Saturday, November 29, 2014

Modi's Dilapidated Energy Policy

 

Modi's Dilapidated Energy Policy Recent Messages ( 263 ...

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3 days ago - Modi's Dilapidated Energy Policy Recent Messages ( 263 ) Sort By: Sid Harth • 1 min ago Aside from power shortages, the chronic underinvestment in electric ...

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Sid Harth
Aside from power shortages, the chronic underinvestment in electric power infrastructure in India has generated an additional side effect: an overinvestment in diesel fuel. Diesel generators are far less efficient per unit of energy than a coal-fired power plant, and they also contribute significantly to local air pollution. Although diesel fuel receives some subsidies, prices are beginning to reflect the true costs of a relatively open market, now incorporating basic costs of importing, refining, and delivering the fuel to customers. While it is more expensive, it is still worth buying when the lights go out. As I wrote a few weeks ago, energy reform under a Modi government will require streamlining government agencies and modernizing the electricity grid – at least at the central level. In his first month in office, there has already been a consolidation of energy-related ministries. But the real battle for power – that is, high-quality, reliable electricity – resides in the states. Each state will need to improve service delivery and build capacity for price reform and fee collection, as Gujarat did under Modi. They will also need to invest in renewables – which can be cost-effective in a country with so many average days of sun each year – and in energy efficiency. All of that starts by getting the prices right. Portrait: Bill Antholis William J. Antholis Managing Director, The Brookings Institution Senior Fellow, Governance Studies @wjantholis William Antholis is managing director of the Brookings Institution and a senior fellow in Governance Studies. His academic background is in how democracies conduct foreign policy, and he has served in the U.S. government at the White House and State Department. He is the co-author with Strobe Talbott of Fast Forward: Ethics and Politics in the Age of Global Warming, and author of Inside Out India and China: Local Politics Go Global. More Posts from William > | View Expert Page > Source: BROOKINGS …and I am Sid Harth
Sid Harth
State of Reform in Gujarat In 2004, under Modi, Gujarat did what no other Indian state had fully done. It sent officials door to door to see who was poor and who was not. The inspectors started in the countryside, determining who was using power for farming and who was using it for household or industrial purposes. State authorities proceeded in a straightforward and disciplined manner. Moreover, the state also separated transmission—including collection of fees—from production of power. Those two steps allowed for the state-managed transmission company to effectively charge and collect fees. It also allowed private power companies to charge and collect a fair price for the energy that they were supplying to the grid. Gujarat’s farmers were willing to pay as soon as they realized that power would be more reliable. “Once farmers had power, they wanted to buy electric appliances,” then-Chief Minister Modi explained to me when I interviewed him in 2012. “Now we have high-quality power all day, every day, in every village. Andhra Pradesh, Tamil Nadu, and Maharashtra are trying to follow suit. Each has learned that getting prices right on electricity is critical to its industrial future. In the last ten years, each raised electricity prices, despite political opposition. Chandrababu Naidu did it in Andhra Pradesh in 2000, which helped contribute to his defeat. Jayalalithaa did it in Tamil Nadu in 2012 and seems to be surviving. These states also have tried to cut down on energy theft and false claims of rural poverty, and as a result, they now provide electricity to 90 percent or more of their populations. Each provides more power each day than in previous years. But until prices are fully right in those places, power will fail and diesel generators will need to swoosh into action.
