Expert forecaster sees Putin’s moves with energy as a power play in anticipation of global cooling 20-30 years out.
By Jeff Poor
Business & Media Institute
1/6/2009 8:23:25 PM
It’s not often that meteorology intersects with geopolitics – but Europe could be in store for another Cold War, literally.
Accuweather.com’s chief long-range and hurricane forecaster Joe Bastardi observed that Russian Prime Minister Vladimir Putin’s recent cut of gas flows to Europe via Ukraine may have been done so in anticipation of a global cooling cycle on the Jan. 6 “Glenn Beck Show” radio program. Bastardi has a solid reputation among Wall Street traders for understanding weather’s impact on energy commodities.
“The thing I want to bring up here – very interesting – most of the solar cycle studies that we know about and that guys like me read have come out of the Russian scientists,” Bastardi said. “But when Glasnost developed, the Russian scientists, a lot of their ideas on the coming cool period that a lot of us believe is going to occur – ice, rather than fire is the big problem down the road here 2030, 2040, and the reversing cyclical cycles of the ocean – it came out of the East.”
According to Bastardi – Putin is relying on the data from the Russian scientists and wants to bring some European nations to their knees by exploiting their reliance on natural gas when the weather is at its coldest.
“Now my theory – something that I put out and it’s something that’s not something that people want to hear is that Putin knows what is going to happen – or he believes the same way I do about the overall climate pattern. So, if you control the pipeline into Europe, you literally can control Europe without firing a shot – if you control the energy.”
Bastardi cited former President Ronald Reagan’s 1982 Cold War-era staunch resistance to a then-$10 billion pipeline that was proposed to deliver natural gas 3,500 miles from Siberia to the heart of Western Europe, as a July 12, 1982 Time magazine article pointed out. Reagan’s stance was criticized by Western Europe Cold War allies and was said to be “riding roughshod over Western Europe’s economies,” by Time.
Bastardi also noted Russia’s invasion of Georgia in August 2008 was evidence of Putin’s willingness to use energy as a strategic tactic, since the Baku-Tbilisi-Ceyhan pipeline, located in Georgia, transports about a million barrels of oil a day from the Caspian Sea through Georgia to ports in Turkey – and then throughout Europe.
“That is why Reagan was so dead set against the Europeans looking east for their energy,” Bastardi said. “And now we’re seeing it. I believe the invasion of Georgia was nothing more than saying, ‘Hey I can take that pipeline whenever I want’ and he shut the gas off to the Ukraine when it got brutally cold.”
In a follow-up interview with the Business & Media Institute, Bastardi explained that a lot of Putin’s personality traits are at play here – that he is using intelligence, going back to his days as at the KGB.
“The weather’s most certainly involved in this,” Bastardi said. “If look at what those Russian scientists, where a lot of these studies on it getting cold come from – you can see that, what makes you think that Putin doesn’t have some knowledge of that? Here’s the head of the KGB – and forever what you want to say, I’m sure he’s privy to the same kind of information the head of the CIA is privy to here about studies and what people are thinking on a scientific nature.”
And according to Bastardi, Putin’s use of the flow of energy into Europe is just one of the weapons in his arsenal of tactics that he, as the head of Russia, has perfected using – comparing him to a wrestler with a perfected move.
“He’s definitely a type-A alpha male and we can both agree on that,” Bastardi said. “I mean look at him and he is more likely to use weapons – and I use weapons in terms of for instance a wrestler – a single-leg take down is a weapon. If you perfect it, you can use it the entire match. He’s more likely in the art of war to use what he knows how to use, even if it’s only two or three things than try to go use something he doesn’t know how to use or try to create something – that’s a waste of time to use it.”
It’s not a personality fault Bastardi contended on Beck’s program – but just what he considers proper for his country.
“And so, there are a couple of things that line up here that indicate the guy is trying act on behalf of his country and what he believes his country should be,” Bastardi said. “And I believe that he wants to use nature, rather than change nature and that may be what’s going on over here.”
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Ron de Haan (17:37:22) :
Thank you for responding but now you have confused me.
