Energy Bills; Who's Fault Did You Say Minister?

Ed Davey, the Energy Secretary, speaks today and apparently will again verbally eviscerate the power companies.  

Just a couple of points to note Mr Davey before you mount the current political hobby horse,

Energy bills are obscenely high, we know that and we've known what's been coming for years.. We also know that a complete intellectual and political vacuum in the field of strategic power planning for twenty five years by successive governments is mostly to blame. The entire political complex is culpable thinking as you did, that you could wave through planning permissions for windmills that don't generate enough electricity to power a train set and that don't work in the cold or high winds in order to tick the green voting box; idiots. The only winners in the windmill game have been property developers, (many of whom have never even seen the land on which these monstrosities have been dumped), and wealthy farmers. All subsidised through the power companies by the beaten up citizen. You're an utter disgrace, the lot of you.

Moreover, creating uncertainty in a sector of shares in which most pension funds are invested for stability and yield is irresponsible and damages the income many of those you purport to want to help by creating an uncertain economic environment for those companies.

Power companies are not perfect but they should not be demonised. We've already seen BP in the oil sector left to the US judicial wolves over the past two years with no political top cover and the current rhetoric does Westminster absolutely no credit. 

Were it only power generation and it's cost then we might be able to muddle through. Actually, Westminster's default reaction to any problem is to go on the offensive and blame everyone else, never themselves. We will see this in other departments in years to come and defence will probably be at the front of the queue when 22 years of sequential defence cuts suddenly mean we are unable to protect our interests.

Switch On and Switch Off

Finally, there is of course an expectation that everyone has a right to a fully centrally heated house all the time. Not so. The elderly and babies need and require minimum temperatures; everyone else can take a leaf out of the Crumble Towers book of winter living; put a fleece on and turn that bloody light out. 

I suspect Michael Gove is probably the only one in government with the stones to say it given he is the only strategic thinker with moral courage in it. 

Highway Robbery

 

 

The other day I drove down from Scotland having taken the youngest Crumble Kid for his first salmon fishing trip on the Lower Pavilion beat on the Tweed. In keeping with the highest Crumble salmon fishing tradition we had a fantastic trip to Melrose and enjoyed the usual hospitality of The Town House and Burts Hotel, but returned with an empty bag and an eye watering bar bill, (it's neither the place nor the time to bump into old friends on a mission). 

So, having inculcated in my youngster that "what goes on tour stays on tour," we headed down the M6 on the 7 hour journey home.

Now, I don't usually go out of my way to find even more eye watering bills but I walked straight into another. I filled up at the BP service station on the M6 toll road. Clearly, the latter day highwaymen there think if drivers can afford the £5.30 toll they can pay whatever they dream up for fuel.......... 153.9p a litre of diesel in this case. Robbing bastards. I don't usually check the price before I drive onto a forecourt but I've just started for that is so far beyond any reasonable cost it's outrageous.

 The economy will remain moribund until we get on top of absolute basics; this is one of them.

BP & The Sons Of The Desert

BP is having an increasingly torrid time, both at the hands of the markets and public opinion in the US. In fact, if Obama gets any more shouty and angry he's likely to spontaneously combust. Of course, with his approval ratings at historic lows and being unable to issue a Presidential directive to an 18,000 feet sub sea oil reservoir his targets to lash out at are strictly limited to BP and Tony Hayward. He's making full use of his available targets though and this in turn is creating a media feeding frenzy which is whipping up the baying, pitchfork carrying mob. I don't remember the same animated reaction from us toward Occidental when 167 men got the chop on Piper Alpha.

Still, as the BP share price continues to be malleted the President and the ill informed mob should be careful what they wish for.

In late 1987 the British Government decided to sell it's remaining 31.5% stake in BP. The offer came unglued during the October Crash....... until the Kuwait Investment Office stepped in and bought 21.6% of BP. I strongly suspect that if the shares continue to slide then the KIO or someone similar might start hoovering them up., (Petrochina has been a name speculated on this morning). Instead of BP, which is now as much an American company as a British one, the American press might find themselves redirecting their outrage to the Sons of the Desert in flowing white robes owning a piece of their energy infrastructure. So much for energy security.

This is not of course, to make light of what is nothing less than a catastrophe for the people of the Gulf states but last I heard, BP is committed to making good the environmental damage and mitigating the economic impact on the area and at vast cost. Whilst Obama is going on and on about the US tax payer not being penalised he might just want to bring himself up to speed with Merrill Lynch who, shortly before being taken over by Bank of America, transferred $29bn of tax losses to their UK office. Does it matter? Not particularly, except to say we don't need any lectures about financial responsibility and morality. Moreover, Obama can raise his anti British rhetoric to as many decibels as he likes but our soldiers continue to fight and die side by side, just as they have done for generations and that bond will outlive any transient politician.

