The First Atomic Age: A Failure of Socialism 1

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  1. A fascinating piece. I agree that there are some changes you could make, but it has withstood the test of time remarkably well.

  2. It is worth noting that many of the decisionmaking individuals involved at the inception of US commercial nuclear power were Old America industrialists who adhered to the classic “Bigger is better” dictum.

    I wonder how things would’ve turned out had people closer to today’s Silicon Valley high-tech types with their “Small is beautiful” been part of the process instead.

  3. It was actually quite prescient for the explosion of new nuclear companies happening today. I think you can take credit Rod for doing new nuclear before it was cool.

  4. Rod,
    What do you think happened in the case of General Atomic? Going by the history I’ve read it seemed to me starting with the TRIGA, they were the most entrepreneurial of the companies, reaching out to potential customers beyond the traditional electric utilities and forming Scallop Nuclear with Shell Oil. It seemed like they had a very Californian Silicon Valley vibe to them, and things were going great. Then, 3 mile island happened and that entrepreneurial spirit just up and evaporated.

      1. What’s strange about that is that armed with HTGR Shell could have had a cost advantage on oil refining that none of its competitors could possibly duplicate. Had they moved forward they would have become the largest company in the world. Nuclear may compete on electricity but on trucks, automobiles, airplanes and PLASTICS there is no replacing oil. Any plot of mass or volume energy density of the various energy storage media can show you that. In a decade history will look back at the Shell Nuclear decisions and regard them as some of the biggest blunders of the 20th century.

        1. @Cavan Stone

          Those decisions were made when I was in middle school. From a business point of view, they were most likely correct.

          Do you have any idea how many trillions of dollars in revenue have flowed into Shell’s coffers since 1973-74, partly as a result of the perceived scarcity of energy?

          (During period of 2005-2014, Royal Dutch Shell’s cumulative revenue was $3.9 trillion or nearly $400 billion/yr. With fuel prices in the toilet (from a supplier’s point of view) I suspect its annual revenue will be closer to $220 billion this year.)

          1. yeah, what Rod said. Let’s not shed a tear for Royal Dutch Shell – they ARE one of the biggest companies in the world, and have been for decades.

            I just saw ‘Bridge of Spies’ and since every bit of history I know is from movies, it occurs to me that the cold war, and the drive to develop more powerful and H-bombs must have been a main driver in the government near-monopoly on information about nuclear power. Anything at all that was seen as giving an edge to the Soviets in that arena was kept close to the vest. A nuclear industry free to follow it’s path through the market would have effectively aided the Russians in development of their own nuclear industry, which would in turn mean more energy, more nuclear scientists and facilities, processing advances, miniaturization, applications, etc. It was just too close for comfort to the weapons industry for US cold warriors to loosen their grip.

            Not saying it makes sense in retrospect, but the cold war distorted lots of decisions. (I just looked at a house for sale in Portland Oregon that has a concrete and steel bomb shelter in the backyard…just saying, people went a little bonkers in the 1950’s)


          2. Rod I can’t comment on 1970’s Shell but take a look at current day Shell. In 2015 Shell derived $243 Billion in revenue from sales of refined petrochemicals which cost them $236 Billion to produce. They received $21 Billion in crude oil sales which cost them $15 Billion to produce. Both the market size and the costs involved with refined products are 10x larger than those for crude. I will concede that their margin on crude sales is larger, but I think it’s clear from the numbers that refining crude to finished product is their prime focus.

            What this means is that Shell should be more concerned about the Crack spread difference between the price of crude and the price of refined products customers are willing to bear than the price of crude itself. It should be clear that the ideal situation for them is a high price of gasoline, a LOW price of crude, and a low cost to transform crude into gasoline. What they should want is a scarcity in oil refineries NOT a scarcity in energy.

            In its current state, it would not be in the best interests of their share holders to oppose high temperature nuclear. In fact had they are monopoly on high temperature reactors now like they had back then it would confer into them an insurmountable cost advantage over their competitors that would simultaneously grow their margins AND market share.

            I’m certain things were different in the 70s but now all the “experienced” executives still with the company should be kicking themselves for killing Scallop Nuclear.


    1. Babcock and Wilcox built Three Mile Island.

      General Atomics built Fort St. Vrain. The company still makes some money selling reports about paper reactors (which is about all they’ve done in the nuclear field since the company was purchased by Neal and Linden Blue in the mid-1980’s), but why should they care about nuclear power when manufacturing Predator drones is much better business these days.

      1. Brian,
        They should care about nuclear power because provided they can get the full lifecycle cost cheaper than coal there is a huge amount of money to be made. For example, using Robert Hargraves cost estimates for a Molten Salt Reactor (MSR), using MSR for process heat in oil refining would increase the value of Shell by ~$10B. Doing so with Chevron, would also in another ~$10B of value created. Replacing all the coal plants in the United States with MSR while pricing the electricity at the full lifecycle cost of the best competitor, combined cycle natural gas, would create more value on cost savings alone than to total market cap of the 3 largest companies, ExxonMobil, Google, and Apple combined, and this ignores all the benefits created by the pollution mitigation.