A question first; is the price of Euro 0.65/m3 a wholesale price or a domestic one?
I have rechecked my numbers and they seem in order so, if you don’t mind, I will run through them again.
My gas meter reads in cubic feet and I have checked with my gas supplier that it has not been converted into m3. We are billed in units of ft3 which they then convert into pence/KWHr at 3.69 pence. There is approximately 31.6 KW in a ft3 and the conversion factor from ft3 to m3 is 35.315. Putting these together gives:
3.69 x 31.6 x 35.315 = 4117.8pence = £41.17/m3
I just can’t make it any different. Maybe I’ll just have to move to Holland!
Pamela Gray (21:36:53) wrote: “Roger (E. Sowell), what if CO2 turns out to be a bust in terms of cause and effect? Wouldn’t that put those emission credits into something akin to a junk bond?”
I have been pressing this in both my blogs for some time, Pamela, and gave a feature to an American crowd who were seeking signatures for a petition to the US watchdog charged with monitoring such as this.
Seems to me there is a case to be made for the deals, and the concept, to have a heavy legal weight dropped on them; but some of the current news coming out of the States leads me to believe the regulatory bodies are themselves now suspect so this is not likely to happen… or not soon.
I fear Australia is in the same sty; or, to take it a logical step further: the CO2 scam has reached critical mass and will not be stopped until, as crosspatch suggests, there is one last person holding a manic tulip bulb (contract)…
Ron de Haan (17:37:22)
Hold everything. It turns out that my meter is in ft3 but the unit 1 is actually 100. Consequently my calculation is 100 times higher than actual.
Sorry to have troubled you, and anybody else that thought of replying. Next time I will do a bit more homework before bothering any one else.
David
rjhendrickson,
That would be true if there was a viable alternative to fossil fuels, but there isn’t. Especially when we won’t build nuclear reactors. The Russians understand this, but the AGW crowd has fooled most of the population of the west into thinking were going to run everything off windmills and solar, which ain’t never going to happen and the Russians know it. Therefore they are more than happy to discourage us from developing our own fossil fuel resources.
Smokey,
re “This UN CO2 scam is nothing but a massive transfer of wealth from responsible Western taxpayers to gross polluters. Or am I missing something?”
I believe the appropriate term here under Kyoto is Verification. There are hundreds of articles written about carbon trading and verification.
It appears some less-than-honest folk have gamed the system, for example, claiming carbon credits (and selling them) for planting a forest — but never planted it. Or improving the efficiency of a carbon-emitting process, like a coal-fired power plant, but never actually doing anything.
There are certified verification companies, but they sometimes get corrupted by bribes, imagine that!
Roger E. Sowell
Marina del Rey, California
“(now owned by Fujitsu, BTW) ”
Meant Toshiba, I think.
Roger Sowell,
I am not suggesting that all environmental studies be cut. We do need to be responsible in how we use our land and what we spew. But once a plant design has been shown to be acceptable, it should not have to re-prove itself at every single construction site. Unlike plants in the 60’s and early 70’s where every plant was more or less custom, plants like the AP1000 are a standard modular design (designed to keep construction costs down).
Also, in a time of economic hardship, people’s patience for frivolous lawsuits is going to wear thin. We are going to need these infrastructure jobs.
I have a close friend who is a city engineer. Getting approval for replacement of culverts, bridges, even re-paving roads becomes so expensive that the city must waste millions. The environmental impact of a new culvert is going to be about the same as the old culvert was. So what happens is that it becomes cheaper to simply wait until the culvert washes out. One reason infrastructure is in such bad shape is because we can not afford to do the studies and litigation needed to repair it. Cities wait until it is destroyed in a disaster or caves in then use the emergency authority to cut through the tape and get it re-built. It is actually a good thing we have fairly frequent disasters or else much infrastructure wouldn’t get replaced at all until it literally falls apart.
*********
Tom in Florida (10:20:26) :
I am going to venture a WAG that a good portion of the staggering cost is due to over the top permitting and “safety” regulations imposed by government at the insistance of anti-nukers, greenies and, yes, the oil, gas & coal companies.