Sid Harth
(Dis)Empowered States Tamil Nadu is much better than most states. India’s southernmost state was spared the July 31 blackout because it maintains its own power grid. The same is true of Andhra Pradesh and Maharashtra, which provide electricity to 100 percent and 88 percent of their villages, respectively – though localized blackouts are common. In fact, there is only one state in India that is significantly better than those three, where there are no blackouts and 100 percent electrification: Gujarat. There, Narendra Modi successfully tackled energy reform. Modi’s secret? He made people actually pay for their power. It sounds quite simple, but in Indian politics and government, nothing has been more difficult. During years of socialist rule, India established a range of subsidies and discounts that provided low-cost or free electricity to its enormous rural and poor populations. As a result, a huge number of Indians claim to be rural and poor even if they are neither. Most Indians do not directly pay anywhere near the full cost of electricity. Much of the blame falls on state governments. Almost 40 percent of all electricity-generating capacity is owned or controlled by state electricity boards, and they are particularly prone to interfering with utility companies trying to establish a real market for electricity. The central government controls about 30 percent, and the rest is supplied by private enterprise. Those figures do not count the enormous number of backup diesel-powered generators that whoosh into action when the power invariably fails. Most state electricity boards can’t acquire adequate fuel or fully operate power plants because they either set prices too low, or fail to collect fees, or both. Together with the central governments, the state electricity boards also help build and maintain transmission lines—or not maintain them. Even in “normal” times, 25 percent of power generated is lost in transmission, thanks to a combination of aging infrastructure and outright theft. India probably needs to invest more than $2 trillion in transmission upgrades alone. And there is the fact that some states still have relatively low rates of village electrification. But the money currently collected from end users is insufficient to cover the unit costs of electricity, let alone new capital investment. So any money spent on fuel and transmission comes directly from general state and national coffers. That drains resources that could go to schools, roads, or other public investments for which it is even more difficult to collect revenues.
Sid Harth
Among many of Modi's problems that I have noticed, one that projects out is, believing in his own propaganda. Let us see how his so called 'Modi Magic,' works. (sic). Modi goes for his three country vacation. G20 is a big cartel. More I say about it the more, Modidiots would like to curse me. That is fine. How was that a beggar, that is Modi for you BBs, hides his true profession-begging-and declares, among other things, that he, Modi, loves environment (protection) and believes in the alternative energy sources, such as nuclear, wind and solar power. Very good, Mr Pradhan Sevakji. When are you going to announce your energy policy-based mostly upon most polluting coal? Australia has what Modi needs. Adani-Modi's Gujarati friend has money, if not Arun Jaitley would give him $1,000,000,000-interest-free or close to it. All this 'tamasha,' in front of his world audience? Are people so stupid that they can't see what I see? Hare Ram! Narendra Modi’s Power Obsession: Indian Energy Reform Villagers stand under an electric pole in Meerwada, India.When I interviewed Narendra Modi in early March 2012, what impressed me the most was that he was obsessed with power – as in, electricity. Many Indian friends and observers had prepared me for Modi’s political ambitions – that he would soon put himself forward as the BJP’s candidate for prime minister. At the time, he was still chief minister of Gujarat, yet Modi’s obsessions were focused on a far more mundane form of power, but ultimately one that may be more important to India. He was impressively focused on how to bring electricity to people in his state. He proudly claimed: “Every village in Gujarat has 24/7/365 three-phase power.” He also spoke fluently about solar panels and water turbines, and about his ambitions on fighting climate change. India – Energy Wasted If only the rest of India were so obsessed. Five months later – on the last day of July in 2012, almost two years ago exactly – India lost power across its troubled heartland, stretching from its far eastern border