        1. Cavan – If it’s so cheap, easy, and profitable, then you do it. You’ll be a billionaire.

          Anybody can sit around on the internet and use naive estimates to sling darts of criticism at corporate decisions. Actually doing this stuff that you say is so wonderful requires real effort, risk, talent, and determination.

          It’s the difference between science and science fiction.

          1. Granted I don’t have the experimental proof of my assertion yet, but you asked why should GA care about nuclear and I answered with a credible theoretical prediction that their technology may be worth something significant. I’m curious what answer were you expecting? Do you beleive the correct answer is that GA should just condemn all the research in this field to the dustbin of history?

          2. Cavan – Yes, yes, but I’m trying to explain to you what GA is like today.

            The best thing that GA could do is sell most of its intellectual property (and there is quite a bit of it) to a company that actually wants to build new nuclear plants.

            The owners know that while it still owns this information it can still make trickles of money selling yet more reports on paper reactors to the DOE.

  5. In related news, tax credits for unreliables have been extended for a further 5 years. That’s $25 Billion for this period.

  6. I admit it’s a petty peeve, but I take issue with your labeling the way nuclear energy was deployed as “socialistic”. If anything it was the exact opposite, as (by your own reasoning) it alienated most of society from the decision process. In that sense a socialistic approach is exactly what we need: people should be educated and empowered to participate in the construction of energy policies.

    1. @Helio

      21 years ago, when I wrote that piece, my understanding of the meaning of “socialism” was based on examples of central planning like the Union of Soviet Socialist Republics (USSR).

  7. Thank you for posting this. It is a much more extensive answer to my question in the other article than I had any reason to expect.

  8. Maybe I’m just glossing over the details when I ask this but France (and others) implemented their nuclear programs under socialist programs. Just focusing on France, though the Messmer plan was criticized for being autocratic, the results came out to be a strong success. How does one reconcile “failure” of an organizational system approach vs. human failures / mistakes made within that scope? Was it the people or the process or a little bit of both?

    As an aside, the way things are going, capitalism is having a hard time stepping up to the plate all by itself to support nuclear. While fingers might be pointed to partly blame artificial factors that benefit competition, is it easier to change the rules for all the competition or ask for similar benefits the competition is enjoying?

    1. @JasonC

      Asking about France’s nuclear build out is a legitimate question.

      I carefully did not refer to it as a success, though it did result in several decades worth of having a grid that was virtually fossil fuel and CO2 emission free.

      Some of the problems associated with achieving that situation are starting to become more visible. It’s been more than 20 years since the French have completed a nuclear plant at home; I’m not positive, but I think that is also true for their international efforts.

      They are struggling mightily with all of their EPR projects, though the two units in China seem to be progressing reasonably well.

      Their recently elected president has made numerous public statements, both before and after the election, about reducing the nuclear energy portion of the electricity supply down to 50%. Apparently, that position is not terribly unpopular or he would not have been elected in the first place.

      France also fenced nuclear energy into a small niche in the energy supply. They have a small fleet of nuclear submarines, but no nuclear powered shipping and no nuclear process heat to speak of.

      As I tried to explain in my article, I can envision an almost unlimited scope of innovation for fission. Socialism can appear to be successful within certain bounds, but it cannot achieve the kinds of innovation that are possible in a more entrepreneurial economy.

  9. With the current global problems of global warming including ocean acidification this should be a prime time for nuclear power to be making a resurgence.

    Given that the power sources being built today are subsidized windmills and solar cells, it does appear that nuclear energy is being killed by socialism.

    The dearth of new nuclear power plants being built and the early shutdown of older nuclear plants looks to be a failure of the free enterprise system.

    I don’t think energy resources are being allocated in the optimum method for the best interests of the consumer.

  10. JasonC makes a very interesting point. Rod may I suggest a post about What is different about France that enables most of its LWR to survive while more than I prefer are being VOLUNTARILY (at least ostensibly) shutdown by plant owners in the United States. This fact does seem to contradict your socialism destroyed nuclear hyopethesis. While our discussion on SI units on how certain companies that have been huge collectors of government largess exhibit economically inefficient behavior appears to support the anti-socialist hypothesis. The rabbit hole gets deeper.

  11. Perhaps the ineptitude of central planning is just evenly spread over there such that each energy source actually competes on a level playing field maybe?

  12. Very insightful article. Still has fresh ideas. I wonder if the term “bureaucracy” might replace “soacialism.”

    I see how private ownership could lead to better innovation. I also see how governments unfairly bailed out of some failing government run companies forcing new companies to inherit a nuclear industry that was developed mis-managed by bureaucrats. This locked in a regulatory system that was also led astray.

    We see the lack of expert opinion circulating. It is unfortunate that mis-information is the new normal. Otherwise we might be able to get back on track. Considering that your views still hold up it does appear as though the renaissance we have been waiting for will be in Gen IV reactors of the SMR variety.

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