• Oil prices have been trying to move upwards over the past week, buoyed by hopes that Europe’s debt issues may be resolved. There are real tensions and divisions threatening the future of the Euro and the European economy. If Europe’s economy sinks further, world economic confidence will fall with it.
• The graph below shows a longer view of oil prices since 2008.  Prices crashed at the start of 2009. While we enjoyed those $2 gas prices, I think none of us want another recession.

Natural gas prices rose somewhat over the last week, as unseasonably cold weather, and snow, crept into the Northeast. Overall, the trend has continued flat to downwards. The graph at the lower left shows how futures prices have dropped since 2009. The red line at the top show that in June 2009 the smart money – the traders on Wall Street – pegged January 2012 natural gas price at $8.00/mmBtu. Today (the bright green line at bottom) it’s $4.06 This gas curve shows how price expectations have dropped due to the combined forces of a bad economy, increased gas production and less speculation in the energy markets.

Brodrick pointed out the challenges in getting from here to there and that to get the optimal combination of light output and energy savings, products have to be designed from scratch.  Unlike fluorescent lights, which emit light from all sides of a tube, LEDs only go in one direction.  That means that a fixture designed to reflect light from its innards isn’t really going to be effective if you just stick an LED in it.  Brodrick stated that the best performance so far has been coming from LED fixtures designed to replace conventional recessed downlights, outdoor area lights, 2 ft x2 ft lay-in troffers and refrigerated-case lights. He was less impressed with the progress in applying LEDs to directly replace standard incandescents (A-lamps), straight-tube fluorescents and fluorescent cove lighting.  With regards to incandescent replacement lamps Brodrick stated that although the lamps are improving, “generally they don’t match the output, color quality, and light distribution” of incandescent sources.  The full article can be found at http://www.ledsmagazine.com/news/8/10/30?cmpid=EnlLEDsOctober262011.

I share his skepticism about LED products that are designed to directly replace fluorescent tubes. For one thing, there are safety and maintenance concerns. Some of these products are designed to run on line voltage, which means the ballast must be removed and the lampholders (tombstones) connected to the building voltage. Pity the person who unknowingly installs a standard fluorescent tube in these figures. If you install these, put the insurance agent and attorney on speed dial. LED tubes that use the (very low) ballast voltage are safer, but what happens when the ballast fails? Many T8 lamp and ballast installations are 10 to 15 years old, or older, and ballasts are reaching the ends of their natural lives. The bottom line, though, is that there’s a better way to use the light-producing qualities of an LED than to stick it deep inside a 2’x4’ fixture. New light sources require new forms. Incandescent lights were originally designed to fit inside or replicate gas lighting (which was similar to candles and kerosene lighting). I’m sure it took years for people to accept the recessed incandescent (try doing that with a flame!). When fluorescent lights came out in the 1930’s, they took on a new shape to match the new light source.  Now that LEDs are reaching maturity (adolescence?), they need shapes and forms that match their strengths. I don’t know what those shapes are, but the end goal remains to provide good lighting.

• Here in New England, we got headlines reading “Home Heating Bills Expected to Hit a Record High”. The US Department of Energy is projecting that heating oil prices will rise by 8 percent and stay at that level all winter. But why? All the charts and graphs tell us that crude oil costs have plummeted like a rock since the spring and are at the same level they were a year ago. The problem is that US crude oil is benchmarked against the price of oil at a huge storage depot in Cushing Oklahoma. That depot is landlocked, difficult to access and near its storage capacity, so prices are depressed. The price of Brent crude oil from the Britain’s North Sea, serves as the benchmark for 2/3 of the world’s crude. It serves as a more realistic indication of price trends. Looking at the table below, notice that Brent crude is up 25% from last year.
• If you think the price of heating oil doesn’t affect you, think again. Heating oil and diesel fuel are basically the same. Diesel costs affect trucking, transportation and construction costs, and those increases will hit us all.

Natural Gas Prices – Will the Zombie Awaken?

Natural Gas prices have been dormant and on an almost continuous slide for the past two years. Whenever we “experts” think that the price can’t go lower, it drops. There are two main reasons for this: 

• First, a great deal of natural gas has come online from “non-conventional” sources such as the shale gas fields of Pennsylvania, West Virginia and New York. In the past ten years, production from these areas has doubled. More importantly, thanks to developments in drilling technology, it is now estimated that the US has 100 years of recoverable gas. Natural gas has gone from being perceived as a scarce and declining commodity to being seen as an abundant one.

• The second driver pushing the price of natural gas down is the economy. Gas is used both for process heat like bakeries, smelters and forges and as an input into the manufacturing of plastics and other materials.

Oil prices have fallen by over $7 per barrel in the past four days. The big (and unanswerable) questions are:

• Is this a sustainable drop or a quick reaction to world events?
• Will this drop translate to lower prices for gasoline & diesel?

As economist James Williams writes on his Energy Economist website, “The outlook for the next 12 months: Oil prices $120 or $60.  As in 2008, both could happen.”

(For NY Times, see Experts Had Long Criticized Potential Weakness in Design of Stricken Reactor, March 16, 2011)

• “.. a growing body of economic research suggests that this conventional view of oil shocks is wrong. The US economy is far less susceptible to interruptions in the oil supply than previously assumed.”
•  The US economy is far less oil-dependent then it was in 1973 and far more flexible and resilient, Oil is still a major factor in everything touching our economy, but heavy industry and utilities are far less oil-dependent than they once were.
• Recent history shows that price spikes caused by supply disruptions have been short-term. (The Iran-Iraq war in the early ’80’s, the 1990 Gulf War and the destruction of Kuwait’s wells, and Hurricane Katrina all resulted in short spikes but no long-term harm.)
• When there have been long price rises (2006-08 for example), researchers found them to be the result of panic, rather than shortage
• If we’re less hostage to oil shortages, then what does that mean to all the interests and policies designed around “Oil Shock”. It’s not just foreign policy, but clean energy, coal, and energy efficiency (to name a few) that base their arguments on what may be a discredited theory.

