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By Robert Rapier on Jun 9, 2011 with 59 responses

Roundtable on China’s Energy Future

Just a note that this weekend I leave for an extended business trip, with visits to Seattle, Washington D.C., Germany, Massachusetts, Vermont, and California. I will be on the road for about four weeks, but will try to keep to my schedule of posting new columns on Mondays and Thursdays. Next Monday I will have a story up on Virent’s progress in producing gasoline from biomass, and following that I have a number of stories and guest posts to choose from.

I was recently asked to participate in an energy roundtable at Focus on China’s Energy Future and the Shale Gas Question. It is no secret that I feel that China’s moves stand to continue sending shock waves through the energy markets over the upcoming years. In fact, energy news from China warranted inclusion in My Top 10 Energy Stories of both 2009 and 2010. In 2009, I stated my belief that “China will be the single-biggest driver of oil prices over at least the next 5-10 years.” In 2010, the news was reported by the International Energy Administration (IEA) that China had become the world’s top energy consumer. BP confirmed this in their just-released Statistical Review of World Energy 2011.

While the roundtable was ostensibly about China’s shale gas developments, the discussion covered China’s energy future in general. I will excerpt from the transcript below, but there were several key points that I made during the roundtable. They were:

  • China can’t possibly be energy independent in the foreseeable future, and they will be out in the world markets competing for energy. Thus, anything the U.S. can do to help China meet their own energy needs — such as sharing shale gas technology — stands to benefit U.S. consumers by helping to keep global prices in check.
  • China’s potential for growth is frightening. China uses about two barrels a year of oil per person. In the United States we use 23 barrels of oil per person per year. If China’s usage grew to the U.S. equivalent, it would be 85 million barrels a day, which is about the total consumption of oil for the world. However, there simply isn’t enough oil available for that to happen, so it sets up some challenges in the years ahead.
  • China is one of the world’s largest producers of renewable energy, leading in categories like wind power and solar hot water. A statistic I recently read said that China’s energy production from solar hot water is equivalent to the energy output of 40 nuclear power plants.
  • Oil prices are being driven by both fundamental supply/demand issue and speculation. With a narrowing of the supply/demand gap over the past decade, it makes the influence of speculators in the market more significant. If there was still plenty of excess oil production capacity, speculators couldn’t have nearly the same impact on oil prices.

You can read the entire transcript here. The transcript is a bit garbled at times, so let me offer some quick corrections. I worked for Hoechst, not Hertz, and Celanese, not Selamese. I referred to Sasol several times, and that got transcribed as Sasaw.

Now a few excerpts from my portions of the roundtable. On China’s energy situation in general:

I’ve written about China for a few years and I think China is going to drive global energy prices more than any other factor over the next decade probably. Just to put things into perspective, China uses about two barrels a year of oil per person. In the United States we use 23 barrels of oil per person. If China’s usage grew to where ours is, it would be 85 million barrels a day, which is about the total consumption of oil in the world. Over the past few years the U.S. actually has had some decline in petroleum consumption because of high prices, but for China and India, their usage grew more than ours fell.

So global demand has remained very high, such that even in a recession we’re still dealing with $100.00 oil, something we wouldn’t have seen in past times. China is out doing deals all over the world. They’re bidding against ExxonMobil to develop fields. They’re in Iraq, they’re in Venezuela, they’re in Africa, and the other thing as David mentioned, they did become the number one energy consumer in the world in 2010 according to the International Energy Administration. People may not realize they’re also very big producers of renewable energy. They’re the largest, and this happened in 2010, they became the largest producer of wind power in 2010 surpassing the United States and they have by far the largest solar hot water heating capacity.

They have over half the world’s capacity of solar hot water. A statistic I read said it’s the equivalent of 40 nuclear power plants is how much solar hot water they produce. So China has a lot going on in energy. On the shale gas subject they use very little gas today actually. It’s only about 3 percent, so there’s a lot of room for that to grow as well.

On speculation versus fundamentals:

Well there is a speculation component and when supply and demand gets tighter it becomes the speculators can have a field day because the oil markets are much more volatile. So there is a component of speculation there that wouldn’t be nearly as easy if there was a lot of global excess capacity. So it’s hard to separate that and say it’s not speculation it’s supply and demand. Well it is supply and demand, which makes the speculation easier.

Ten years ago there was a lot of global spare capacity laying around, and when somebody went offline or there was tightness in, say, Libya, somebody else could bring on more capacity and ease those shortages. Over the past ten years demand has grown faster than we’ve added new capacity and so there just isn’t much excess capacity anymore and that’s likely to be the case going forward. It may be that we can add a little more incremental capacity, but if you see where China is starting from and where they would like to go it’s hard to imagine that we will ever return to the days of cheap oil.

