Scary stories from New England about the fuel crisis coming this winter.

There at least, they have some perception that the crisis is coming, and the market forces fairy is not going to wave a wand and make it all better. New England is well known for being especially dependent on oil for home heating, and naturally there is no immunity from price hikes. One retail heating oil dealer says she expects a typical household delivery that cost $500 last winter will climb to at least $850 this winter .  At four deliveries on average that’s over £700 or 70% up on last year. The situation in Maine, where 80% heat with oil, is particularly dire: Maine Sen. Olympia Snowe, the panel’s ranking Republican member, said high oil prices are a matter of life and death. She said parts of Maine could literally "become uninhabitable" for many this winter
A fuel dealer noted how she has become a de facto social services agency  It is very tough looking into the eyes of these customers when they ask me what I think they should do….. I don’t know what to tell them. For the first time I think some of my customers are going to have to choose between main essentials like groceries, gasoline, warm clothes and heating oil just to pay their bills

Can UK consumers cushion themselves?  Well certainly they won’t be as desperate in their choices as those in the US, but the impact on their spending on anything else is going to be huge. The idea that the Bank  of England  wants to cure inflation via interest rates is laughable and dangerous when the main inflationary cause is energy. The Bank wouldn’t put up rates if taxes rose, why does it think that upping interest rates due to similarly non-discretionary spending as energy can do anything except push the UK economy over the edge?

Hate Something: Change Something

To call those responsible for energy in the UK total incompetents leaves us open to a libel suit from the Royal Society of Complete Incompetents.

An organisation that does have it’s head screwed on is the National Endowment for Science, Technology and the Arts which has just released the kind of bleeding obvious survey that the government should listen to. 

The report says that while UK policy has responded to some degree to the threat of climate change the Government has not yet fully embraced the importance of mass behaviour change to respond to it.

Campaigns should avoid being ‘miserable, gloomy and bleak’ (despite the potentially catastrophic consequences of not acting), instead emphasising that taking action on climate change is ‘normal’ – encouraging more people to engage with it.
•     Campaigns should recognise the importance of fairness – i.e. Everyone needs to be seen to be doing their bit, including government and industry.
•     Campaigns should be personally relevant. Campaigns should relate to our environment, not the environment and should use insight from commercial ads to engage emotional responses.
•     Campaigns should identify the opportunities for individuals in taking action. For example, consumer research shows that millions of people desire a lower-stress, less consumption orientated lifestyle; this could form one basis for a social marketing campaign.

How to be in two places at once.

Countless cubic metres of hot air surround Thursday’s launch of the UK’s Renewable Energy Strategy and they weren’t emanating solely from the government, although any speech which includes a promise to make Britain the Arabia of Wind Energy has to be approached with caution. As we predicted in our preview, the government succeeded in making an unintended discovery that would be vital to the introduction of quantum energy: how to be in two places at once.

The two positions are nothing new: Climate change is vital to the survival of the human race, but don’t worry your pretty little head about actually doing something:  Have yet another consultation and waste another two years or so.At the same time, we shouldn’t worry about any efficiency measures and you don’t have to worry about smart metering any time soon either;  don’t worry about using less energy, just keep paying more for it.  But that’s not our fault.

There are positive developments surrounding planning consents, but what this may mean in actual delivery we’ll see.  Greenpeace said If the government actually means it this time, then we could create jobs, reduce our dependence on foreign oil and use less gas, and in the long run our power bills will come down,”  said John Sauven, director of Greenpeace, the environmental pressure group. “It won’t happen without action.

But the usual hot air came from the reporting of the story by the conventional wisdom zombies, otherwise known as most UK journalists. Increased costs! Ugly Windmills! Higher Fuel Bills! Snooping Smart Meters! Government Interference! etc etc.

What’s far worse than the government trying to postpone the problem, is the CWZ’s looking at current energy prices having a solution.  If only, they say, would the Saudis, Russians, Iranians, Brussels Bureaucrats, Speculators, Greedy Oil Companies, Environmental Plotters etc etc stop their actions then we can return to the past. Just as any of these guys aren’t providing causes, neither can they provide solutions.