with Burma to its northwest border with Pakistan. Over 600 million people were estimated to have experienced the blackout— about half of all India, affecting more people than live in all of Europe, and about twice the population of the United States. That also is nearly one in ten people on the planet. Out of India’s 28 states, the blackout covered 19 plus the National Capital Territory of Delhi. Three interstate grids had failed: the northern, northeastern, and eastern. Two-thirds of those affected lived in four places: the National Capital Territory of Delhi, Uttar Pradesh, Bihar, and West Bengal. That stretch did not include Gujarat, nor much of India’s south. The blackout shut down factories and office buildings, traffic lights and trains. Yet what might be more alarming is how much of the region was able to function without public electricity. To begin with, a great number of Indians have no public electricity. For those
Sid Harth
Energy & Oil Prices Crude Oil & Natural Gas Commodity Units Price Change % Change Contract Time(ET) Crude Oil (WTI) USD/bbl. 66.15 -7.54 -10.23% Jan 15 13:44:59 Crude Oil (Brent) USD/bbl. 70.15 -2.43 -3.35% Jan 15 13:59:59 TOCOM Crude Oil JPY/kl 52,430.00 -870.00 -1.63% May 15 13:59:57 NYMEX Natural Gas USD/MMBtu 4.09 -0.27 -6.13% Jan 15 13:44:58 Refined Products Commodity Units Price Change % Change Contract Time(ET) RBOB Gasoline USd/gal. 182.76 -18.43 -9.16% Jan 15 13:44:59 NYMEX Heating Oil USd/gal. 216.12 -16.79 -7.21% Jan 15 13:44:54 ICE Gasoil USD/MT 654.25 +13.75 +2.15% Jan 15 13:59:35 TOCOM Kerosene JPY/kl 63,420.00 -810.00 -1.26% Jun 15 13:59:38 Emissions Commodity Units Price Change % Change Contract Time(ET) ICE ECX Emissions EUR/MT 7.04 -0.05 -0.71% Dec 14 12:00:00 Bloomberg Oil Buyers Guide
Sid Harth
Save the Farms Illinois 5 hours ago Add in Canada and Keystone and the ability of the N. American continent to produce will ensure that prices stay low. The shift to cheap “fracked” Natural Gas, the initiator of the current glut, will help ensure cheap electricity for the nascent electric car market. Indeed, Keystone oil could well become “unprofitable” if prices continue to drop. So fracking released natural gas to displace coal – helping global warming, and frackings oil-field cousin, could well price Keystone out of business. We live in interesting times – fracking could well help save the planet (and before the renewable crowd jumps in – please do go read what the two Google scientists had to say on renewable’s recently). Contrarian Southeast 5 hours ago Will we never learn? We have ridden this roller coaster since the 1970s. OPEC is once again playing us for chumps, and giving us enough rope to hang ourselves. Yes, some people will get very rich over the next few years, but oil will never be a stable long term proposition. Every time the price drops, we go on a binge; yes SUV sales are up again! When OPEC decides to turn off the spigot, once again we and the whole world will land very hard. When will we get serious about the hard, but doable, work of developing a sustainable energy economy? SB Nevada 4 hours ago Look, it is not a binge. It is normal increases in demand that come from lower prices. Oil commodities are very responsive to small changes in supply, meaning the price can change wildly. These wild price changes can greatly effect demand. If you could buy your gas for half the price, why wouldn’t you drive more? Reply 3Recommend Will New York, NY 9 hours ago Perhaps this is an opportune time to tax oil consumption in the US in order to keep prices at a stable level, say $80 per barrel. This would have several benefits: (1) it would encourage domestic producers to maintain and increase production levels in high cost fields; (2) the revenue from taxes could be used for a variety of purposes such as fixing our infrastructure, reducing our budget and trade deficits, and investing in alternative energy technologies; (3) taxes that maintain stable domestic prices reduce economic uncertainty and volatility; and (4) the extra supply on the world market would continue to suppress prices keeping troublemakers like Iran and Russia at bay. Reply 23Recommend Amy Brooklyn 5 hours ago Yep, people are marking money and you are willing to spend it for them. I guess everything will work out fine so long as you get hold of the money and can dictate how it will be spent. Reply 4Recommend SB Nevada 4 hours ago A tax would do exactly the opposite of what you say. It would decrease the amount of money going to the oil companies and thus decrease the production levels (lower price reduces supply…). Higher taxes would also increase the uncertainty and volatility in the industry, because that is exactly what
