Alternative Energy in the supply and demand world of oil
In the last 75 years we have experienced the greatest shift in the source of energy ever known, comparable perhaps only to the discovery of fire. In the first half of the twentieth century, coal maintained its preeminent position as the major fuel source for the industrialized world. The discovery of large amounts of oil in the Soviet Union, the United States, and above all, the Middle East, along with the comparative ease of oil extraction, its extraordinary range of uses, and its easy transportation, led to profound change in fuel sources.
During the 1960s oil replaced coal as the primary energy source for the industrialized world. This shift accelerated industrial development worldwide, thus further increasing the demand for oil. Yet, despite the magnitude of the increase in demand for oil, which rose from 3 million barrels a day in 1925 to 60 million in 1977, nearly half of the world’s energy consumption was derived from wood, peat, and dung, the so-called noncommercial fuels.
Geothermal Energy, why not use volcanic activity?
Competition for available supply is likely to continue to be intense and war over access to vitally needed supplies is a continued problem because of situations like Ukraine. There remains an adequate supply of alternative fuel sources in the world and the access to the worlds oil supplies will begin to weigh less of a concern as new energy sources become more popular.
Geothermal is a very tiny piece of the pie at under 1 %. Coal energy generation in Texas is at 20 % and Wind is also at 20 %. If we lived in Iceland we could rely upon volcanic activity to save the day but unfortunately we don’t have this perpetual energy source here in large quantity.
Nuclear energy remains a very important alternative at a whopping 10 % of our Texas energy generation. Nuclear is a form of geothermal energy. The earth was created using nuclear geothermal forces that still exist in the earth today as volcanic activity. Geothermal energy found in the earth and ocean sources is just not a great option for Texas. Texas will likely continue to increase their nuclear generation as we find safer ways to do it and depending on the political tide. Nuclear is controversial but when considering the pros and cons and using good research it is still an option on the table.
Solar is the window dressing as of late as solar sales have skyrocketed in California and they seem to be making moves into Texas. Solar relies upon natural gas production to fill in for days that aren’t sunny and during peak demand periods. Inflation and energy demand have caused prices to rise with both electricity generation, gasoline and diesel fuel.
Natural gas plants created for the purpose of helping solar can be a conundrum because they aren’t being efficiently utilized. This can add to the generation cost in a way that is not great for the consumer.
You would think that with such high prices with electricity as of August of 2022 there would be a high demand for natural gas. In reality natural gas has fallen way below the forecasted demand. Natural gas is expected to be about half less in demand than what it was forecasted to rise between 2022 – 2025. Unfortunately this lack of forecasted demand has not effected current electricity prices to drop much at all.
A big reason natural gas is on the decline in demand is because of the high gas prices causing people to switch to using coal and oil. Weaker economic activity is also playing a major part in why natural gas has lost a significant amount of demand.
Don’t forget that the war in the Ukraine has caused a severe spike in natural gas prices as countries fight over LNG to keep running as a country. Electricity prices would not be so high if these factors weren’t in play. Each factor contributes to the high electricity prices because natural gas makes up 47 % of all electricity generation in Texas as of 2022.
In 2017 the natural gas spot price was around $3.50 but as of 2022 it is sitting at $8.33. No wonder Texas electricity rates are so high right now. There are so many factors at play right now. Many are trying to save their money during inflationary electricity prices as well as inflation in general. This reduction in the use of energy is what is setting things up nicely for lower electric rates in the coming months. Hopefully people will get to lock in to affordable energy contracts in the near future but unfortunately the grocery bills are likely to still remain high.