********
Exactly so. I’m a former (fossil) power-plant engineer w/some experience with nuclear plants. My educated WAG would be that perhaps 30-40% of nuclear costs (including operating costs) are regulatory! The procedures/paperwork/red-tape involved in simply installing a new pump for example are beyond belief. The Nuclear Regulatory Agency is a bureaucratic nightmare swollen beyond obesity.
The only solution I can think of is a tight standardization of approved “package” nuke plants to simplify the approval mechanisms. The costs of nukes w/a reasonable & achievable regulatory burden is considerably less than fossil fuels & far less than “renewables”.
Ben F.
Przemysław Pawełczyk (P2O2)
Mój Polski przyjaciel, dzien dobry! and, regarding the Tale of Two Reactors, that was fascinating reading. Thank you for the link!
(my apologies for my atrocious Polish, I am using an internet-based translator…for the moderators, I am hoping I said “My Polish friend, good morning!)
I hope you had a chance to read the article on the current cost of nuclear power plants, found here:
http://climateprogress.org/wp-content/uploads/2009/01/nuclear-costs-2009.pdf
I especially recommend pages 19 and 20, where construction delays and cost over-runs are discussed.
Best to you,
Roger E. Sowell
Marina del Rey, California
(where it is warm, and our forecast is for 70 degrees F starting Saturday!)
Roger Sowell & crosspatch: Thank you for enlightening knowledge and opinion.
Roger Carr: Thank you, sir. I also learn from your comments, as well as from the others who share such important information.
crosspatch — another few comments on nuclear projects.
“I think the comments by Mr. Hail are myopic. He apparently isn’t aware of the scope of the nuclear industry inside the US and the fact that we have been building reactors all along.”
The article I provide a link to above addresses all the points I tried to make. The author, Craig Severance, confirms what I have known and written about for a couple of years now, and confirmed what I have suspected but was not really sure about – that Generation III designs are behind schedule and way over budget.
Re cookie-cutter new-design plants, on pg 20 he says “Finland’s effort
to build the world’s first new generation nuclear reactor at Olkiluoto is now over 2 years behind schedule after beginning in 2005, and construction cost estimates have already overrun by at least one billion euro. The recently-released “2008 World Nuclear Industry Status Report – Global Nuclear”(16 Sep 2008) surveyed the current global status of all new nuclear projects, and states “two thirds of the under-construction units have encountered significant construction delays, pushing back officially announced start-up dates.””
Re shortage of qualified operators and engineers, he says on pg 24, “the current generation of nuclear operators is nearing retirement age,
and there are not enough nuclear-trained personnel coming up through nuclear engineering programs to replace current operators, let alone expand the industry. Therefore, staffing a new facility may be a challenge involving extensive recruitment, scholarship, etc. costs.”
Finally, his conclusion is that the total cost that ratepayers must bear is around $0.30 per Kwh, by far the most expensive form of power available. (see pg 28). And, this does not include delays from litigation.
The grim reality is that such a power price will result in many electric users installing their own power generation, whether as cogeneration, windmills, solar, or distributed generation. This leads to a *death spiral*, which I have written about, and he describes on pg. 30. The ones who lose in this scenario are the poor, those on fixed incomes, and those just scraping by paycheck to paycheck. This actually happened in Louisiana in the 1980’s due to the construction of a nuclear power plant there. It will happen again.
To tie this back to AGW and the science issues, I urge everyone to read this article carefully, and give it the same scrutiny for soundness and weakness as for the global warming issues. Replacing fossil-power with nuclear power is one of the keystones of the AGW argument.
The link again is:
http://climateprogress.org/wp-content/uploads/2009/01/nuclear-costs-2009.pdf
Roger E. Sowell
Marina del Rey, California
Przemyslav Pawelczyk – looking for the energy-climate report: there was a Royal Commission report ‘Energy & Climate’ in 2002 . I reviewed it for a journal here and can send that review if it would help. And could look to see if there is a pdf of the report somewhere in my files. You can mail me at ethos_uk@onetel.com and send me a mail address. They looked at what it would take to achieve a 50% reduction in emissions by 2050 – with or without nuclear. The consequences of what either would mean for the UK countryside, landscape, wildlife and rural communities first became clear – and that led to some work with UK agencies to visualise that impact – which you can view at http://www.ethos-uk.com
on politics…..
