Spring is here, the sap is rising — and Ontario is giving away electricity.
That may come as news to householders, who had watched bills crawl steadily higher until the province took the edge off by awarding a 10 per cent discount starting January 1.
But the combination of low demand and gushing rivers has driven prices lower than zero at certain times of day over the past week.
For example:
On April 11, prices dipped below zero for five hours during the night, going as low as minus 12.2 cents a kilowatt hour.
The previous day, prices were also negative for five hours, dipping to minus 12.8 cents a kilowatt hour at the lowest.
The price fell to minus 2.2 cents a kilowatt hour for an hour on April 9.
The negative prices, unfortunately, do not mean that householders will get a refund or a credit on their next bill.
Residents are generally locked in to regulated prices, or time of use rates. Others are committed to fixed prices under retail contracts, which don't vary as market prices rise and fall.
But larger users, generally businesses, who are charged the market rate for electricity, can actually receive a credit for the power they use when prices are below zero.
So can neighbouring states and provinces, which trade power back and forth with Ontario.
Low prices are common at this time of year, says Terry Young, vice president of the Independent Electricity System Operator, which runs the province's power market.
Temperatures are moderate, so there's low demand for heating and air conditioning. Demand on April 11 was a low as 11,746 megawatts — less than half what it would be on a hot summer day or a cold winter night.
At the same time, the spring run-off has filled rivers and reservoirs so hydroelectric production is high. Nuclear plants run close to full capacity all the time and can't be scaled back, so surpluses can develop.
Surplus power and negative prices can be an opportunity for businesses that can boost production when the price plummets, said Young.
"There are customers who can respond to this," he said.
Wind is also increasingly a wild card in Ontario's power system. It wasn't a huge factor over the weekend, but windy weather did help push Ontario into a surplus position in January.
A report has warned that if no action is taken Ontario could have surplus power on its hands one day out of every seven by 2013. The surpluses would likely disappear within a few years, as the province starts shutting down nuclear reactors for major overhauls.
Delicate talks are currently under way with wind generators to see if there are ways to limit the flow of wind power onto the grid during periods of surplus.
Currently, all wind power flows onto the system and most generators receive a fixed price of 13.5 cents a kilowatt hour.
Other generators with contracts are also paid the contract price, despite the zero market price. To make up the difference, customers pay "global adjustment," a surcharge on the energy portion of their bill.
ITER Nuclear Fusion advances tokamak magnetic confinement, heating deuterium-tritium plasma with superconducting magnets, targeting net energy gain, tritium breeding, and steam-turbine power, while complementing laser inertial confinement milestones for grid-scale electricity and 2025 startup goals.
Key Points
ITER Nuclear Fusion is a tokamak project confining D-T plasma with magnets to achieve net energy gain and clean power.
✅ Tokamak magnetic confinement with high-temp superconducting coils
✅ Deuterium-tritium fuel cycle with on-site tritium breeding
✅ Targets net energy gain and grid-scale, low-carbon electricity
It sounds like the stuff of dreams: a virtually limitless source of energy that doesn’t produce greenhouse gases or radioactive waste. That’s the promise of nuclear fusion, often described as the holy grail of clean energy by proponents, which for decades has been nothing more than a fantasy due to insurmountable technical challenges. But things are heating up in what has turned into a race to create what amounts to an artificial sun here on Earth, one that can provide power for our kettles, cars and light bulbs.
Today’s nuclear power plants create electricity through nuclear fission, in which atoms are split, with next-gen nuclear power exploring smaller, cheaper, safer designs that remain distinct from fusion. Nuclear fusion however, involves combining atomic nuclei to release energy. It’s the same reaction that’s taking place at the Sun’s core. But overcoming the natural repulsion between atomic nuclei and maintaining the right conditions for fusion to occur isn’t straightforward. And doing so in a way that produces more energy than the reaction consumes has been beyond the grasp of the finest minds in physics for decades.