Sid Harth
wj florida 4 hours ago Not mentioned are questions about the degree to which increasing efficiency in building performance and transportation, and gains in energy production by renewables may be contributing to the global decrease in demand. Might it be that a factor in the Saudi decision not to cut production is to maximize the revenue from their oil assets before they become stranded? Reply 8Recommend Olamide New York 4 hours ago Oil producing countries need to see this as an opportunity to begin the process of weaning themselves off of oil dollars. The world is changing and I’m sure that in 100 years oil won’t have the same demand that it has enjoyed through the 20th century up till now. Anyone who places all their eggs in one basket is inviting disaster. Reply 6Recommend augustborn Lima, Ohio 4 hours ago While prices are low we need to enact a .25 Cent additional fuel tax to replace the aging past end of life design Bridge infrastructure that has to long been avoided. Our roadways are our life blood. Reply 22Recommend Kate New York 5 hours ago We need to go solar as much as possible and fill in the gaps with other sources of energy. Reply 18Recommend realist NY 5 hours ago Political move to put pressure on Russia, a reasonable gesture that worked in the 80’s. but oil is still a commodity and it’s quantities are finite. Interesting to see how this all plays out. Reply 3Recommend Christian Miller Saratoga, CA 5 hours ago Let’s put a $15 per barrel tax on all oil imported from OPEC. Reply 10Recommend Mel Farrell New York 5 hours ago $140 per barrel oil occurred because those who could affect the price, did so, in their insatiable desire to increase their wealth regardless of the adverse effect on the lives of countless millions of people worldwide. At $120 per barrel, $100, $90, $80, $70, and any day now, $60 per barrel, those same groups, are still manipulating markets, raking in countless billions, in a feeding frenzy that is acutely aware of the consequences, as they gorge themselves leaving misery and desperation in their wake. The writings of those who would have us believe that these shenanigans have any real sustainable benefit for the masses are nothing more than attempts to manage perception and induce belief in a fairytale that may cause the populace to increase their spending and hand what little is left in their purses, to the Plutocracy that spends its time dreaming up new and improved ways of beggaring the masses. Their fear of certain unavoidable consequences in their plans, is palpable. All the economic ruminations and fixes from any and every school, will be entirely useless, if the nightmare they fear the most raises it’s fearsome head, that dreaded “deflation” scenario, currently nibbling voraciously at their wealth in Europe.
Sid Harth
And OPEC has been weakened before, only to stage a comeback. The cartel is still able to produce about a third of the global oil market. After the oil price spikes of the 1970s, the United States and other industrialized countries raised their strategic reserves, put into effect conservation policies and incentivized oil production. New output from places like Alaska and the North Sea in the 1980s helped produce a glut, sending oil prices plummeting. Saudi Arabia lobbied its OPEC partners for production quota cuts, and the kingdom cut its own production. When other OPEC members failed to comply with the new quotas, prices collapsed in 1986, and Saudi Arabia lost valuable markets for years to come. OPEC has never completely regained the power it once had, but in the early 2000s, oil prices spiked again primarily because of the rapid growth in demand from China and other developing countries and increasing unrest in several oil-producing countries like Nigeria and Venezuela. With the oil market growing tighter, Saudi Arabia expanded its spare capacity and kept a lid on spiraling prices. An equilibrium price of around $100 a barrel kept producing and consuming countries reasonably happy. But now the United States production, combined with slowing economic activity in China and Europe, have broken the balance. “OPEC still has power in that they can still cut production and raise price if they choose to do so,” said Michael C. Lynch, president of Strategic Energy and Economic Research and sometimes an adviser to OPEC. But he added, “They don’t have the same power they once did because so many of the members are in bad financial condition and so it’s harder for them to cut production and lose revenues in the short term to raise prices.”