I’ve changed my mind in the light of following these discussions and the encouragement and agree WWUT should cover the political dimension. I was worried that my exasperated views, which i couldn’t resist, would lose me friends! I get very worried when Americans air views about the politics of Europe and the threat from Russia, whilst seemingly blind to their own power play (and huge military expenditure)!
In the Times yesterday it was noted that Gazprom has a $50 billion debt to service and Ukraine had promised to pay market prices and had not – and when Russia cut supplies, Ukraine diverted gas from Europe – so it is Ukraine that is playing the power game too by blackmailng the EU. Incidently, most old EU countries have a small percentage of Russian gas and it is the Balkans and eastern Europeans who are most vulnerable.
I think we need to kook more toward the modern world of business, markets and and an energy mafia (e.g. like former PMs becoming board members) than think in terms of old nationalistic combatants – or we will miss a few tricks. There is a massive amount of corruption (and deception) going on.
Roger Sowell (22:13:01) :
I have been following your comments on nuclear plants and have also briefly looked at the link you gave to Craig Severance. In either case I have not seen any reference to the apparent success of the French nuclear industry. From the little I have read I believe the French energy industry is around 80% nuclear and the KW/hr cost is about 6cents. They are also the largest exporter of electricity in the world.
These numbers seem to be in complete contrast with yours. Perhaps you could comment on these significant differences.
David Porter: re France nuclear power price
Very good question! My short answer is that, for just one thing, France subsidizes their plants. More on that later as to why and how, perhaps this weekend.
IMHO, there is a fascinating *game* being played out involving nuclear power versus other power-generation means. As examples, the Pickens Plan in the U.S., zero-emission coal, solar, natural gas cogeneration, wind, wave, tidal, geothermal, hydroelectric, and some others. The stakes are huge, and it is difficult to sort through the hyperbole to glean the facts.
Here is one link on nuclear subsidies, in which France is discussed.
http://www.globalsubsidies.org/en/subsidy-watch/commentary/gambling-nuclear-power-how-public-money-fuels-industry
From near the end of the article, “All [countries with nuclear plants] have adopted a range of subsidies that attempt to make the new plants appear financially viable, though some countries, such as France and China, do not publish enough information to get a good handle on how big the public support really is.”
Roger E. Sowell
Marina del Rey, California
David Porter, Roger Carr, there is a pretty good discussion on the Severance article over at Climate Progress. Severance himself is responding to questions and criticisms. see
http://climateprogress.org/2009/01/05/study-cost-risks-new-nuclear-power-plants/
(full disclosure: CP is on the Sky Is Falling side of the fence — be forewarned…some of the comments are just hilarious.)
I have done many feasibility studies for mega-projects in various countries, including financing options, and I conclude that Severance is very close to getting it right, and his critics are way off.
As to why France has so many nukes, and charges a low power price, it is almost entirely due to policy, government ownership, and lack of accountability. One interesting article stated that France’s power plants have little load-following capability, so they must export power at night rather than reduce power rates.
France is known for having few natural energy resources, no oil, little gas and most of that is exhausted by now, almost no coal, and just a few hydroelectric sites in the mountains. The OPEC embargo of 1973 and price escalation in 79 led to the choice to build nukes rather than pay high prices for fuel oil for oil-fired power plants.
Roger E. Sowell
Marina del Rey, California
Roger Sowell (18:17:12) re: “study-cost-risks-new-nuclear-power-plants…”
Thanks, Roger. Working through it this cool and pleasant Saturday afternoon in Melbourne, downunder.
FWIW, I agree with earlier posts that cast doubt on Russia’s using AGW as a fundamental fulcrum.
Personally, I don’t agree with his ideas about ‘controlled’ nuclear conflicts, city trading, etc. I think the first use will result in a rapid escalation to a full out exchange, with the possible exception of a strike over the open ocean against a Carrier Attack Group.