On the difference between China’s shale gas resource and what may be a much smaller recoverable reserve:

I can’t speak to the specific technology how much of that is recoverable because I’m not a shale gas expert per se. I will say that on the previous conversation there just to give an analogy, in the U.S., and we’ve known this for 100 years, we’ve had trillions of barrels of oil shale in the western United States and that’s Utah and that’s Colorado and those states, and that’s different from shale gas in that you can take oil shale and you can actually extract oil from it. We have talked about the resource base there of 1 trillion barrels or 2 trillion barrels and this has never been produced.

The reason it’s never been produced, it’s just too energetically intensive to go out and produce it. I have a headline, newspaper headline from I think it’s 1905 that says “Shale oil development imminent” and it’s been that way for 100 years. It gets into how much energy it actually takes to go out and get it, and that’s gonna be the situation as well with the shale gas. You may have gas that’s technologically recoverable in much larger amounts than say the reserve, so you may be able to get maybe the majority of that resource but not economically because ultimately you’re spending more money and you’re spending a lot more energy to get that gas out than it’s worth on the market.

On my understanding of the technology initiative that President Obama made with China, and what’s in it for the U.S.:

My understanding is that it’s technology, that we will provide them and share technology with them that allows them to exploit their resource there. As I said if you look at it from the perspective what’s in it for us, there’s a lot in it for us if they are able to produce more of their own energy domestically and aren’t out there on the open market driving up prices and competing with the U.S. So that’s I think the basis of it.

But to the extent that we can help them reach their goals I think it’s very beneficial for us. If not for China, oil is not at $100.00 a barrel. If not for the growth that they’ve had over the past decade. We’re now at these oil prices and they’re not going back. So I think to avoid continued escalation in oil prices it’s in our interest to help them achieve their own energy goals, otherwise they’re in there in Iraq outbidding us for development of fields. They’re outbidding us in China. They’re doing deals with people that we don’t deal with, so they’re out there on the global market if not dominating it at this point very soon to dominate the global market in petroleum.

On what other alternatives China may consider. This section was a bit garbled, so I am editing it to more clearly reflect the point I was making:

One major one that they have that we’ve talked about just a little bit in the U.S. is dimethyl-ether, which can be made from coal. They can make methanol from coal and that can be used for fuel. So from their coal they can produce liquids and not necessarily the more capital intensive Fischer-Tropsch process that say Sasol uses. Of course Sasol sunk their capital costs at much lower oil prices, so probably now that process makes a lot of money for Sasol. But to build a plant like that today you need ever higher oil prices (or at least a large differential between natural gas prices or coal prices and oil prices).

To build a methanol plant based on coal or to build a dimethyl ether plant based on coal you can probably produce fuel for less than current oil prices. And China is building dimethyl ether plants. Dimethyl ether is a fuel that can be used in a combustion engine, it can be used in a compression engine like a diesel engine. It’s a gas at room temperature but it’s very easily compressible, non-toxic, so it has quite a lot of things going for it. We just don’t have the infrastructure here in the U.S. for it right now. So that’s one alternative. China is doing a few things as a result of having so much coal that we really haven’t touched upon a lot.

We can produce methanol in the U.S. as well just like we can produce ethanol except via a different process, but we haven’t had the need for that. For instance, methanol on the global market sells for like $1.00 a gallon or something and it has half the energy content of gasoline. But it has its own issues. It’s corrosive and it’s toxic and things like that, but the same can be said about gasoline. There are a few options out there that I think don’t get a whole lot of attention that probably have a lot of potential for mitigating declining oil production.

All together, a good discussion of China’s energy situation, with excellent contributions by fellow participants David Fridley (from Lawrence Berkeley National Laboratory) and Kurt Cobb. (Arthur Berman was scheduled to participate, but had some technical difficulties).

  1. By Kit P on June 9, 2011 at 8:22 am

    “China is one of the world’s largest producers of renewable energy, ”

     

    According to communist propaganda and the NYT (more communist propaganda) but not according to BP.

     

    “A statistic I recently read said that China’s energy production from solar hot water is equivalent to the energy output of 40 nuclear power plants. ”

     

    Nuke plants produce electricity that can run steel mills and factories. Hot water is nicer than cold water for taking a bath. In the US, I can make hot water in an electric hot water heater cheaper than solar hot water.

     

    China is a backward country 50 years behind the US. There record for record for producing energy is one of death and pollution. China is getting better when it comes to coal. Soon they will be only 100 years behind the US.