But perhaps not for much longer. Some major technical challenges have been overcome in the past few years and governments around the world have been pouring money into fusion power research as part of a broader green industrial revolution under way in several regions. There are also over 20 private ventures in the UK, US, Europe, China and Australia vying to be the first to make fusion energy production a reality.
“People are saying, ‘If it really is the ultimate solution, let’s find out whether it works or not,’” says Dr Tim Luce, head of science and operation at the International Thermonuclear Experimental Reactor (ITER), being built in southeast France. ITER is the biggest throw of the fusion dice yet.
Its $22bn (£15.9bn) build cost is being met by the governments of two-thirds of the world’s population, including the EU, the US, China and Russia, at a time when Europe is losing nuclear power and needs energy, and when it’s fired up in 2025 it’ll be the world’s largest fusion reactor. If it works, ITER will transform fusion power from being the stuff of dreams into a viable energy source.
Constructing a nuclear fusion reactor ITER will be a tokamak reactor – thought to be the best hope for fusion power. Inside a tokamak, a gas, often a hydrogen isotope called deuterium, is subjected to intense heat and pressure, forcing electrons out of the atoms. This creates a plasma – a superheated, ionised gas – that has to be contained by intense magnetic fields.
The containment is vital, as no material on Earth could withstand the intense heat (100,000,000°C and above) that the plasma has to reach so that fusion can begin. It’s close to 10 times the heat at the Sun’s core, and temperatures like that are needed in a tokamak because the gravitational pressure within the Sun can’t be recreated.
When atomic nuclei do start to fuse, vast amounts of energy are released. While the experimental reactors currently in operation release that energy as heat, in a fusion reactor power plant, the heat would be used to produce steam that would drive turbines to generate electricity, even as some envision nuclear beyond electricity for industrial heat and fuels.
Tokamaks aren’t the only fusion reactors being tried. Another type of reactor uses lasers to heat and compress a hydrogen fuel to initiate fusion. In August 2021, one such device at the National Ignition Facility, at the Lawrence Livermore National Laboratory in California, generated 1.35 megajoules of energy. This record-breaking figure brings fusion power a step closer to net energy gain, but most hopes are still pinned on tokamak reactors rather than lasers.
In June 2021, China’s Experimental Advanced Superconducting Tokamak (EAST) reactor maintained a plasma for 101 seconds at 120,000,000°C. Before that, the record was 20 seconds. Ultimately, a fusion reactor would need to sustain the plasma indefinitely – or at least for eight-hour ‘pulses’ during periods of peak electricity demand.
A real game-changer for tokamaks has been the magnets used to produce the magnetic field. “We know how to make magnets that generate a very high magnetic field from copper or other kinds of metal, but you would pay a fortune for the electricity. It wouldn’t be a net energy gain from the plant,” says Luce.
One route for nuclear fusion is to use atoms of deuterium and tritium, both isotopes of hydrogen. They fuse under incredible heat and pressure, and the resulting products release energy as heat
The solution is to use high-temperature, superconducting magnets made from superconducting wire, or ‘tape’, that has no electrical resistance. These magnets can create intense magnetic fields and don’t lose energy as heat.
“High temperature superconductivity has been known about for 35 years. But the manufacturing capability to make tape in the lengths that would be required to make a reasonable fusion coil has just recently been developed,” says Luce. One of ITER’s magnets, the central solenoid, will produce a field of 13 tesla – 280,000 times Earth’s magnetic field.
The inner walls of ITER’s vacuum vessel, where the fusion will occur, will be lined with beryllium, a metal that won’t contaminate the plasma much if they touch. At the bottom is the divertor that will keep the temperature inside the reactor under control.
“The heat load on the divertor can be as large as in a rocket nozzle,” says Luce. “Rocket nozzles work because you can get into orbit within minutes and in space it’s really cold.” In a fusion reactor, a divertor would need to withstand this heat indefinitely and at ITER they’ll be testing one made out of tungsten.