Actually, he had a “nuclear ladder” of 37 escalation steps (order not fixed and steps could be skipped) from the lowest level crisis up to “spasm war”. His most valuable contribution was causing the US to go from a “nuclear tripwire” strategy (a conventional Soviet attack on Europe = a nuclear strike against the US) to a strategy of “flexible response”, which greatly reduced the chance of conflict and greatly enhanced the chance for controlling a conflict (nuclear or not) if it should occur.
As for “city trading” (NOT a good characterization of his strategy; he advocated avoiding cities entirely–“Type 2 and 3” deterrence), he used to propose the following exercise: Russia nukes, say, New York and New York, only. What do you do? Almost no one would propose an all-out retaliation (which was his very point). OK, he would say, so what DO you propose to do? And the discussion would continue from there.
Let’s put it this way. Miracle Mile was not only dumbass braindead but also amounted to enemy propaganda.
There is loads and loads more to it, much of it far more subtle, but here is not the place for it.
Roger Carr, and others, with my thoughts on Severance’s nuclear cost estimates.
I can verify the approximate cost of equity and cost of debt used by Severance in his calculations. As one example, a major electric utility in Houston (Reliant Energy) recently arranged such financing, although not for a new nuclear plant. Such financing for a nuclear plant would likely be at higher rates.
From their SEC 8-K filing, Reliant’s debt was at just under 8 percent for a multi-million dollar term loan of approximately 4 years, and the equity was a $350 million preferred stock issuance with 14 percent annual dividend. Reliant serves almost 2 million customers in the Houston area.
Severance did not use short-term debt, I believe. It appears his debt financing was likely bonds. In a real-world scenario, such bonds would likely have a range of maturities from 10 to 20 years or so.
A utility or independent power producer would pick from an array of financing possibilities, but what Severance used seems reasonable and produces results in the right ballpark.
The main financial drivers are the high construction costs, multi-year construction schedule, interest on the construction loan, depreciation schedule, and debt and equity rates. Even at 7 percent interest per year on the construction loan, the annual interest payments in the final years of construction do amount to more than $1 billion. See his Appendix B.
Paying off the construction loan with long-term financing is what typically occurs when the plant is substantially completed.
The sales price of power, in $/kwh, must be sufficiently high to pay the annual interest (the coupon rate) on the long-term bonds at 6.25 percent, provide a fund to pay off the bonds upon maturity, and pay the preferred stockholders the agreed annual dividend of approximately 15 percent. Taken together, the cost of capital is roughly 15 percent, compared to his Capital Recovery factor of 14.57 percent.
If anything, it appears his numbers are generous on the low side, as his numbers are based on zero government subsidies in the form of loan guarantees. Lenders, bond, and equity investors would require higher interest rates, absent such guarantees.
What remains to be seen is if any plants currently planned or under construction can be built for under $8800 per KW. As was mentioned by another commenter, the Chinese stated they can do it for about half that.
And, Roger Carr, Los Angeles is predicted to have Santa Anna winds this weekend, bringing daytime high temperatures into the low 80’s (F)! The air will also be very dry so we should get at least one wildfire. I’ll be jogging on the beach in shorts, trying to stay out of the smoke.
I’m interested in your views on the cost estimates.
Roger E. Sowell
Marina del Rey, California
Roger Sowell (00:01:54) “I’m interested in your views on the cost estimates. “
The reality of me, Roger, is that I have no qualifications (formal or otherwise) which would allow me to provide any useful view at all. My interest level is high, but my knowledge level zero, so I but follow the information you and others here provide. Aside from adding to my personal knowledge the only part I can play is to add links from my two blogs as a resource for others to follow as I do myself.
Half a century writing novels and short books for children here and in the USA, plus film, television and some journalism equips me only to endeavour to provide insights to the young from insights I gain from reading and contemplating ~ which is what I am doing here on WUWT? following the trails y’all lay down.
…and I sure could handle a jog along that beach with you.
This is by far the most interesting collection of comments on the subject that I’ve ever seen ! Thanks to most of you for your insight. The AGW light is dimming slowly and we need to regain our common sense. Mk