     

    I will again point our that wind and solar are shinny things to distract from the record of increasing demand for fossil fuels. There is nothing wrong with wind and solar but it is like ping pong. Who cares if you are the world leader.

     

    The US is a world leader in air quality and reliable supply of energy.

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  2. By Douglas Hvistendahl on June 9, 2011 at 9:40 am

    Backward lets them copy instead of innovating to improve, which is lower cost. It also lets them jump over older technologies to better things. Example: they are experimenting with the J-pod electrical powered transportation design which can be put up for about a tenth the cost of light rail. A J-pod system can be powered totally by a roof of solar cells, with output left over for other purposes. For urban people moving it may be the best system currently known.

    Solar hot water preheat pays off now over 95% of the continental US for those willing to invest in the cost of putting up a system. At present we are strengthening our south roof, for possible future development. For places where there is plenty of sunlight and energy costs are high, it is a slam-dunk. Solar PV is still needing subsidies, but the price is decreasing.

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  3. By Rufus on June 9, 2011 at 10:19 am

    Don’t overlook that China is a Net Coal Importer; and those imports are rising, rapidly.

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  4. By Wendell Mercantile on June 9, 2011 at 11:58 am

    China’s energy future also involves land. They have been quietly buying up land in less-developed countries (such as those in Africa) so when the Chinese get hungry, they can grow food in Africa for them.

    Not yet resolved is how they will handle the outrage of the hungry Africans living near that land on which industrial farmers are growing food for China.

    That’s one reason to have a strong military ~ as the competition for resources (energy, food, commodities, and water*) becomes more intense, countries will have to be ready to fight for them.

    —————————–
    * The coming conflict over water, will be even more acute than that over energy.

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  5. By Kit P on June 9, 2011 at 12:23 pm

    “Backward lets them copy”

    Backwards is building 1950 era coal plans. Following is building 1970 era coal plants. If China had just followed the west, they would not have the pollution problems they have now. State of the art coal plants are very efficient and have pollution controls. You find these in places where they import coal like South Korea and Japan.

    “Don’t overlook that China is a Net Coal Importer; and those imports are rising, rapidly.”

    If China coal plants got as much electricity from a ton of coal as my utility, China would not need to import coal. If you look at the carbon foot print of American manufactured goods it is much lower.

    Another example is refrigerators. China is cloning frigs with the energy use of what I had 40 years ago. Multiply that by a billion and compare it to an energy star frig.

    Every time I look at China beneath the propaganda I see a sad repeat of what the west learned many years ago. It is good that China is putting some effort into not killing their slave labor.

    “For places where there is plenty of sunlight and energy costs are high, it is a slam-dunk.”

    Total BS Doug but I will be happy to review your calculation for free. Start with the flow of your low flow shower nozzles (2.5 gpm?) and multiple by the amount of time your family takes showers. Skip the amount used for washing cloths because modern detergents do not need how water. What you will find out is that a modern house does not use very much hot water. If you just conserve you will not need to build a solar plant.

    If you have a multifamily dwelling, a dorm of coed, or hotel; solar hot water may be economical.

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  6. By Kit P on June 9, 2011 at 12:38 pm

    “That’s one reason to have a strong military”

    China has a big military with only the capability of maintaining a slave labor system. The only people who to worry about the people’s army is the people of China. For all practical purposes, China has no navy. China can only import coal and oil if western navies maintain the sea lanes open. It just take one wing nut in North Korea with a fleet of old diesel subs to disrupt that. China does not have the ability to control North Korea but we do. Not saying it would be pretty.

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  7. By rrapier on June 9, 2011 at 1:12 pm

    Kit P said:

    “China is one of the world’s largest producers of renewable energy, ”

     

    According to communist propaganda and the NYT (more communist propaganda) but not according to BP.

     


     

    I have to wonder if you ever bother to fact check. According to the BP report, (non-hydro) renewable growth in China was 74.5%, giving them 7.6% of the world’s total renewable capacity. That puts them in the Top 5 according to the BP report, which most (sane) people would agree makes them one of the world’s largest producers of renewable energy. Further, the BP report confirms what I said; that China took first place in 2010 for wind power; 22% of global capacity versus 20% in the U.S. If you missed it, here, under China Takes the Lead.

    The BP report counts hydropower separately, and China is by far in first place there. In fact, when you add their hydropower generation to their other renewable energy capacity, nobody is even close to them.

    So, to be blunt it’s just another case of you not knowing what you are talking about, sharing with us your ignorance, and the next step of course will to be tap dance and explain why you really got it right. Your turn….