Sid Harth
“What we have now is a yearlong game of chicken,” he said. “The Saudis are waiting to see how much U.S. production adjusts because of prices and they are waiting to see how much pain the other major oil producers can take before they are willing to make meaningful cuts.” Referring to the global oil benchmark, he added, “If Brent sinks below $60, I think you will see OPEC hit the panic button pretty fast.” That would mean an extraordinary OPEC meeting, and emergency cuts in production. The Brent price has fallen more than a third since June and closed on Friday at $70.15 a barrel. For OPEC producers like Venezuela and Iran, the tumbling price in oil has produced economic hardship and potential political problems. Venezuela and Algeria contend that OPEC needed to band to together to cut production and raise prices. But Saudi Arabia has by far the most sway in OPEC, since the kingdom produces roughly one-third of OPEC output alone. It also has the financial muscle and spare capacity to lower or raise production whenever the Saudi royal family deems necessary. Saudi Arabia resisted calls for lower production mainly because the countries that were most vociferous in calling for cuts would be the countries least able to actually cut their production since their cash-short governments are dependent on more, not less oil revenue. Recent Comments schbrg 4 hours ago What precipitated the current oil glut? (BTW, recent Saudi action deepens the glut, but did not precipitate it.) WilliamBanzai7 4 hours ago No mention here of how the shale oil miracle has been heavily subsidised by the Fed’s cheap debt printing press… Kevin Cahill 4 hours ago During this drop in oil prices, Congress should fill up the Strategic Petroleum Reserve. And there was no guarantee that a cut in OPEC production would raise prices. Even if it did, that would only encourage more American output. So far, United States oil production has proved resilient no matter the price. Even as prices slid in October, production in the Bakken shale field in North Dakota and the Eagle Ford field in Texas — the two primary promoters of the American oil production boom — increased more than 3 percent over the month before. That is because American producers keep improving the efficiency and output of their wells with new technology, and because in the short run, lower prices can actually encourage companies to produce more to pay debts and dividends. Energy experts caution that there is no guarantee that the United States will permanently keep its new powerful edge on world markets. Eventually, low oil prices will drive down production in higher-cost fields, drive marginal companies that are deeply in debt out of business and encourage major companies to slow down their investment in new wells. Several companies have already shaved their 2015 exploration budgets.
Sid Harth
Energy & Environment Free Fall in Oil Price Underscores Shift Away From OPEC By CLIFFORD KRAUSS NOV. 28, 2014 HOUSTON — Since the economically crippling oil embargo of 1973, every American president has pledged to seek and achieve energy independence. That elusive goal may finally have arrived, at least for the foreseeable future, with the failure of Saudi Arabia and its 11 oil cartel partners in the Organization of the Petroleum Exporting Countries to agree to a production cut that would put a brake on plummeting crude prices. On Friday, the benchmark American price for crude oil continued the free fall that began on Thursday, closing at $66.15, its lowest price in more than four years. The inability or unwillingness of OPEC to act showed that the cartel was no longer the dominating producer whose decisions determine global supplies and prices. Suddenly, the United States — which is poised to surpass Saudi Arabia as the world’s top producer, possibly in a matter of months — is in that position, although the resiliency of that new command must still be tested. “This is a historic turning point,” said Daniel Yergin, the energy historian. “The defining force now in world oil today is the growth of U.S. production. The outcome of the OPEC meeting is a clear indication that the oil exporters now recognize that this is a new market.” For decades, the United States faced dwindling domestic production and rising demand, leading President George W. Bush to call on the country to get off its “addiction” to imported oil. But around eight years ago a few small oil companies began experimenting to produce oil from hard shale rocks in North Dakota and Texas, using hydraulic fracturing — fracking — and horizontal drilling techniques that proved effective in producing natural gas a few years earlier. Domestic oil production has soared more 70 percent over the last six years, to roughly nine million barrels a day. The country is still a net importer, but with production growing by more than a million barrels a day every year, it is importing less and less almost every month. Imports from OPEC producers have been cut by more than a half in recent years, forcing increasing competition among Saudi Arabia and other exporting countries seeking to replace the American market with Chinese and other Asian markets. That has produced more cracks in an organization in which competition between Saudi Arabia and Iran is already fierce. That remarkable global turnaround has been a windfall for the United States, helping keep inflation in check, lower the trade deficit, strengthen the American dollar and bring relief to consumers. On Friday, Americans paid an average of $2.79 a gallon for regular gasoline, according to the AAA motor club, nearly 50 cents less than a year ago. For David Goldwyn, the State Department’s coordinator for international energy affairs in the first Obama administration, OPEC’s decision not to cut was “strategic .”
