# Gulf Coast Disaster and the near term energy future



## Augmister (Jun 8, 2010)

Just back from the Florida Panhandle from vacation.   While we had no oil on the beach, the mood there is resigned doom.  It is only a matter of time before Florida and the Gulf Coast becomes America's toxic swamp.   Offshore drilling will be halted until it can be regulated properly and the new costs will be passed on to the consumer.   I also have no doubt that cap and trade will find approval for all the wrong reasons.  With government revenues shrinking faster than a cotton shirt washed in hot water, the public is going to pay through the nose.

Bottom line: MUCH higher energy prices are dead ahead!

What does this mean for pellets?   I would expect them to track with other energy alternatives.  With the global economic failure that will continue for many years to come, they will no doubt be taxed, even though they are a cleaner fuel.   If there was a time to stock pile and join the Pellet Pig Nation, the future is now........


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## smoke show (Jun 8, 2010)

wow
scary


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## hossthehermit (Jun 8, 2010)

THE SKY IS FALLING, THE SKY IS FALLING!!


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## vvvv (Jun 8, 2010)

mYBE THE AFFECTED AREAS WILL EXPERIENCE A LOWER DEMAND FOR OIL due to curbed boating,tourism,etc. this may result in a lesser demand for pil & lower prices?


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## TboneMan (Jun 8, 2010)

Augustine said:
			
		

> Just back from the Florida Panhandle from vacation.   While we had no oil on the beach, the mood there is resigned doom.  It is only a matter of time before Florida and the Gulf Coast becomes America's toxic swamp.   Offshore drilling will be halted until it can be regulated properly and the new costs will be passed on to the consumer.   I also have no doubt that cap and trade will find approval for all the wrong reasons.  With government revenues shrinking faster than a cotton shirt washed in hot water, the public is going to pay through the nose.
> 
> Bottom line: MUCH higher energy prices are dead ahead!
> 
> What does this mean for pellets?   I would expect them to track with other energy alternatives.  With the global economic failure that will continue for many years to come, they will no doubt be taxed, even though they are a cleaner fuel.   If there was a time to stock pile and join the Pellet Pig Nation, the future is now........



It is hard to think about these things and not scared.   

My thoughts...anything that uses energy to make or transport "energy" will be effected drastically.   So yes, the pellet industry is at major risk for much higher production and transportation costs.  While the overloads may allow some tax incentive to use pellets, the product relies on the lumber industry (you need a lot of diesel fuel to harvest wood), electricity to run their pellet plants, plastic for the bags, fuel for delivery to the customer and ultimately electricity needed in the home to run the stove.   If pellet manufacturing is still a for-profit entity, then prices are sure to raise significantly.   

One caveat to this is a co-generating pellet plant that can produce its own electricity from steam generated by burning wood.   Transportation and wood harvesting is still a major component, however.

If I had the opportunity to switch to natural gas, I'd do it in a heart beat as transportation (pipelines do most of the work) is not as great an influencing factor in cost.    Propane, fuel oil, and pellets rely heavily on transportation.


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## geek (Jun 8, 2010)

what's interesting is that the gas prices have been falling little by little, the price here was reaching to the $3.00 mark but right now is around $2.70


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## TboneMan (Jun 8, 2010)

geek said:
			
		

> what's interesting is that the gas prices have been falling little by little, the price here was reaching to the $3.00 mark but right now is around $2.70



The spill really had no effect on supply.  The price decline is related more to the problems in Europe and general stagnation in the economy.   Gold on the other hand is pushing closer to $1,300 an ounce.   

What the thread originator was implying is once the gov. gets their hands on the situation, things won't be pretty (buy gold now, it is probably the only thing that has strong potential to increase in value, that is if anyone has money left to buy it from you).  Unfortunately, you can't heat your house with it.


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## Augmister (Jun 8, 2010)

"My thoughts...anything that uses energy to make or transport "energy" will be effected drastically.   So yes, the pellet industry is at major risk for much higher production and transportation costs.  While the overloads may allow some tax incentive to use pellets, the product relies on the lumber industry (you need a lot of diesel fuel to harvest wood), electricity to run their pellet plants, plastic for the bags, fuel for delivery to the customer and ultimately electricity needed in the home to run the stove.   If pellet manufacturing is still a for-profit entity, then prices are sure to raise significantly."  



Point up!  It takes a lot of energy to make those little pellets AND deliver them.  OINK, OINK, OINK....(hint)


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## smwilliamson (Jun 9, 2010)

I heard a notable fellow say that in he would wager a 75% chance that the spill will be contained by Christmas time. That's more than 3,000,000 barrels or 165 million gallons...yikes!