    RR

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  8. By A reader on June 9, 2011 at 1:12 pm

    Kit, do you realise that China is one of North Korea’s closest allies? If anyone has the ability to control NK it is them, not the US (at least without additional military spending that is already helping to drive US deficit problems into the stratosphere).

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  9. By mac on June 9, 2011 at 1:13 pm

    Douglas said:

    “A J-pod system can be powered totally by a roof of solar cells, with output left over for other purposes. For urban people moving it may be the best system currently known.”

    Here’s a link to a somewhat similar idea. This looks like fun. I’d like to try this myself..

    http://www.youtube.com/watch?v…..ure=fvwrel

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  10. By mac on June 9, 2011 at 1:48 pm

    RR said:

    “A statistic I recently read said that China’s energy production from
    solar hot water is equivalent to the energy output of 40 nuclear power
    plants.”

     

    To me this seems like an absolute positive.  The Chinese saved the expense of building 40 nuclear power plants.

    If the Chinese need to build 40 nuclear power plants to smelt aluminum, that’s an entirely different matter.

    They  can build their nuclear powered aluminum smelters with the money they saved by installing solar hot water heaters.

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  11. By OD on June 9, 2011 at 1:52 pm

    one of the world’s largest producers of renewable energy.

    I think your reply was a tad harsh RR. Perhaps Kit read that sentence as, THE largest producer of renewable energy, as did I on first scan.

    My question, and one that can not be overlooked imo, is will China have enough water to continue to generate electricity growth at such a pace? Their growth reminds me of our housing bubble, but on steroids. It can not last and when it hits the brick wall, it was be spectacular, not in a good way.

    When 1.3+ billion Chinese realize their standard of living can not continue to rise, what happens? And yes, you absolutely can apply this question to numerous countries, including your own.

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  12. By rrapier on June 9, 2011 at 1:55 pm

    OD said:

    one of the world’s largest producers of renewable energy.

    I think your reply was a tad harsh RR. Perhaps Kit read that sentence as, THE largest producer of renewable energy, as did I on first scan.


     

    Given Kit’s history here, I doubt that. Further, given said history I don’t give Kit any benefit of the doubt. He has taken a flamethrower to far too many people here for me to cut him any slack.

    RR

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  13. By Kit P on June 9, 2011 at 3:04 pm

    “That puts them in the Top 5 according to the BP report”

    Top consumer of energy, 5th largest producer. No, not a leader!

    China has built a lot of wind farms and finally caught up to the US. Of course they have not said how well they work. If quality control is typical of China, they do not make electricity. RR can look up how much electricity they make. Staying focused on the on the least important aspect of energy is a specialty.

    “The BP report counts hydropower separately, and China is by far in first place there.”

    But not a leader. The amount of hydro is a function of geography. In the US, hydro was built out in the 60s. Lucky to get that too since the environmental movement put a stop to that. Since RR lived in Montana, he should know that.

    “Kit, do you realise that China is one of North Korea’s closest allies?”

    Yes, do they have any others?

    “not the US (at least without additional military spending that is already helping to drive US deficit problems into the stratosphere).”

    It will take 48 hours to destroy the NK military with existing ordinance excluding nuke weapons. Unfortunately it will be too late for millions in SK.

    “If anyone has the ability to control NK it is them”

    I assume you mean in a peaceful way A Reader. That is the scary part. China is not doing a very good job unless leaders in China are just as insane as NK. Insanity appears to be passed from father to son in the leadership of NK.

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  14. By rrapier on June 9, 2011 at 3:38 pm

    Kit P said:

    “That puts them in the Top 5 according to the BP report”

    Top consumer of energy, 5th largest producer. No, not a leader!


     

    So we have you initially disputing that they were one of the larest producers of renewable energy, being shown you are wrong, and now you move the goal posts with a “leader” descriptor that only you can decipher. As I said, the tap-dancing would surely ensue, because to this date I don’t think I have ever heard Kit say “I was wrong about that.” All you ever try to do is spin when you are wrong.

    China has built a lot of wind farms and finally caught up to the US. Of course they have not said how well they work. If quality control is typical of China, they do not make electricity. RR can look up how much electricity they make. Staying focused on the on the least important

    aspect of energy is a specialty.

    Hyperbole, speculation, but no facts. Tap dancing.

    “The BP report counts hydropower separately, and China is by far in first place there.”

    But not a leader.

    Not a leader per Kit P, who has leader metrics the rest of us are not privvy to. You see, if we were going to debate the issue of “leader” versus “largest producer”, the first thing I would have had you do is to provide objective criteria by which we would measure what a leader is. As long as it is merely subjective for you, you will deny no matter how wrong you are shown to be.

