It Can Be Done, And Quickly

As this article from the NY Times about Portugal makes very clear, transition to a renewable energy regime can be accomplished, and very quickly at that.

"Today, Lisbon’s trendy bars, Porto’s factories and the Algarve’s glamorous resorts are powered substantially by clean energy. Nearly 45 percent of the electricity in Portugal’s grid will come from renewable sources this year, up from 17 percent just five years ago."

Apparently, they have hit all the right buttons: grid modernization, emphasis on wind and hydro, two-way power flow to and from customers who have rooftop solar panels.

Yes, all it really takes is political will.  The rest is just money (and we know what that is really worth..).

By contrast, the real costs of relying on fossil fuels are:

1. Massive geopolitical risk, which translates into the cost of maintaining an enormous "defense" establishment and occasionally fighting energy wars, as we are doing right now.
2. Environmental degradation and climate change.
3. Losing our technological edge as other countries and entire continents (e.g. Europe) move towards more sophisticated energy regimes.  For example, the Portuguese electricity company EDP already owns wind farms in Iowa and sells electricity to the Tennessee Valley Authority.  Instead of moving ahead, the U.S. is dumbing-down.

In the 1950's and '60s rich American tourists visited remote villages in poverty-stricken Spain and Portugal, frequently snapping pictures of themselves riding donkeys and mules.  The poor locals were befuddled, since they would gladly have exchanged their picturesque animals for a tractor or - gasp - an automobile, if they could afford it.

I fear that in 2050 rich Spaniards will be visiting West Virginia or Utah to pixelize themselves driving ancient gasoline pickup trucks, which the locals would gladly exchange for a 300-mile range electric model, if they could afford it.

Global Warming? Nyet, Nyet..

No, there's no fossil-fuel induced global warning.  Absolutely not.  The 100 degree Fahrenheit (38 Celsius) temperatures in Moscow (25 F higher than normal, hottest since record-keeping began 130 years ago) is a direct consequence of sunspots, the tilting of the Earth's axis, too much vodka on the air and cow farting.

Well, OK.. there is some fire where the smoke is coming from and it is making life difficult for Muscovites. 

Photo: The NY Times

The Kremlin Shrouded In Smoke

The record heat and drought are threatening Russia's wheat production, prompting the government to suspend all wheat exports for a short period of time and setting off gyrations in futures markets.

But, hey, Muscovites should enjoy the haze since it protects them from sunburn;   as for the rest of us, we can all eat cake.

The Real Cost Of Oil

It is estimated that a total of 5 million barrels of crude oil have leaked from BP's Deepwater Horizon site, making it the worst oil spill in history.  And as of last night, the company's market capitalization was down a total of $62.5 billion when compared to before the disaster.  The loss was even bigger before the rebound, at $106 billion, see chart below.

Price of BP Shares

So what's the cost of a barrel of oil? For BP, it's definitely a case of crying over spilled crude: doing the division it comes to $12,500 per barrel - and it was even more before the bounce, at $21,250/bbl.

If we go a bit further and amortize the loss over BP's entire crude oil plus equivalents production for a whole year, it comes to $43/bbl.  And if we go all the way and amortize the market cap loss  over their entire proven reserves, it comes to $3.40/bbl. (Data from BP's 2009 Annual Report.)

Choose the number that best reflects "reality" in your view - it's only money, after all.  However, it does put a number on one of those "external" costs for oil.

Now... what's the cost for the Iraq and Afghanistan wars?... hmmm.