Meanwhile, in the US, the National Spherical Torus Experiment – Upgrade (NSTX-U) fusion reactor will be fired up in the autumn of 2022, while efforts in advanced fission such as a mini-reactor design are also progressing. One of its priorities will be to see whether lining the reactor with lithium helps to keep the plasma stable.
Choosing a fuel Instead of just using deuterium as the fusion fuel, ITER will use deuterium mixed with tritium, another hydrogen isotope. The deuterium-tritium blend offers the best chance of getting significantly more power out than is put in. Proponents of fusion power say one reason the technology is safe is that the fuel needs to be constantly fed into the reactor to keep fusion happening, making a runaway reaction impossible.
Deuterium can be extracted from seawater, so there’s a virtually limitless supply of it. But only 20kg of tritium are thought to exist worldwide, so fusion power plants will have to produce it (ITER will develop technology to ‘breed’ tritium). While some radioactive waste will be produced in a fusion plant, it’ll have a lifetime of around 100 years, rather than the thousands of years from fission.
At the time of writing in September, researchers at the Joint European Torus (JET) fusion reactor in Oxfordshire were due to start their deuterium-tritium fusion reactions. “JET will help ITER prepare a choice of machine parameters to optimise the fusion power,” says Dr Joelle Mailloux, one of the scientific programme leaders at JET. These parameters will include finding the best combination of deuterium and tritium, and establishing how the current is increased in the magnets before fusion starts.
The groundwork laid down at JET should accelerate ITER’s efforts to accomplish net energy gain. ITER will produce ‘first plasma’ in December 2025 and be cranked up to full power over the following decade. Its plasma temperature will reach 150,000,000°C and its target is to produce 500 megawatts of fusion power for every 50 megawatts of input heating power.
“If ITER is successful, it’ll eliminate most, if not all, doubts about the science and liberate money for technology development,” says Luce. That technology development will be demonstration fusion power plants that actually produce electricity, where advanced reactors can build on decades of expertise. “ITER is opening the door and saying, yeah, this works – the science is there.”
Consumers Energy Virtual Energy Coaching connects Michigan small businesses with remote efficiency experts to cut utility costs, optimize energy usage, and access rebates and incentives, delivering safe COVID-19-era support and long-term savings through tailored assessments.
Key Points
A remote coaching service helping small businesses improve energy efficiency, access rebates, and cut utility costs.
✅ Three-call virtual coaching with usage review and savings plan
✅ Connects to rebates, incentives, and financing options
Franklin Energy, a leading provider in energy efficiency and grid optimization solutions, announced today that they will implement Consumers Energy's Small Business Virtual Energy Coaching Service in response to the COVID-19 pandemic and broader industry coordination with federal partners across the power sector.
This Michigan-wide offering to natural gas, electric and combination small business customers provides a complimentary virtual energy-coaching service to help small businesses find ways to reduce electricity bills and benefit from lower utility costs, both now during COVID-19 and into the future, informed by similar Ontario electricity bill support efforts in other regions. To be eligible for the program, small businesses must have electric usage at or below 1,200,000 kWh annually and gas usage at or below 15,000 MCF annually.
"By developing lasting customer relationships and delivering consistent solutions through conversation, the Energy Coaching Program offers the next level of support for small business customers," said Hollie Whitmire, Franklin Energy program manager. "Energy coaching is suitable for all small businesses, but it's ideal for businesses that are new to energy efficiency or for those that have had low engagement with energy efficiency offerings and emerging new utility rate designs in years past."
Through a series of three calls, eligible small businesses can speak with an energy coach to help them connect to the right program offering available through Consumers Energy's energy efficiency programs for businesses, including demand response models like the Ontario Peak Perks program that support load management. From answering questions to reviewing energy usage, conducting assessments, identifying savings opportunities, and more, the energy coach is available to help small businesses put money back into their pocket now, when it matters most.