    The amount of hydro is a function of geography.

    In case you haven’t noticed, all renewable energy is a function of geography.

    RR

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  15. By Justin on June 9, 2011 at 4:32 pm

    I have a question RR – who specifically said this, “For instance, methanol on the global market sells for like $1.00 a gallon or something and it has half the energy content of gasoline. But it has its own issues. It’s corrosive and it’s toxic and things like that, but the same can be said about gasoline. There are a few options out there that I think don’t get a whole lot of attention that probably have a lot of potential for mitigating declining oil production” and how likely do you think it is that methanol is what is used to replace declining oil production. Just based on the little I know it seems unlikely, but I’d rather hear from others who are more knowledgeable.

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  16. By Wendell Mercantile on June 9, 2011 at 5:17 pm

    how likely do you think it is that methanol is what is used to replace declining oil production.

    Justin~

    Very likely. It can be made from a number of domestic feedstocks (coal, natural gas, and biomass gasifiers for example), and methanol can be the feedstock for another fuel called dimethyl ether (DME). DME can be used in compression ignition engines and is an excellent replacement for diesel fuel.

    Methanol is toxic, but so is ethanol and as you pointed out, gasoline. Methanol has a low energy density compared to gasoline, but that just means you’d need a larger fuel tank, or would need to make more refueling stops.

    Methanol economy could be a strong option as a replacement for oil, but there would be resistance from those entrenched in the oil and ethanol business, and the politicians they have in their pockets.

    There are methanol experts who regularly post here, and I’m sure they will jump in with more.

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  17. By I Gimlet on June 9, 2011 at 5:19 pm

    Re: coal in your presentation:

     

    Per the 2011 BP Annual Statistical China now represents nearly half the world’s coal consumption–48.2% to be exact as of end of 2010.  I don’t have any data on coal burning plants construction currently underway in China on hand, but IIUC, they are slated to build quite a few this year and the next and the next etc.  They have quite large reserves 9third largest in the world IIUC), but at just 2010 rates their R/P ratio comes in at just 35 years.  The Chinese mine more than three times as much coal as the next closest producer (the US).  BP doesn’t give the import numbers on coal, but IIUC they are growing at a fairly rapid clip–which so far has put little to no upward pressure on coal prices, but I can’t imagine at their increasing rate of consumption that that will last (I think on a boe basis Asia Pacific LNG prices are already comparable to CAPP futures, for example.)

     

    All of which to say that CTL may not have much product with which to work with in China.  Just an observation.

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  18. By OD on June 9, 2011 at 5:22 pm

    Given Kit’s history here, I doubt that. Further, given said history I don’t give Kit any benefit of the doubt. He has taken a flamethrower to far too many people here for me to cut him any slack.

    Point taken ;-)

    I would not consider China & North Korea allies. They seem more akin to a parent dealing with an unruly child. At any point the parent can take away support, and the child will be left to fend for themselves.

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  19. By mac on June 9, 2011 at 5:31 pm

    Workhorse of the Solar Industry – solar thermal

    “Experts project that by 2010 the number of solar water heaters installed in China will equal the thermal equivalent of electrical capacity of 40 large nuclear power plants. Globally, solar water heaters have the capacity to produce as much energy as more than 140 nukes. Their energy production dwarfs photovoltaics by a factor of 30 and equals the electrical capacity of wind, thought by most to be the most widely used renewable energy source.”

    http://www.miller-mccune.com/s…..stry-4736/

    .

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  20. By OD on June 9, 2011 at 5:33 pm

     They have quite large reserves 9third largest in the world IIUC), but at just 2010 rates their R/P ratio comes in at just 35 years.  The Chinese mine more than three times as much coal as the next closest producer (the US). 

    That is a scary little factoid. I wonder what their plans are to keep the power companies going once the coal runs out? Reading stuff like that makes it really hard to believe they are preparing for peak oil, as some have claimed. In my eyes, they don’t seem to be preparing for peak oil, peak coal, or peak anything. Just moving as many people off of farms and into cities as fast as they can.

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  21. By I Gimlet on June 9, 2011 at 5:41 pm

    I Gimlet said:

    (I think on a boe basis Asia Pacific LNG prices are already comparable to CAPP futures, for example.)
     


     

    Big error, sorry I had a brain fart–US NG front month sells at a $5.20/boe premium to CAPP front month (as of close yesterday), and has a much much longer way to go before it even gets close to the price of Asia Pacific LNG, which, of course, encourages even more coal use.  Sorry for screw up there, got all turned around.