Sid Harth
The trouble with the BJP barking dogs is, their limited vocabulary. World is a big place and it turns not according BJP-boys yelling and screaming on, relatively, minor issues. Such as one, deluded Kalyan boy (23) returns home. Better set your goal, higher. BUt other OPEC countries may not be able to withstand the steady production and the falling prices it brings. OPEC members like Venezuela and Nigeria need levels close to $100 or above to fund national budgets. Saudi rival Iran is suffering, too, with the price drop adding to huge revenue losses due to sanctions on its crude sales imposed over its nuclear program. And Russia’s economy is in trouble, making falling oil revenues a problem there, as well. “I think you’re going to see additional tension between the OPEC ranks,” said Jamie Webster, senior director of crude oil markets at IHS consultants. In the U.S., gasoline prices are averaging $2.82 per gallon, the lowest price this time of year since 2009, according to the U.S. Energy Information Administration, which says the average U.S. retail regular-grade gasoline price has fallen 88 cents/gal since the start of July. But in the U.S., consumers’ joy at pump prices falling toward $2 a gallon will be tempered by fears the burgeoning economy in places like the Dakotas, Texas and Oklahoma could be hurt by the lower cost. The industry is credited with creating nearly 2 million jobs, a number projected to double by 2035. “If prices don’t recover soon this could be the beginning of the end of the Great American oil fracking boom,” Forbes’ Christopher Helman recently wrote. BIgger energy companies with money of their own to invest might be able to ride out the dip, but smaller, highly-leveraged oil and gas companies will have problems, he said. Source: Fox News ...and I am Sid Harth
Sid Harth
सटोडीया मोदिजी: कोल दिया ऑयल लिया November 29, 2014 / elcidharth Trade How low can it go? Oil, gas prices in freefall as OPEC reels from US fracking Published November 29, 2014 A row of oil pumps work in the desert oil fields of Sakhir, Bahrain. OPEC nations have agreed to keep supply steady, putting new pressure on US producers. (The Associated Press) Drivers paying less at the pump due to free-falling oil prices can thank the U.S. energy boom for generating shale oil – and weakening OPEC’s ability to keep the cost of a gallon of gas high. In just a matter of months, the price of a barrel of oil has dropped from more than $100 to about $70, and gas is now cheaper than it has been in years. But a recent report conducted for the American Petroleum Institute claimed oil would cost twice as much as it does now if it weren’t for America’s fracking boom, which wrings oil and natural gas out of shale miles underground. But the next question could be whether the fracking industry can survive the low prices it brought. “The shale boom is on a par with the dot-com boom,” Russian oil baron Leonid Fedun of OAO Lukoil told Bloomberg. “The strong players will remain, the weak ones will vanish.” OPEC, the cartel of oil-producing nations that has historically been able to calibrate the price of oil – and ultimately gasoline – by increasing or decreasing supply, announced Thursday that it won’t fight the price skid by cutting production this time. That likely means prices will continue to fall, and the more costly production technique of fracking could become cost-prohibitive, say experts. Drivers have benefited in recent months from the falling prices, the API study found. “This reduction in petroleum product prices have saved U.S. consumers an estimated $63 to $248 billion in 2013 and estimated cumulative savings of between $165 and $624 billion from 2008 to 2013,” stated the report. OPEC decision to maintain a production target of 30 million barrels a day was seen as a reflection of its members view that the short term pain was necessary to pressure rival producers in the U.S., who need moderate oil prices to break even. Saudi Arabia, the leader of OPEC, appears to be hoping to drive prices below the level at which shale oil production is economical. Experts say shale oil production turns too costly at the $60 a barrel level.

...and I am Sid Harth

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