Obsessing about alleged villains is a distraction from the real issues. A lot of people are still in the angry stage, and they will stay there unless both the government and media start helping them to confront difficult issues in an adult way. We cannot just wish high energy prices away like spoiled children. There are many causes and many solutions of the hole we’re in. Chickens don’t necessarily come home to roost all at once. Every few months there has been a little cheep over the past thirty or so years, and for the most part no one paid much attention, ourselves included. But now the chickens are all here. Stop clucking and start acting.

With friends like these, who needs any enemies?

Datamonitor recently published a  report on UK SME consumer behaviour.    The highlights are The majority of SME buyers spend less than £5,000, and one quarter of SME buyers contract via a Third Party Intermediary.

The report was published a month ago, and assuming the research was carried out earlier this year, we must point out they won’t be paying £5K for much longer.  A small office, retail unit or restaurant would easily pay £5K solely on gas these days.  And we mean small 5000 therms or 150,000 kWhs or so.  The rule of thumb is that electricity costs twice as much as gas (which explains why energy consultants concentrate on it).  3 or 4% is the usual commission, although we’ve heard of 8%. That also  explains why energy consultants encourage multi year deals with suppliers, and or multi year end user agreements that ties you  to them for year.  Energy consultants are either paid flat fees up front, or paid monthly on actual use.  That does explain of course why energy consultants often don’t recommend any energy saving measures –  they have an incentive for you to use as much energy as possible.  With friends like these, who needs any enemies?

We will shortly be adding pages to the site which tell exactly how to buy SME gas and electricity, how to cut energy use, and how to ensure the price is the best possible.  It won’t cost a penny.

Not just an energy crisis anymore..

What’s happening?  The credit crunch came first, but Northern Rock and all that is, well, so 2007.

It’s the energy crisis now.  And it’s even scarier because some people, especially most of the UK political class, just don’t get it.   

Using yesterday’s tools (interest rates) to solve an energy/financial crisis completely different from the last one is a sign of the lack of thought about the current crisis. This is like a slow motion train wreck.

Two sides:  Alistair Darling on Sunday:"It’s important that we don’t allow inflation to become entrenched here at home," Darling told BBC television. "Pay awards in both the private and public sector have to be consistent with our inflation target, which is 2.0 percent.

Or this one:  A new round of price increases hit the global economy Tuesday as some of the world’s largest industrial companies moved to pass rising raw materials costs more quickly to customers.

Oil has reached a turning point

One of the world experts on oil and energy says  Oil has reached a turning point.   

The break point is already here. Oil is in the process of losing its almost total domination in ground transport. It is not going to fade away soon – such is the scale of its use and convenience, it will retain a dominant position for many years. But it will share the transport market with other sources as never before, reinforced by a new drive for fuel efficiency.

Now the paradigm has collapsed as much as shifted, now what for any energy using enterprise?

Think Different:  Our new section on what actions to take (and not to take),  coming soon.

Hit the Rails Jack

A basic principle of ours:  High Prices impact consumer behaviour, contradicting the commonly held view, in both energy markets and among some consumers, that energy consumers are somehow immune to price signals, and will keep on paying because they have no choice.

From almost day one on this blog, we’ve been pointing out how demand destruction is occurring in ways and places where energy conservation was once never thought  possible.  A little demand destruction here and there won’t impact market fundamentals, but in aggregate little things mean a lot.

Latest heretofore impossible news on consumer shifts, comes from LA, where commuters are hitting the rails.  That bears repeating:  The shift in behavior extends beyond Southern California. Americans drove 1.4 billion fewer highway miles in April compared with the same month last year, and 400 million fewer miles than they did in March, U.S. Transportation Secretary Mary E. Peters announced this week. Peters also said that gas-guzzling sport utility vehicles are decreasing in popularity, as sales of mid-size sport utility vehicles were down 38% year-over-year in May.

At 19.5 US gallons of gasoline from a barrel of oil, that should mean a drop of 35,000 barrels per day at 20 mpg for April  alone, or 135,000 barrels per day year on year.  Who says energy prices can’t influence behaviour?  That news will give oil traders kittens.  Eventually.