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  22. By rrapier on June 9, 2011 at 5:45 pm

    Justin said:

    I have a question RR – who specifically said this, “For instance, methanol on the global market sells for like $1.00 a gallon or something and it has half the energy content of gasoline. But it has its own issues. It’s corrosive and it’s toxic and things like that, but the same can be said about gasoline. There are a few options out there that I think don’t get a whole lot of attention that probably have a lot of potential for mitigating declining oil production” and how likely do you think it is that methanol is what is used to replace declining oil production. Just based on the little I know it seems unlikely, but I’d rather hear from others who are more knowledgeable.


     

    Hi Justin,

    There won’t be one replacement for oil. Methanol could probably do it on a very short term basis, but then we would quickly run out of coal. And there isn’t enough biomass to be able to replace oil with biomass-based methanol.

    In short, I see methanol as being one of my contributors toward replacing oil. There isn’t one that can do it alone. But we would be foolish to overlook the potential of methanol in being part of that solution.

    RR

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  23. By Kit P on June 9, 2011 at 5:49 pm

    “Their growth reminds me of our housing bubble, but on steroids. It can not last and when it hits the brick wall, it was be spectacular, not in a good way.”

    When it comes to making electricity, it has hit a brick wall OD. China has electricity shortages every summer and winter. That is why China is importing coal. They can not mine and ship it fast enough to meet demand. That is why China is building nuke plants.

    When I look at other countries to see what we can learn to do better or how they affect the way we live. When it comes to China, there is nothing we can learn as far as making electricity better.

    Once China stop exporting slave labor coal, the US could compete on the world market. That made US coal more valuable and the cost of making electricity more expensive. It affects are pocket book but in small way compared to buying gasoline.

    Since coal is more expensive, new nukes are not competitive. This affects me in a big way. It is called job security.

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  24. By OD on June 9, 2011 at 6:02 pm

    Since coal is more expensive, new nukes are not competitive.

    Really? I would think the opposite would be true.

    The new EPA rules are sure to make electricity generated from coal more expensive as well.

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  25. By Kit P on June 9, 2011 at 7:43 pm

    “To me this seems like an absolute positive.  The Chinese saved the expense of building 40 nuclear power plants.”

     

    That is a lot of hot water MAC. Tell me how you make hot water at your house. Maybe they are really small nuke plants.

     

    “More than 30 million Chinese households rely on the sun to heat their water. Over the last six years, the number of solar consumers has grown sixfold. The motivation is simple. A solar water heater in China costs less than $200. Without one, a family wishing for hot water would have to buy an electric water heater for about the same price and pay up to $120 per year for electricity. The payback is almost instantaneous.”

     

    I happen to think solar hot water is great. So much so that I designed, built, and operated a system for my house in California 30 years ago. That makes Kit P a leader and Huang Ming in China a follower.

     

    What I learned is that it is a really stupid idea in California and by extension most of the US. If I could have done for $200, maybe not so stupid. I also found a lot of systems that were junk and did not work.

     

    I also learned about solar BS. Under that category is reading someplace that ‘ Chinese saved the expense of building 40 nuclear power plants’. That is a lot of nuke plants, there should be a lot of data to support the efficacy solar hot water.

     

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  26. By Kit P on June 9, 2011 at 7:56 pm

    “Really? I would think the opposite would be true. ”

     

    OD you are correct, I made an error typing.

     

    “The Chinese mine more than three times as much coal as the next closest producer (the US). ”

     

    I Gimlet do you remember when the US used about the same amount of coal as China and Clinton/Gore wanted to impose the Kyoto Treaty on the US? In a little more than 10 years, China has created two more king coal US economies.

     

    I think renewable energy is great, it is the BS that about China and all the other places that talk about renewable energy while going the opposite so fast it will make your head spin. How gullible are the folks at the NYT? ‘US bad, China good’ what a load of happy HS as my father would say.

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  27. By mac on June 9, 2011 at 8:50 pm

    The following is from a U.K Energy Blog:

     

     

    The photo above shows an apartment block, part of the 61 residential
    units that make up the Gneis Moos development in suburban Salzburg.

     

    “In the UK we are used to solar water heating panels on our roofs,
    with an average size of about 2 square meters, just to contribute a
    part of the domestic hot water of a single household.

    Over the next
    couple of blogs I want to write about large scale solar hot water
    systems, from a few hundred to tens of thousands of square meters, now
    rapidly being deployed in Europe, with a few elsewhere in the world, but
    sadly none yet in the UK, despite the fact that they would work very
    well in our climate.”