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## slls (Jun 9, 2010)

If some euro nations default, oil will be cheap, too many variables to predict.


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## Augmister (Jun 9, 2010)

slls said:
			
		

> If some euro nations default, oil will be cheap, too many variables to predict.




Not true  .... Econ 101..... Oil price is calculated in dollars not Euros.  

The DOA Euro will be replaced soon with the sovereign currency (Francs, Deutchmarks, Lira, etc.) and it will cost MORE for them to buy oil because they will get less dollars when their currency is exchanged.   Do you really think they want to turn off their heat and wear overcoats inside their homes this winter?   NO.  They will whine and pay!

Energy prices will go higher due to taxes.   Cap and Trade is right around the corner......  VAT is on deck......  Federal and State Governments are BROKE.   I fully expect state tax levy's on pellet fuel soon.


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## TboneMan (Jun 9, 2010)

Augustine said:
			
		

> slls said:
> 
> 
> 
> ...



True oil is traded in $$, but the more accurate answer from an Econ 101 stand point is that if Europe's financial situation worsens, the potential decrease in demand will be what drives oil down.  For example, during the fall of 2008, crude dropped from highs in the low-$100/barrel down do the low $40/barrel after the financial markets tanked (hmmm... maybe people having to pay $5.00/gal contributed to this....hmmmm).

I agree, that the future cost energy concerns are taxes and government control.  What that is more likely to mean is oil will trade at relatively low prices but the consumer products will be outrageously expensive.  Not market but government driven.

I just don't think anyone will be able to stash enough pellets away to avoid such increase.    Heck, I have enough problems storing my 5 ton under a roof.   While I have land, I wouldn't waste it trying to store 4 or 5 years worth of pellets on it.


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## Stentor (Jun 10, 2010)

Two complications in this discussion:

1.  There is inevitable inefficiency and inconsistency in how we manage energy sources. And "we" means individuals, corporations and governments.  Although there is a relationship between costs of heating oil, pellets, gas and the rest, constraints exist.  For example, I have electricity and a wood pellet stove.  Even if I wanted to switch to coal or gas, I couldn't without making a capital investment in hardware. There are also practical limits to how much energy I can buy and store at any one time. I can't as a practical matter make use of 12 or 16 tons of pellets when I use less than 4 tons a year.

2.   Global energy demands are unpredictable and so are sources.  for example, apart from Europe China and India are using growing amounts of energy. It's a world wide issue, beyond this global recession.


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## begreen (Jun 10, 2010)

Good points, infrastructure takes time and investment to build. This is why conservation and the reduction of consumption is our best short term action item. This we can do on all levels now.


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## Augmister (Jun 10, 2010)

BeGreen said:
			
		

> Good points, infrastructure takes time and investment to build. This is why conservation and the reduction of consumption is our best short term action item. This we can do on all levels now.




I fully agree that short term, it is in our best interests to conserve and reduce consumption.   

However, make no mistake, we have an ABUNDANT supply of energy in this country but lack the political will to take advantage of our good fortune.  Oil has been the cheap and easy way out for us for too long.   We should be working NOW on those changes in infrastructure (I happen to know first hand that the nuclear industry is going full speed ahead with new development.)   The French generate around 70% of their electricity in this fashion, without mishaps!   What the hell is our problem?   P-O-L-I-T-I-C-S  
It is not often I agree with every word found on an internet blog but I invite you to look here, at another view:  http://market-ticker.org/archives/2385-Energy-Are-You-A-Pig-And-A-Bigot.html

And of course, wood pellets certainly have their place in our energy independence....


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## Stentor (Jun 12, 2010)

It's not just "politics" but economic self-interest sometimes.  Sure, there are lots of people who are concerned about the environment, risks of the old style nuclear plants, etc.  But the real heavy hitters include the industry and lobbying groups who depend on current energy sources. Think about groups that need the jobs, tax revenue and other money associated with something as simple as gas stations if a lot more electric cars were on the road.

We have the tricky problem of making it more profitable and socially beneficial to change than to stick with the old way.


