The success of exploration and drilling efforts in the Gulf of Mexico convincingly makes the case for opening up the nation’s other offshore areas for drilling. Yes, that should mean offshore California and the East Coast.

There are no perfect choices in energy, but offshore drilling has proved friendlier to the environment than the alternative of bringing in foreign crude supplies via tanker.

– “Gulf Giant: BP’s Find in the Gulf of Mexico Reminds Us of the Need for Oil Bridge to Greener Future,” Houston Chronicle, September 4, 2009.

Kudos to the editorial board of the Houston Chronicle for stating the obvious: that neighborhood oil which provides government revenue instead of requiring government subsidy is better than importing oil; that expanded domestic offshore drilling is part of the solution, not the problem.…

As I posted last week, conventionally sized nuclear power (?750–1,250 MW) is dramatically uncompetitive with coal- and gas-fired electricity generation in light of the huge increase in construction costs recently estimated by various utilities. A typical new coal-fired plant may cost on the order of $2,000/MW compared to new nuclear estimated to cost as much as four or five times more. The lower operating costs of nuclear compared to fossil-fired plants cannot erase this capital-cost premium.

Micro-nuclear, with capacity in the 5–100 MW range, while exciting as a new technology, is no panacea. Actual installed costs are yet to be published. But operating cost estimates of less than ten cents a kilowatt-hour have drawn attention to the designs. But are the scale economies in construction, operations, maintenance, and the fuel cycle considered in these preliminary estimates?…

A market-driven revitalization of the world oil refining sector is the best and fastest way to reduce both oil demand and related air emissions, including CO₂. A combination of market-based pricing–absent from foreign refineries (most politically owned and/or managed)– and new investment brought forth by the improved profitability of such pricing, could reduce the demand for crude oil by between eight and twelve million barrels per day, or about 10–15 percent.

A Bold Hypothesis

This rather astounding assertion can be educed as follows:

• Most countries subsidize refined oil product consumption, usually middle distillates (diesel and kerosene) at the expense of gasoline and other products;
• Owing to the price controls on heavily used middle distillate products, most oil refiners outside the U.S. and a few other countries lose money;
• The subsidies to middle distillate users, at the expense of gasoline and LPG consumers, creates an “unbalanced” demand barrel – one that defies both economics and chemistry;