    These systems can be used to produce domestic hot
    water, central heating and even air conditioning in summer for groups of
    just a few households to towns with thousands of buildings. Hot water
    is fed into a district heat main with a central storage tank, which if
    of sufficient size and insulation can store the summer’s heat to meet a
    large part of the winter heating requirement of whole communities.”

     

    Sounds to me like the Europeans have caught the same solar hot water disease as the Chinese.  Solar District Heat too !!  Wow ! What’s the world coming to ?

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  28. By thomas398 on June 9, 2011 at 9:21 pm

    What’s the EROEI for coal to methanol?

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  29. By I Gimlet on June 10, 2011 at 2:51 am

    Kit P said:

    I Gimlet do you remember when the US used about the same amount of coal as China and Clinton/Gore wanted to impose the Kyoto Treaty on the US? In a little more than 10 years, China has created two more king coal US economies.


    Yes, I do remember that … and how the environmentalists went ballistic over the issue.  Clearly no deal can be made unless the emerging economies agree to play along.  The scale of Chinese coal consumption is a bit mind boggling.

     

    Kit P said:

    I think renewable energy is great, it is the BS that about China and all the other places that talk about renewable energy while going the opposite so fast it will make your head spin. How gullible are the folks at the NYT? ‘US bad, China good’ what a load of happy HS as my father would say.


     

    The Chinese do seem to have made some significant efforts in terms of renewables–they are no 1 in wind power, IIUC, and I understand their solar sector is pretty well advanced.  Scaling them to China’s size and per capita wealth is clearly gonna be difficult.  The more I think about their R/P of 35 for coal the worse their outlook seems.

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  30. By Kit P on June 10, 2011 at 7:51 am

    “The scale of Chinese coal consumption is a bit mind boggling. ”

     

    It is not what you do, it is how you do it. Modern societies safely enjoy the benefits of energy while reducing the environmental impact to an insignificant level. If you destroy air quality and kill lots of miners, I think that is not doing a very good job.

     

    “they are no 1 in wind power, IIUC, and I understand their solar sector is pretty well advanced. ”

     

    It is not a game or a contest. Is there something to be learned from China about wind? What we know is based on government communist propaganda. I see no evidence that the NYT or RR know anything about renewable energy by boots on the ground information.

     

    When I was developing renewable energy, I studied Texas. Now more than 26 states have renewable energy standards based on what works in that state. On the topic of this modern era of wind, the leadership goes to Germany and Texas. In the US we have public debate, offshore wind has passed the 10 year mark.

     

    When it comes to the US, we are waiting on the NRC to move forward with construction. The design certification and COL processes of designs being built in China began several years before China asked for bids. China is following a process that we did in the 60s and 70s where the operating license is not given until the end. We have boots on the ground in China. My company has built and is building nukes in China to the same high standards as in the west. If there is something to learn we learn it.

     

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  31. By rrapier on June 10, 2011 at 2:22 pm

    Thomas398 said:

    What’s the EROEI for coal to methanol?


     

    Thomas,

    The EROEI for any XTL process is sort of confusing. If you view it as energy output/energy input, the EROEI is quite high. That is because the external inputs into the process are quite low (most of the energy is provided by the heat of combusting the coal). So you may be looking at an EROEI of 5 give or take.

    But, that isn’t the entire story. What is really important is how much of the energy content in the coal ends up as methanol. Let’s say you have 5 BTUs of coal, but you only get 1 BTU of methanol out. That says nothing about the EROEI if the energy requirements are met internally; i.e., by the 80% of the coal that was consumed in the process. That is a more important consideration than EROEI.

    My guess — based on other XTL processes — is that around 50% of the coal BTUs end up as methanol. The real deciding factor here won’t be EROEI though, it will be the price differential between coal and methanol (or whatever liquid fuel is being produced).

    RR

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  32. By rrapier on June 10, 2011 at 2:28 pm

    Kit P said:

    It is not a game or a contest. Is there something to be learned from China about wind? What we know is based on government communist propaganda. I see no evidence that the NYT or RR know anything about renewable energy by boots on the ground information.
     


     

    I have never felt a particular need to share with you where all my boots have been on the ground and what all I have looked at. That is of course my job, though — to put boots on the ground and evaluate technologies. Suffice to say my boots have been far more places than yours have been, and thus I am confident I know far more about renewable energy across the board than you do. But I am talking to a self-described know-it-all, and I know that my words won’t penetrate that fog of arrogant ignorance you have wrapped yourself in.

