Wow, Does Anyone See The Unintended Consequence In This Story? This Is Quite Incredible: The Road To New England

First, some facts to get out of the way: renewable energy, wind and solar, will never make a significant contribution to the electricity needs of this country. And wherever wind and solar replace coal or natural gas, the costs are three to five times higher. That won't change over time. I may be wrong on some of the details, but the underlying premise is correct: wind and solar will never make a significant contribution to the electricity needs of this country. There is simply not enough land area available. This was posted back in 2012, but I doubt anything has changed.

Second: nuclear is pretty much dead in this country. Even if "we," as a nation, embraced nuclear energy this weekend, it would take 20 years to get new nuclear reactors built and on-line.

Third: if you want to know where I'm going with this story, check out the stories at the "NG_Shortage" and "NG_NewEngland" tags at the bottom of the post. Those links are about the natural gas shortage in New England this year, and the spot price of natural gas jumping to $40 or more compared to the "going" price of $4. Why? Everybody in New England switched to natural gas this past year; there was not enough; and there was no alternative.

Fourth: the country will need more electricity in the future, not less. EVs, server farms, LED TVs, computers, smart phones, it's all going to add up. 

Now, the story. I was not going to post this story as a stand-alone post. I posted/linked it deep in the blog for archival purposes when Don sent it to me. But while reading it, posting it, linking it, it dawned on me that the natural gas companies are sitting very, very pretty.

The article is linked at this post:

Bloomberg is reporting another coal plant in the heart of coal country is closing. The country is converting to natural gas. This is for the archives. Some day folks are going to be wondering why their electric bills are so high. Come back to this article for an explanation. For the archives.

For evidence, look to the E.D. Edwards power plant, built in 1960 close to the coal mines south of Peoria. While it pumped out electricity for once-booming steel mills and distilleries, the plant cruised along and avoided spending the millions of dollars to install a scrubber on its smokestack.

And so Edwards, confronting a need to meet state and federal rules to clean up and mounting competition from cheaper natural gas, was part of an unusual transaction last year. Owner Ameren Corp. paid Dynegy Inc. to take Edwards and four other Illinois coal plants off its hands, a transaction that perplexed some analysts.

“This was an exercise in kicking the can down the road,” said David Johnson, an analyst at ACM Partners, a financial advisory firm that reviewed the sale for environmentalists trying to scuttle it. “To throw money at someone to take something off your hands is a bit atypical.”

Ameren’s move is among a series of closures, bankruptcies or fire sales by companies desperate to get out of investments in aging U.S. coal plants. Owners are reacting to abundant electricity from natural gas and wind, flat or declining demand and a slew of new environmental rules meant to clean up the country’s top source of pollution. Also in the mix: efforts by environmentalists targeting individual coal facilities.

Read the article and then re-read the preamble above.  Do you see where "we" are going? This is quite incredible. The president has set the United States to go down the road of ensuring that there is only ONE fuel source for electricity some twenty years from now. Presidents think very long term, that's why they are called "change agents." (Google -- "change agents")

If the math doesn't work for renewable energy (wind or solar); hydroelectric is maxed out; nuclear is dead; and coal is dead; what's left to provide electricity for the nation? This is quite incredible. One almost gets the feeling that Washington movers and shakers were heavily invested in natural gas when they came up with the idea of how to kill coal.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read her, but this is quite incredible. 

Think about it. I take that back. Don't think about it. Re-read all the stories this past two months about the high cost of natural gas in New England, and how they are literally on the cusp of running out. That's not an exaggeration. If I had the time I would post the links but they are easily found at the blog and everywhere on the internet.

This is one of those "aha" moments. I assume, because presidents come and go, coal will make a comeback in this country, but that assumption could be wrong. The refineries along the coast spent billions of dollars converting to heavy oil capability and they aren't eager to switch back to light oil capability due to the billions of dollars it would take. They are still hoping Canadian heavy oil will reach them.

Likewise, all the electric utilities that have spent billions switching to natural gas aren't about to switch back to coal. And that leaves the US on the road to New England: natural gas shortages and/or high price electricity due to high price natural gas.

The road to New England: the US quest for a single fuel source for electricity. 

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or anything you think you might have read here, but I'm certainly not going to avoid this investment opportunity. This is a once in a lifetime investment strategy. Thank you Mr Obama. 

Addenda:

This was sent in by a reader as another example: Chicago's two coal-fired plants to shut down sooner than expected. It's an old story but is another example of going to one fuel for electricity, natural gas, without really thinking this through. The reader points out that the state of Illinois has nuclear power but the plants are probably in their last decade of life, and as they age, anything can happen. The reader also makes this point: "to me it appears the power generating companies are being separated from the utilities... the utilities are more just distribution companies now...  the regulation for the power generation is really a burden."