"Consumers Energy is committed to helping Michigan's small business community prosper, now more than ever, with examples such as Entergy's COVID-19 relief fund underscoring industry support," said Lauren Youngdahl Snyder, Consumers Energy's vice president of customer experience. "We are excited to work with Franklin Energy to develop an innovative solution for our small business customers. The Virtual Energy Coaching Service lets us engage our customers in a safe and effective manner, as seen with utilities waiving fees in Texas during the crisis, and has the potential to last even past the COVID-19 pandemic."
China Renewable Energy Law drives growth in wind power, solar thermal, and photovoltaic capacity, supporting grid integration and five-year plans, even as China leads CO2 emissions, with policy incentives, compliance inspections, and national resource assessments.
Key Points
A legal framework that speeds wind, solar thermal, and PV growth in China via mandates, incentives, and grid rules.
✅ 2018 renewables: 1.87T kWh, 26.7% of national power
✅ Over 100 State Council policies enabling deployment
✅ Law inspections and regional oversight across six provinces
China leads renewable energies, installing more wind power, solar thermal and photovoltaic than any other country, as seen in the China solar PV growth reported in 2016, but also leads CO2 emissions, and much remains to be done.
The effective application of Chinas renewable energy law has boosted the use of renewable energy in the country and facilitated the rapid development of the sector, as solar parity across Chinese cities indicates, a report said.
The report on compliance with renewable energy law was presented today at the current bimonthly session of the Standing Committee of the National Peoples Assembly (APN).
Electricity generated by renewable energy amounted to about 1.87 trillion kilowatts per hour in 2018, representing 26.7 percent of Chinas total energy production in the year, aligning with trends where wind and solar doubling globally over five years, the report said.
Ding Zhongli, vice president of the NPC Standing Committee, presented the report to the legislators at the second plenary meeting of the session.
An inspection of the law enforcement was carried out from August to November, as U.S. renewables hit 28% record showed momentum elsewhere. A total of 21 members of the NPC Standing Committee and the NPC Environmental Protection and Resource Conservation Committee, as well as national legislators, traveled to six regions at the provincial level on inspection visits. Twelve legislative bodies at the provincial level inspected the law enforcement efforts in their jurisdictions.
The relevant State Council agencies have implemented more than 100 regulations and policies to foster a good policy environment for the development of renewable energy, as seen in markets where U.S. renewable electricity surpassed coal in 2022. Local regulations have also been formulated based on local conditions, according to the report.
In accordance with the law, a thorough investigation of the national conditions of renewable energy resources was undertaken.
In 2008 and 2014 atlas of solar energy resources and wind energy evaluation of China were issued. The relevant agencies of the State Council have also implemented five-year plans for the development of renewable energy, which have provided guidance to the sector, while countries like Ireland's one-third green power target remain in focus within four years.
The main provisions of the law have been met, the law has been effectively applied and the purpose of the legislation has been met, and this momentum is echoed abroad, with U.S. renewables near one-fourth according to projections, Ding said.
US Utilities Shift From Coal as natural gas stays cheap, renewables like wind and solar scale, Clean Power Plan uncertainty lingers, and investors, state policies, and emissions targets drive generation choices and accelerate retirements.
Key Points
A long-term shift by utilities from coal to cheap natural gas, expanding renewables, and lower-emission generation.
✅ Cheap natural gas undercuts coal on price and flexibility.
✅ Renewables costs falling; wind and solar add competitive capacity.
✅ State policies and investors sustain emissions reductions.
When President Donald Trump signed an executive order last week to sweep away Obama-era climate change regulations, he said it would end America's "war on coal", usher in a new era of energy production and put miners back to work.
But the biggest consumers of U.S. coal - power generating companies - remain unconvinced about efforts to replace Obama's power plant overhaul with a lighter-touch approach.