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## tjnamtiw (Jun 20, 2010)

Augustine said:
			
		

> Just back from the Florida Panhandle from vacation.   While we had no oil on the beach, the mood there is resigned doom.  It is only a matter of time before Florida and the Gulf Coast becomes America's toxic swamp.   Offshore drilling will be halted until it can be regulated properly and the new costs will be passed on to the consumer.   I also have no doubt that cap and trade will find approval for all the wrong reasons.  With government revenues shrinking faster than a cotton shirt washed in hot water, the public is going to pay through the nose.
> 
> Bottom line: MUCH higher energy prices are dead ahead!
> 
> What does this mean for pellets?   I would expect them to track with other energy alternatives.  With the global economic failure that will continue for many years to come, they will no doubt be taxed, even though they are a cleaner fuel.   If there was a time to stock pile and join the Pellet Pig Nation, the future is now........



there are 30,000 wells out there that have been working for many, many years and now because Obama has done nothing for 2 months to create his needed 'disaster' to further his Cap and Trade agenda, we suddenly have to idle all the wells.  Man, we are the dumbest people in the world!


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## webbie (Jun 20, 2010)

I'm going to move this to the green room......

BTW, politics IS economic self interest. I am firmly convinced that almost no matter what our leaders do it will take individual change and the want to do so to make a difference. Our leaders generally reflect what we are. Bush and Reagan were both "oil is the way, we Americans don't have to save", while Obama talks a good game and does do some things (CAFE, etc.) but not nearly enough to make up for the 30 or 40 years when we should have been headed in a different direction.

As long as a large percentage of our populations - AND the oil, gas and coal interests and related lobbyists...continue to push for "we should be able to use as much energy as we like" agendas, we are pissing into the ocean - or more accurately, spewing oil.

If you want to see it in a nutshell, with a little comedy and sarcasm added, check this out....
http://www.thedailyshow.com/watch/wed-june-16-2010/an-energy-independent-future

That pretty much sums it up. Fool me once, I'm the fool. Fool me eight times......something is rotten at the core.


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## jharkin (Jun 21, 2010)

With all of this going on one of my very left leaning relatives got me to reading about the peak oil theory.  Not the first Id heard of it but I never really read into it before.

Much of it is rather alarmist, certainly, but I think even if you don't buy the idea that technological civilization will basically start to collapse after oil production peaks within the next 10years... I think its pretty much ha guarantee that the cost of energy (and thus everything) has nowhere to go but up.... way up.


Time to stockpile a few more cord.


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## begreen (Jun 21, 2010)

All of the resources on this spaceship Earth are finite. Oil won't run out tomorrow, but the cheapest, easiest to get stuff is running out quickly. In the meantime, India and China's middle class grows. And world population continues to increase, accelerating the decline. Oil from deep waters and shales are now being extracted, but at a very serious environmental cost. And we have just begun to go after the hard to get stuff. If we want clean water to drink and fish to eat, then we need to set some rules established pretty quickly.


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## dougstove (Jun 21, 2010)

In our economy dollars (or euros or yuan) are now primarily a means to exchange energy.  We could easily exchange watts or BTU, since most of what we consume is embodied energy.

A carbon tax makes sense on multiple levels;  we want/need funding for core government services.
We now we take the funds largely through job-inhibiting income taxes and other payroll deductions, which encourages practices that spend energy to save expensive labour.
A tax on carbon based energy instead of income tax would make labour relatively cheaper compared to energy, with pervasive beneficial effects.  It would be worth paying for high skill labour to build better buildings, for example, instead of shoddy energy wasting buildings.

I sympathize with honest libertarians or anarchists who dream of minimal government, but have no sympathy for the hypocrisy of demanding government services while resisting reasonable taxes.

A world spanning military, a social net, or low taxes.  Pick any two.  Or, the current option of running up massive deficits to fuel consumption and then conducting a slow-motion debt default through currency devaluation.


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## Meneillys (Jun 21, 2010)

I don't think this is going to make one bit of difference in the pellet price this year. The market is flooded with pellets right now and manufactures can't get rid of them so I feel that it is going to be a good year for the consumer once the price war starts.


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## smwilliamson (Jun 24, 2010)

In a store yesterday and heard someone say that ocean water is now going for $4.00 per gallon.


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## slls (Jun 24, 2010)

Why no more new nuclear power plants is lack of regulation. Three mile island had trained personal that never run a actual nuclear power plant, they had no idea what they were doing. Now after the fact the feds have made it a regulation that there needs to be someone, that ran a nuclear plant to be on duty. Can't trust private industry to do the right thing, look at BP, cutting corners.


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## Fsappo (Jun 24, 2010)

The way pellets fluctuate with the price of crude is why I use wood for alternative energy.  In regards to this year, with the over supply of wood pellets..the only folks who "May" get hurt are the ones who think they are being smart by waiting to see if pellet prices get lower than they are now in the late summer early fall.  If you can afford to buy this winters supply and think you are outsmarting the system by waiting, you certainly deserve paying higher prices in the fall if thats the way they go.


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