Lights Out

Depending on who you speak to,  illumination makes up to a third of total  electricity use.
A surer fact:  Secretary of State for Energy John Hutton said in a statement: ‘We have always said 15 percent (carbon reduction) is ambitious but we remain fully committed to hitting this target. We will launch a consultation this summer and then publish how we plan to boost the current level of renewables in spring next year.’

But what if the Edison era has ended?  What if >90% of energy used in lighting, combined with most expense for electronic displays, plus the associated cooling costs were to disappear by the 2020 target ?  Printable OLED lighting and electronic displays are being planned by companies like GE and Mitsubishi.  Giant plasma screens, self refreshing newspapers and light bulbs brighter and far more efficient are all on the horizon for 2015 or sooner. This raises an interesting possibility: electricity use by 2020 would collapse and half of remaining power needs would come from renewables.

Science fiction?  Or Science Fact?   The Universal Display Corporation has a name straight out of Blade Runner but seems to be exceeding it’s own expectations.      

The new milestone for the first time indicates that white OLEDs can surpass the power efficacy of the two incumbent indoor lighting technologies – incandescent bulbs are less than 15 lm/W and most fluorescent lamps are 60 – 90 lm/W.

What would should government do ?  Spend billions on nuclear?  Or on renewables? Or on burying Thomas Edison?

Carbon: the new Money?

This interesting viewpoint has some logic. 

According to Bloomberg this was posited today by John Browne, "Carbon trading will resemble the currency markets, with“an array” of credits commanding differing prices based on the quality of their“central bank,” according to the former chief executive officer of BP Plc. Lord Browne as some like to address him, although he doesn’t seem bothered either way, now works for Riverstone Holdings, a London based hedge fund

It is sure to send shivers down the spines of both traditional right-wingers and anti-globalistion forces – the extreme right often goes so far that it closes the circle with the extreme left and vice versa. We saw a recent example in Ireland when Libertas on the right allied with traditionalist social revolutionaries in Sinn Fein to defeat the LisbonTreaty.

There are commonalities for sure between not only the right and left but also among climate change deniers and eco fundamentalists. CC deniers often come from the right: Supply siders and nationalists for example have a fundamental philosophical problem, in that they cannot abide thinking CC is a problem, because of a basic discomfort with the conception that if there is a unique world problem, then the solution must also be global ; that brings out the anti-UN and anti-EU brigade who feel uncomfortable with basic scientific facts such as that there are six billion other people sharing the planet with them. Result: they pretend there isn’t a problem and see it as a one-worlder plot of foreigners asking them to change their ways.
One world greens from their side feel uncomfortable using present institutions, borne out of a long suspicion over multi-nationals’ impact on the earth. They see the new green agenda as just another wheeze to enrich the already rich.

It doesn’t help that the Davos/Bilderberg/Billionaire axis conspiracy theorists of left and right thrive on (for different reasons), is among the greatest advocates of climate change.

The solution: somewhere in the middle.

Green IT

Our Michael Caine moment: The IT Data Centre industry uses more energy than the worldwide airline industry. Not a lot of people know that.

This is especially true in industry, where the energy input into IT is only now starting to be assessed. In an IHT story that you may not want your IT manager to read (they’ll ask for a raise immediately), the problem is explained thus :" For years and years, the attitude was just buy it, install it and don’t worry about it … that led to all sorts of inefficiencies. Now, we’re paying for that behavior".

Sounds like energy in almost any enterprise to us.

IT energy costs depends on:

Utilisation/efficiency : Most modern computers sit idle over 80% of the time

Power use: Computers are much more efficient than a few years ago, but the numbers of them grows even faster

Indirect costs: Half the cost of IT is involved in dissipating the heat computers throw off.

Help is at hand in that IT Energy costs for individual enterprises can often be halved with little effort – or investment. In fact, you could reduce your carbon footprint entirely, cut  IT costs dramatically and improve performance.  Who can hate that?  Mr IT Guy for starters. The hard part: It involves new thinking and, often great effort, to breach the analog/digital, carbon/silicon divide.

In a similar vein, from Computer Business Review’s story on the release of a new HP server, these words could be used almost anywhere – just replace computer in this sentence:
If we released a new computer that didn’t have some green capability, that would be suicide