that level; they want to return to the “good old days” when they were pocketing a much larger share of everyone’s income.
Cuomo’s pressure against Indian Point, Shumlin’s pressure against Vermont Yankee, and Patrick’s pressure against Pilgrim are all aimed at the same goal – enriching their supporters who love the profits from expensive natural gas and expensive, taxpayer-supported alternative energy developments.
“The steps we can take are the steps we have taken in that we are very involved in commenting in the re-commissioning process at the federal level, in both the facility down in Plymouth and the one up on the Vermont line,” Patrick said.
But activists want the governor to take a firmer stand because of the dangers of nuclear power.
“I absolutely think we should be shutting down every nuclear power plant in the United States,” said John Rosenthal, an anti-nuclear activist who fought construction of the Seabook Power Plant in New Hampshire in the 1970s.
When I saw that John Rosenthal was one of the antinuclear activists pushing Governor Patrick to question the continued operation of the Pilgrim nuclear plant, I dredged up a video that I produced over a year ago to share some information about who he is. I think it supports my contention that the battle against nuclear energy is often led by the very wealthy “Establishment” whose wealth is often built on a complex foundation that rests on fossil fuel money. We have, after all, spent the past 150 years in the Hydrocarbon Age.
Como and Greenpeace; Caterers of Fear instead of Fact.
I’d really like to see in everyman’s black and white the EXACT reason anti-nuclear actitivists and governors have to shut down and scrap these plants as was done at the virtually completed Shoreham here on Long Island? It boils down to plain Fear (of what Might happen), doesn’t it? Can you use Fear as a pretext to shut down a longtime facility without a worker/public casualty record? Can you use Fear to raise electric rates, increase Co and throw people out of jobs? On what historical mega-death nuclear incident pretext does the Gov’ and anti-nuclear have outside catering to Fear? Are they using Fukushima as an totallu incongruous and unrelated excuse when at date it hasn’t killed anyone or caused physical damage outside the plant’s gates? Are anti-nuclear activists making nuclear a special “moral” case that gives reams of other more “mundane” toxins and emissions with long known greater pernicious effects a pass? Really, Como and Greenpeace, upon what do you rest your case to shut down nuke plants besides gullible phamtom Fear? I’d like to see Indian Point go down fighting at least by slinging those questions!
James Greenidge
Who wants Indian Point to close? Democrat Andy Cuomo, that’s who. Are you still proud to be liberal like Cuomo? I’d be ashamed.
Is there a broken record here?
Everything is not strictly a black/white, Republican/Democrat partisan issue.
Please bring something different in your next comment here, Ioannes.
The EIA Natural Gas Weekly Report http://www.eia.gov/oog/info/ngw/ngupdate.asp indicates quite consistently the price fluctuates according to electrical power demand. Just as oil prices increase in winter (home heating oil) and summer (driving), now natural gas can increase in the winter (heating) and summer (electrical power generation for air conditioning). A great thing for natural gas producers. At least with natural gas, the amount stored is a much larger percent of monthly usage than oil, but supply and demand still rule….
Joel, Ioannes is a self proclaimed Christian apologist thus to him everything IS black and white.
Rod – I know you have a challenging day job, and get up early to research and write this excellent blog. But I want to challenge you to coalesce the commentaries you have put together over the years on this topic into a book.
I will deign to offer a title – “Smoking Gun – the unholy marriage of fossil fuels and green power politics”.
A published book is the entry ticket that qualifies you as an expert in the eyes of the mainstream media (unless you are on their shortlist as an anti with a penchant for alarmist soundbites, then no qualifications are necessary).
The content of today’s blog needs a wider platform for dissemination to the general public, many of whom will immediately grasp that it makes perfect sense. You are in an ideal position to speak for small modular reactors and atomic energy in general, but first must “qualify” in the eyes of the media decision makers before they grant access to their bully pulpit.
When the book comes out, I would like to be at the first signing party in NY. To guarantee media coverage, hold it in front of Indian Point Energy Center. I know Wheeler will be there, Maybe Gwyneth and Bill Tucker will show up too – just don’t expect Andy C!
@Atomikrabbit – I think you are a mindreader.
Sadly, in regards to Ioannes, he seems to believe that Christianity lines up directly with a specific political party.
In today’s America, it seems to me that far too many issues end up getting politicized and sides get taken solely for the sake of supporting a particular party or due to the perceived strategic effects that taking that side will have on the next election rather than actually basing a position on an actual analysis of that particular issue. I feel like this is a huge (if not the primary) reason for the US Government’s sometimes apparent ineffectiveness.
For 2 particular examples of this, see the whole Jaczko/Reid Yucca Mountain saga and now this present backup plan for the impending 8/2 debt crisis devised by Mitch McConnell of giving President Obama the authority to raise the debt ceiling essentially for the purpose of “washing the Republicans hands” of that decision so as to hopefully not hurt their chances in the 2012 election if that is shown to be a bad decision.
Rod has stated on several occasions that he doesn’t consider himself to be part of a particular party. I feel that Rod does a good job of evaluating issues for their individual merits, and I feel that America’s government could be much more effective if more politicians felt empowered to do the same.
Perhaps a legitimate 3rd party emergence could allow some of that type of empowerment?
I think that excellent blogs could translate very well to books.
I had a thought recently that my not-yet-implemented nuclear blog idea could possibly translate into a nice book.
There any way to invite a pro-nuclear politician to drop by this blog for a look-see? Time is running out fast.
James Greenidge
I suggest I don’t just stick to nuclear though, and begin the book with the story of how Big Oil bankrolled the Sierra Club’s early campaigns against hydroelectric dams.
For anyone who selflessly wants to help the pro-nuclear cause I recommend sending e-mails, commenting on news-stories, calling talk radio shows. It is having an effect, and most of the time, the other people there are terribly misinformed and oppose nuclear only because they’ve been brainwashed by Greenpeace et al.
Some quick calculations about what it would (at minimum) take to replace Indian Point with solar:
Spain’s Gemasolar has a nameplate capacity of ~20MW, molten salt storage to supply electricity 24h (at least on sunny days), an expected avrage annual capacity factor of 60%, and use 1,85 km^2 of land.
Indian Point is 2GW, 90% capacity factor and use about 500*750m or 0,375km^2 of land.
The land use for Indian Point is coarsely estimated with Google Earth. I’m unsue about how much of the nearby industrial area belongs to the power plant.
To get same average power you would need (2000*0,9)/(20*0,6) = 150 Gemasolar, at ~5 times the area for each or 750 times the total area. This is ~280km^2, or four and two thirds Manhattan.
That’s not accounting for upstae NY probably being less sunny than Andalucia, and for alternatives on longer period of cloudy days.
Sending a link to this site’s address could work if the politician were willing to take a look.
Speedy – Please don’t waste your breath.
If Indian Point is closed down, I’m sure that New York will simply do what SMUD did with Rancho Seco (video). They’ll throw up a few solar panels, claim that solar has “replaced” nuclear, and call it a day. Meanwhile, burning natural gas will make up the difference.
My only question is the following: Is the lobotomy a mandatory requirement for moving to the Sacramento area (it would go a long way to explain the California State Legislature) or is it just a “good idea” so that you can get along with your neighbors? 😉
No worries, I live on the other side of the atlantic, so it’s not my problem. At least not in the first order, but CO2 emissions are eventually everyone’s problem.
I did the calculation just out of curiousity, and I though I might as well share it.
I’d suggest an alternative title:
“Smoking Gun – How Fossil Fuel Money Subverted Environmentalism”