Reuters surveyed 32 utilities with operations in the 26 states that sued former President Barack Obama's administration to block its Clean Power Plan, the main target of Trump's executive order. The bulk of them have no plans to alter their multi-billion dollar, years-long shift away from coal, suggesting demand for the fuel will keep falling despite Trump's efforts.
The utilities gave many reasons, mainly economic: Natural gas - coal’s top competitor - is cheap and abundant; solar and wind power costs are falling; state environmental laws remain in place; and Trump's regulatory rollback may not survive legal challenges, as rushed pricing changes draw warnings from energy groups.
Meanwhile, big investors aligned with the global push to fight climate change – such as the Norwegian Sovereign Wealth Fund – have been pressuring U.S. utilities in which they own stakes to cut coal use.
"I’m not going to build new coal plants in today’s environment," said Ben Fowke, CEO of Xcel Energy, which operates in eight states and uses coal for about 36 percent of its electricity production. "And if I’m not going to build new ones, eventually there won’t be any."
Of the 32 utilities contacted by Reuters, 20 said Trump's order would have no impact on their investment plans; five said they were reviewing the implications of the order; six gave no response. Just one said it would prolong the life of some of its older coal-fired power units.
North Dakota's Basin Electric Power Cooperative was the sole utility to identify an immediate positive impact of Trump's order on the outlook for coal.
"We're in the situation where the executive order takes a lot of pressure off the decisions we had to make in the near term, such as whether to retrofit and retire older coal plants," said Dale Niezwaag, a spokesman for Basin Electric. "But Trump can be a one-termer, so the reprieve out there is short."
Trump's executive order triggered a review aimed at killing the Clean Power Plan and paving the way for the EPA's Affordable Clean Energy rule to replace it, though litigation is ongoing. The Obama-era law would have required states, by 2030, to collectively cut carbon emissions from existing power plants by 30 percent from 2005 levels. It was designed as a primary strategy in U.S. efforts to fight global climate change.
The U.S. coal industry, without increases in domestic demand, would need to rely on export markets for growth. Shipments of U.S. metallurgical coal, used in the production of steel, have recently shown up in China following a two-year hiatus - in part to offset banned shipments from North Korea and temporary delays from cyclone-hit Australian producers.
RETIRING AND RETROFITTING
Coal had been the primary fuel source for U.S. power plants for the last century, but its use has fallen more than a third since 2008 after advancements in drilling technology unlocked new reserves of natural gas.
Hundreds of aging coal-fired power plants have been retired or retrofitted. Huge coal mining companies like Peabody Energy Corp and Arch Coal fell into bankruptcy, and production last year hit its lowest point since 1978.
The slide appears likely to continue: U.S. power companies now expect to retire or convert more than 8,000 megawatts of coal-fired plants in 2017 after shutting almost 13,000 MW last year, according to U.S. Energy Information Administration and Thomson Reuters data.
Luke Popovich, a spokesman for the National Mining Association, acknowledged Trump's efforts would not return the coal industry to its "glory days," but offered some hope.
"There may not be immediate plans for utilities to bring on more coal, but the future is always uncertain in this market," he said.
Many of the companies in the Reuters survey said they had been focused on reducing carbon emissions for a decade or more while tracking 2017 utility trends that reinforce long-term planning, and were hesitant to change direction based on shifting political winds in Washington D.C.
"Utility planning typically takes place over much longer periods than presidential terms of office," Berkshire Hathaway Inc-owned Pacificorp spokesman Tom Gauntt said.
Several utilities also cited falling costs for wind and solar power, which are now often as cheap as coal or natural gas, thanks in part to government subsidies for renewable energy and recent FERC decisions affecting the grid.
In the meantime, activist investors have increased pressure on U.S. utilities to shun coal.
In the last year, Norway's sovereign wealth fund, the world's largest, has excluded more than a dozen U.S. power companies - including Xcel, American Electric Power Co Inc and NRG Energy Inc - from its investments because of their reliance on coal-fired power.