The best place incidentally, to keep abreast of events remains The Oil Drum; the comments by industry veterans are especially informative.

    

BP; Latest!

BP latest.

Interesting to note from in the flow blogsite, itooshaggedsarahferguson.com that the reason they can't plug the hole is that they actually drilled all the way through the Earth's core, coming out just South of downtown Merthyr Tydfil.

This is on good authority, and apparently no-one's noticed the 45k bpd flooding the streets there because they've all been in the pub since the election. Ramifications are huge as the Milford Haven refinery can be taken out of moth-balls and Wales will run a fiscal surplus from 2011, taking £33bn off the deficit in the process.

Gordon Brown has been quick to claim credit for the breakthrough, suggesting that it happened on his watch and as a direct result of his pleas to big business to dig a great big hole to bury that bigoted old dear he insulted in Rochdale.

A spokesman for BP said, "Bollocks, this is the last thing we bloody need. First the Yanks, now we're going to have to deal with the bloody Welsh. Drill the hole until you get to the oil we said but oh no, those bloody know all Texans we hired always know better and have to do everything bigger, deeper and faster than everyone else. Honestly, you could hammer six inch nails into their foreheads and it  wouldn't make any difference whatsoever. Well I'll be bollocksed if I'm carrying the can for this...... call Tracey in London, she can answer your questions with whatever we've made up for today."

No-one in Merthyr Tydfil could be found sober and coherant enough to comment.

The Gulf Oil Spill & You

Many years ago, while stationed in Germany, the Army occasionally insisted on interrupting our busy social lives to ask us to go out and practice defending the Free World against 3rd Shock Army and the rest of the Soviet hordes. To do this they equipped us with vehicles designed in the 1950's, built in the 1960's and which broke down regularly in the 1980's. On one such occasion when smoke was billowing from the front, noisy part of the armour, I asked Bombardier Clark what the problem was, "The problem is Sir," he replied, adopting his know-all driver-mechanic tone, "the fvcking thing is fvcking fvcked." I imagine that would pretty much be Bombardier Clark's summary of the Deepwater Horizon rig were he in the vicinity when disaster struck.

BP shares have been malleted since the Gulf Deepwater Horizon rig blew up and sank, killing 11 men and initiating massive contamination of the Gulf. Whilst BP have committed huge resources in attempting to minimise the environmental impact and are working ceaselessly to stem the leak, the outlook remains grim. It strikes me that the media in the UK haven't quite got a grip of the scale of the disaster but as oil is beginning to hit the shoreline coverage will go up a few gears.

 

The oil industry has always operated at geographical and technical extremes. Putting aside for a moment the tragic loss of life and the growing impact on the environment, economy and people of the Gulf states, the engineering challenges apparent are fascinating. I hope for the sake of the former that the boffins can pull this off.

A number of initiatives have been tried to stem the flow but with mixed success. BP claim that they are now siphoning off 5000 b/d from the leak and given the thing continues to spray oil into the Gulf, (webcam here), it's obvious that the leak is producing much much more than the 5000 b/d that BP have been claiming for the last month.

There is a "top kill," injection scheduled for Sunday. In simple terms they will attempt to cap the well by injecting mud at greater pressure than the leak and then cap it with cement.

The most important undertaking though, is the drilling of two relief wells to kill the initial one and this, this is something else. At a depth of 5000 ft they hit the seabed and drill 5,000 feet down through the mud and then another 8000 feet at an angle aiming to intersect the original vertical pipe which can't be much more than 24'' across. It gives new meaning to needle and haystack and I dread to think of the permutations of things that can go wrong.

 Unfortunately, while the "sheen," from the oil, the light film on the surface, has been apparent over a very wide area, the underwater and heavier oil is now beginning to appear in the marshes of Louisiana and surface traces are being drawn into the Loop which in the worst case would draw oil onto the beaches of Florida.

As the days pass the news flow is likely to become more emotive as the oil spreads on the shorelines. For the people of the Gulf states, who seem to go from one disaster to the next, none of this is good news. With a higher than average hurricane season forecast the threat to human health will increase if high winds blow oil particles inland to contaminate metropolitan sanitation.

The engineering challenges are complex; to keep up to date with technical matters go to The Oil Drum. Some of the discussion threads with contributions from industry veterans and engineers are fascinating and give an insight into the enormity of the work required.

You may however, think of this disaster as nothing to do with you. Unfortunately, you'd be wrong. The insurance industry is already well aware of the potential cost and Lloyds and the reinsurers will be hammered. With the hurricanes coming, they are calling it a perfect storm. They will of course get the money back, mostly from you and me in the form of higher premiums over the next few years from every part of domestic and commercial insurance which I'm told, is what they want because premiums are very depressed at the moment. Oh, and petrol is going to get more expensive but that comes much later.

Funny, the way things work out.