206
typically use “combined cycle” power generation, which employs a gas turbine that
looks like a stationary jet engine to turn a generator. The hot exhaust exiting the
turbine is then directed to a boiler, where it produces steam that turns a second turbine and generator. This “two-for-one” electrical generation technology is cheaper
and significantly more efficient than almost any other method of electrical generation currently in use (USEIA 2018). It is being implemented because of the economics of cheap gas, but in replacing coal-fired generators it has also substantially
reduced GHG emissions in the United States.
Economics alone does not always lead to beneficial energy decisions.
Understanding and finding the balance among technology, policy, and economics is
critical to developing and maintaining sustainable, clean, affordable energy. The
wise application of policy could include tax credits or emissions taxes that will
encourage or discourage the development of specific types of energy resources,
such as carbon-free versus GHG-emitting for example. This is unlikely to be
achieved with technological advancements or economics alone.
Many industries from retail to restaurants suffered from the COVID-19 outbreak
in 2020, and the energy sector was hit hard, especially oil and gas. At this writing
the pandemic is still underway, but many economists are predicting that the restructured economy after it is over will look very different from the economy that existed
before. Fossil fuel may well be one of the industries facing restructuring. The economic downturn caused by the coronavirus will leave the world awash in cheap oil
for quite some time, and the components of the O&G business that relied on higher
prices may struggle to survive. This includes shale gas and tight oil, along with
enhanced oil recovery.
Rather than waiting for oil surpluses to get used up and prices to come back,
perhaps this may be an opportune time for the energy industry to switch to resources
that are cleaner, greener, and more sustainable. Some ideas for these new technologies are discussed in Chap. 12, but the transition cannot happen without energy policies to support it. In an unregulated free market, cheap fossil energy supplies will
win out against higher-cost options like renewables, nuclear, and geothermal.
Without some substantial and wise government policies in place, the opportunity
may be squandered to transition U.S. energy over to more sustainable resources.
11.1 Peak Oil
Back in the 1950s, a Shell geophysicist named M. King Hubbert (1956) developed
the idea of “peak oil.” Hubbert looked at production curves from numerous oil
wells, and came to the conclusion that the amount of petroleum produced from any
given location over time would follow a bell-shaped curve, starting with small
amounts from exploration wells, then peaking as fields were fully developed with
infill and step-out drilling, and finally declining as older wells watered out, pressures dropped, and oil became an immobile phase and stopped flowing. The idea
that every oil field would experience a peak in production and then drop off meant
11 Balancing Energy, Environment, and Economics
typically use “combined cycle” power generation, which employs a gas turbine that
looks like a stationary jet engine to turn a generator. The hot exhaust exiting the
turbine is then directed to a boiler, where it produces steam that turns a second turbine and generator. This “two-for-one” electrical generation technology is cheaper
and significantly more efficient than almost any other method of electrical generation currently in use (USEIA 2018). It is being implemented because of the economics of cheap gas, but in replacing coal-fired generators it has also substantially
reduced GHG emissions in the United States.
Economics alone does not always lead to beneficial energy decisions.
Understanding and finding the balance among technology, policy, and economics is
critical to developing and maintaining sustainable, clean, affordable energy. The
wise application of policy could include tax credits or emissions taxes that will
encourage or discourage the development of specific types of energy resources,
such as carbon-free versus GHG-emitting for example. This is unlikely to be
achieved with technological advancements or economics alone.
Many industries from retail to restaurants suffered from the COVID-19 outbreak
in 2020, and the energy sector was hit hard, especially oil and gas. At this writing
the pandemic is still underway, but many economists are predicting that the restructured economy after it is over will look very different from the economy that existed
before. Fossil fuel may well be one of the industries facing restructuring. The economic downturn caused by the coronavirus will leave the world awash in cheap oil
for quite some time, and the components of the O&G business that relied on higher
prices may struggle to survive. This includes shale gas and tight oil, along with
enhanced oil recovery.
Rather than waiting for oil surpluses to get used up and prices to come back,
perhaps this may be an opportune time for the energy industry to switch to resources
that are cleaner, greener, and more sustainable. Some ideas for these new technologies are discussed in Chap. 12, but the transition cannot happen without energy policies to support it. In an unregulated free market, cheap fossil energy supplies will
win out against higher-cost options like renewables, nuclear, and geothermal.
Without some substantial and wise government policies in place, the opportunity
may be squandered to transition U.S. energy over to more sustainable resources.
11.1 Peak Oil
Back in the 1950s, a Shell geophysicist named M. King Hubbert (1956) developed
the idea of “peak oil.” Hubbert looked at production curves from numerous oil
wells, and came to the conclusion that the amount of petroleum produced from any
given location over time would follow a bell-shaped curve, starting with small
amounts from exploration wells, then peaking as fields were fully developed with
infill and step-out drilling, and finally declining as older wells watered out, pressures dropped, and oil became an immobile phase and stopped flowing. The idea
that every oil field would experience a peak in production and then drop off meant
11 Balancing Energy, Environment, and Economics