Another eight companies, including Southern Co and NorthWestern Corp, are "under observation" by the fund.
Wyoming-based coal miner Cloud Peak Energy said it doesn't blame utilities for being lukewarm to Trump's order.
"For eight years, if you were a utility running coal, you got the hell kicked out of you," said Richard Reavey, a spokesman for the company. "Are you going to turn around tomorrow and say, 'Let's buy lots of coal plants'? Pretty unlikely."
Maritime Link Cable Burial safeguards 200-kV subsea cables in the Cabot Strait as Emera and Nova Scotia Power trench lines to mitigate bottom trawling risks from a redfish boom, ensuring Muskrat Falls hydro delivery.
Key Points
Trenching Cabot Strait subsea power cables to prevent redfish-driven bottom trawling and ensure Muskrat Falls power.
✅ $14.492M spent trenching 59 km at 400 m depth
✅ Protects 200-kV, 170-km subsea interconnects from trawls
✅ Driven by Gulf redfish boom; DFO and UARB consultations
The parent company of Nova Scotia Power disclosed this week to the Utility and Review Board, amid Site C dam watchdog attention to major hydro projects, that it spent almost $14,492,000 this summer to bury its Maritime Links cables lying on the floor of the Cabot Strait between Newfoundland and Cape Breton.
It's a fish story no one saw coming, at least not Halifax-based energy conglomerate Emera.
The parent company of Nova Scotia Power disclosed this week to the Utility and Review Board that it spent almost $14,492,000 this summer to bury its Maritime Link cables lying on the floor of the Cabot Strait between Newfoundland and Cape Breton.
The cables were protected because an unprecedented explosion in the redfish population in the Gulf of St Lawrence is about to trigger a corresponding boom in bottom trawling in the area.
Also known as ocean perch, redfish were not on anyone's radar when the $1.5-billion Maritime Link was designed and built to carry Muskrat Falls hydroelectricity from Newfoundland to Nova Scotia.
The two 200-kilovolt electrical submarine cables spanning the Cabot Strait are the longest in North America, compared with projects like the New England Clean Power Link planned further south. They are each 170 kilometres long and weigh 5,500 tonnes.
Nova Scotia Power customers are paying for the Maritime Link in return for a minimum of 20 per cent of the electricity generated by Muskrat Falls over 35 years.
The electricity is supposed to start sending first electricity through the Maritime Link in mid-2020.
First time cost disclosed In August, the company buried 59 kilometres of subsea cables one metre below the bottom at depths of 400 metres.
"These cables had not been previously trenched due to the absence of fishing activities at those depths when the cables were originally installed," spokesperson Jeff Myrick wrote in an email to CBC News in October.
Ratepayers will get the bill next year, as utilities also face risks like copper theft that can drive costs in the region. Until now, the company had declined to release costs relating to protecting the Maritime Link.
The bill will be presented to regulators, a process that has affected projects such as a Manitoba Hydro line to Minnesota, when the company applies to recover Maritime Link costs from Nova Scotia Power ratepayers in 2020.
Myrick said the company was acting after consultation with the Department of Fisheries and Oceans.
Unexpected consequences After years of overfishing in the 1980s and early 1990s, redfish quotas were slashed and a moratorium imposed on some redfish.
Confusingly, there are actually two redfish species in the Gulf of St. Lawrence.
But very strong recent year classes, that have coincided with warming waters in the gulf, as utilities adapt to climate change considerations grow, have produced redfish in massive numbers.
After years of overfishing, the redfish population is now booming in the Gulf of St. Lawrence. (Submitted by Marine Institute) There is now believed to be three-million tonnes of redfish in the Gulf of St Lawrence.
The Department of Fisheries and Oceans is expected to increase quotas in the coming years and the fishing industry is gearing up in a big way.
Earlier this month, Scotia Harvest announced it will begin construction of a new $14-million fish plant in Digby next spring in part to process increased redfish catches.