Read the article and let us know what you think: http://www.boston.com/bostonglobe/ideas/articles/2011/02/13/crude_reality

Last week in his State of the Union address, President Obama talked about technology developments and staked out a bold position on America’s Energy Future:

“Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling. So tonight, I challenge you to join me in setting a new goal: By 2035, 80 percent of America’s electricity will come from clean energy sources. Some folks want wind and solar. Others want nuclear, clean coal and natural gas. To meet this goal, we will need them all …”

It’s a great notion. I want to believe it. There are all manner of amazing technologies being developed. And it is true that technological innovation can come blindingly fast and result in amazing changes. (For example, 25 years ago there was no world wide web and barely an internet. Who know what we’ll have in 2035, 24 years from now.)  Here’s the math illustrating the daunting road ahead:

2011 Electric Demand: 940 gigaWatts (gW)             2035 Projected Demand: 1200 gW

2011 “Clean” Power produced: 225 gW                    2035 Target for “Clean” power:960 gW 

That’s a lot of power generation capacity that needs to be constructed in order to meet the 80 percent goal. Right now you can find vocal opposition to almost any kind of electrical power plant or transmission construction, from gas-fired plants to wind farms to large-scale solar developments.  I understand that realism historically is not a feature of the State of the Union Address, but a lower goal with a firmer plan for implementing it would have been preferable. I was also disappointed that energy efficiency was not mentioned as a power source. Energy efficiency has helped reduce energy demand and will continue to do so.

We discussed “clean coal” and the mix of sources contributing to the US electricity generation capacity in the December 7 Energy Intelligence Update, available here.

More with Less

Our friends at dMASS have a new video out titled “Why Design Matters”. It’s a great introduction to the kind of thinking that could actually make clean power goals achievable. Check it out at www.dmass.net.

Winter Thoughts:

 The past month has been cold and snowy here in Boston, which brings back memories of what it’s like to live in a real winter environment (defined as one where the snow lasts until April). The cold, and the various technologies for dealing with it, have brought me back to some fundamental  truths about technology:

• Look at the new technology. My ski boots are so much lighter than what I had 35 years ago and my feet are so much warmer. I never knew! The same goes for your building. Look at what’s new and better
• Don’t necessarily throw out the old. My 50 year-old boiler works just fine and is reasonably efficient. Replacing it would be a 10 year payback, which doesn’t fly for me. Remember, just because “everybody” knows a technology is obsolete, sometimes an upgrade just doesn’t make sense
• It’s all about execution. Up here, the sign of a well-insulated roof is lots of snow and no icicles. If you have icicles, you don’t have a well-ventilated roof. My humble house has all the signs of a good insulation job. A nearby $1.5 million house is covered in icicles because somebody clearly didn’t do something right. Just because you have a new system (or building), it doesn’t mean anything unless it performs.

• Roughly 35% of the world’s oil exports come from Saudi Arabia, Kuwait and the Gulf Emirates. Like Egypt, these countries are led by elderly autocrats that fear unrest and crave stability. What happened in Tunisia, and is now happening in Egypt and Jordan, may not spread to other parts of the Arab world. It still has focused renewed attention on the fundamental instability in the “Oil Basket”.
• Democratization in Egypt could provide an opening for more radical elements aligned with Iran or Syria
• The Suez Canal and Pipeline transport 4.5% of the world’s crude oil production. It has not been affected yet, but its shutdown is a very real possibility.

The cold weather in the Eastern US and Europe has also had an impact. Liquified Natural Gas (LNG) that normally flows into the Northeast US to reduce gas pipeline capacity problems has been going to the higher-priced European market instead.  The Northeast is also a heavy user of #2 heating oil, and prices have risen as a result of the extreme cold during January.

“It seemed like a good idea at the time.” Is that what they will be saying about the LEED standard for green buildings, a few years from now? Was it perhaps a bit ahead of its time when it was first developed back in 1998? Has our collective understanding of what it takes to make a building truly sustainable evolved over the past few years to the point where a different standard is needed?

Although LEED has raised awareness, it has become a flawed brand. Achieving LEED certification has become a “green sainthood” of sorts. Just as there’s no single definition of “sustainable”, there’s no single, foolproof certification that a building is “good” for the environment. There are just too many variables, and too few of them can easily be measured or quantified. LEED, ASHRAE, EPA Energy Star and other benchmarking systems all have their pros and cons.

LEED attempts to address sustainability issues beyond energy efficiency. The LEED process can be a great means to really dive into a design and make sure that everything is optimally designed.  Sadly, it can also be reduced to foloowing a checklist and looking for loopholes. The fact that a 4800 sf luxury home in the Hamptons can become LEED Platinum certified (http://www.hamptonsgreenalliance.org/house/index.html) speaks to a very narrow concept of sustainability. (Dare I say it’s ridiculous?) Could the factory that produces individually wrapped plums become LEED-certified? Absolutely. Would it be an environmentally beneficial building? Yes as an alternative to a poorly designed prune-wrapping plant, but LEED doesn’t answer the question of whether we need a prune-wrapping plant. The LEED rating system isn’t designed to answer that question. It rates the building, that’s all.

Is LEED “garbage”, as some detractors claim? No, but we should be wary of the of the instant green mantle that a LEED certification can bestow.   No certification of buildings, individuals or institutions – can replace intelligent, comprehensive and independent thinking.