Oil and Gas Profitability Decline reflects shale-driven oversupply, OPEC-Russia dynamics, LNG exports, renewables growth, and weak demand, signaling compressed margins for producers, stressed petrodollar budgets, and shifting energy markets post-Covid.
Key Points
A sustained squeeze on hydrocarbon margins from agile shale supply, weaker OPEC leverage, and expanding renewables.
✅ Shale responsiveness caps prices and erodes industry rents
✅ OPEC-Russia cuts face limited impact versus US supply
✅ Renewables and EVs slow long-term oil and gas demand
The oil-price crash of March 2020 will probably not last long. As in 2014, when the oil price dropped below $50 from $110 in a few weeks, this one will trigger a temporary collapse of the US shale industry. Unless the coronavirus outbreak causes Armageddon, cheap oil will also support policymakers’ efforts to help the global economy.
But there will be at least one important and lasting difference this time round — and it has major market and geopolitical implications.
The oil price crash is a foretaste of where the whole energy sector was going anyway — and that is down.
It may not look that way at first. Saudi Arabia will soon realise, as it did in 2015, that its lethal decision to pump more oil is not only killing US shale but its public finances as well. Riyadh will soon knock on Moscow’s door again. Once American shale supplies collapse, Russia will resume co-operation with Saudi Arabia.
With the world economy recovering from the Covid-19 crisis by then, and with electricity demand during COVID-19 shifting, moderate supply cuts by both countries will accelerate oil market recovery. In time, US shale producers will return too.
Yet this inevitable bounceback should not distract from two fundamental factors that were already remaking oil and gas markets. First, the shale revolution has fundamentally eroded industry profitability. Second, the renewables’ revolution will continue to depress growth in demand.
The combined result has put the profitability of the entire global hydrocarbon industry under pressure. That means fewer petrodollars to support oil-producing countries’ national budgets, including Canada's oil sector exposures. It also means less profitable oil companies, which traditionally make up a large segment of stock markets, an important component of so many western pension funds.
Start with the first factor to see why this is so. Historically, the geological advantages that made oil from countries such as Saudi Arabia so cheap to produce were unique. Because oil and gas were produced at costs far below the market price, the excess profits, or “rent”, enjoyed by the industry were very large.
Furthermore, collusion among low-cost producers has been a winning strategy. The loss of market share through output cuts was more than compensated by immediately higher prices. It was the raison d’être of Opec.
The US shale revolution changed all this, exposing the limits of U.S. energy dominance narratives. A large oil-producing region emerged with a remarkable ability to respond quickly to price changes and shrink its costs over time. Cutting back cheap Opec oil now only increases US supplies, with little effect on world prices.
That is why Russia refused to cut production this month. Even if its cuts did boost world prices — doubtful given the coronavirus outbreak’s huge shock to demand — that would slow the shrinkage of US shale that Moscow wants.
Shale has affected the natural gas industry even more. Exports of US liquefied natural gas now put an effective ceiling on global prices, and debates over a clean electricity push have intensified when gas prices spike.
On top of all this, there is also the renewables’ revolution, though a green revolution has not been guaranteed in the near term. Around the world, wind and solar have become ever-cheaper options to generate electricity. Storage costs have also dropped and network management improved. Even in the US, renewables are displacing coal and gas. Electrification of vehicle fleets will damp demand further, as U.S. electricity, gas, and EVs face evolving pressures.
Eliminating fossil fuel consumption completely would require sustained and costly government intervention, and reliability challenges such as coal and nuclear disruptions add to the complexity. That is far from certain. Meanwhile, though, market forces are depressing the sector’s usual profitability.
The end of oil and gas is not immediately around the corner. Still, the end of hydrocarbons as a lucrative industry is a distinct possibility. We are seeing that in dramatic form in the current oil price crash. But this collapse is merely a message from the future.
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