    RR

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  33. By Wendell Mercantile on June 10, 2011 at 3:04 pm

    The real deciding factor here won’t be EROEI though, it will be the price differential between coal and methanol (or whatever liquid fuel is being produced).

    RR~

    The second deciding factor would be environmental effects. CTL (whether gasoline, diesel, or methanol) takes lots of water. Unfortunately, water is limited where most of our coal is. (Montana, Wyoming, and Utah.)

    I’m an advocate for methanol from coal or natural gas, but it could be a difficult thing to do with coal because of the water situation. We might need two pipelines into and out of the coal regions: One to carry water to them from the Great Lakes, the other to carry methanol back. We could also take the coal by rail to where we want to make the methanol, as we now do for coal-fired power plants, but the transportation would add to the EROEI.

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  34. By biocrude on June 10, 2011 at 3:30 pm

    Off topic, but did anyone else see this latest idiotic move by Sen Dick Elliot from South Carolina?

    http://www.usatoday.com/money/…..-cap_n.htm

    “Elliott, a Democrat, has proposed a bill that calls for the wholesale price of gas to be capped for one year.”

    Unbelievable… I wonder if he consulted with Donald Trump on this one?  

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  35. By Wendell Mercantile on June 10, 2011 at 5:49 pm

    RR~

    Youv’e been quoted in AvWeb concerning biofuels for aviation: Aviation Biofuels: Continuing Self-Delusion

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  36. By rrapier on June 10, 2011 at 8:44 pm

    Biocrude said:

    Off topic, but did anyone else see this latest idiotic move by Sen Dick Elliot from South Carolina?

    http://www.usatoday.com/money/…..-cap_n.htm

    “Elliott, a Democrat, has proposed a bill that calls for the wholesale price of gas to be capped for one year.”

    Unbelievable… I wonder if he consulted with Donald Trump on this one?  


     

    These guys should at least have to take a basic economics course before being elected. Of course what would happen is if oil prices spiked, refiners would just stop making gasoline.

    RR

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  37. By Optimist on June 10, 2011 at 8:57 pm

    “Elliott, a Democrat, has proposed a bill that calls for the wholesale price of gas to be capped for one year.”

    Oh great! Just what we need! Lines at the gas station, anyone?

    Well there is a speculation component and when supply and demand gets tighter it becomes the speculators can have a field day because the oil markets are much more volatile. So there is a component of speculation there that wouldn’t be nearly as easy if there was a lot of global excess capacity. So it’s hard to separate that and say it’s not speculation it’s supply and demand. Well it is supply and demand, which makes the speculation easier.

    Affraid I don’t see how that works. If one speculator bid up the price too high, wouldn’t he be taken to the cleaners by the others? In the end, they all have to sell to REAL consumers.

    There are several examples of coomodity markets that went through the same 2008 bubble as oil, such iron ore, where no speculators are present.

    The way I see it, volatility is caused by the intentional opaqueness of the oil market, brought to us courtesy of our allies, the Saudis. With friends like those. Uncertainty, not speculation…

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  38. By paul-n on June 11, 2011 at 3:34 am

    My guess — based on other XTL processes — is that around 50% of the coal BTUs end up as methanol.

     

    I would agree with that – what I have seen usually gives NG to methanol as 70% and coal to  methanol as 50% energy yield.  There may be some side energy recovery as steam/electricity, but we are interested in the liquid fuel yield.

     

    One interesting thing that  China is doing for methanol production is using the off gas from coke production to make methanol.   So they are taking a low value waste product (usually burned on site, with or without electricity production) and making a medium value liquid fuel.  In fact, this is actually reducing on-site emissions from coke making – though given their emissions record that would not be hard.

    They quote 41Gj of energy (incl feedstock) to make 1ton of methanol, which is 19.9 GJ, which is 48.5% energy recovery.

    You can only scale this to amount of coke being produced for every ten tons of coke produced you get one ton of methanol, but given that China made 388 million tons of coke in 2010, there is a fair amount of upside there.  In fact, that amount of methanol, from all their coke oven off gas, is equal to two thirds the energy value of current US corn ethanol production – no food required!  As a proportion of their current annual gasoline consumption, it would be 25% (energy basis) – not bad for the product of a waste gas.

    Their current motor gasoline consumption is 74 million tpy (equal to 1.8 mbd, or 20% of US usage).  Using the coke oven methanol for the first 25%, they could replace the remaining 75% by converting 175 million tons of coal to methanol – or all of 6.5% of their current coal consumption.

    In fact, to theoretically replace all of China’s  9mbd oil usage with coal derived methanol, it would need to use 1.2bn tons of coal (38% of its current consumption) to do so.

    For comparison, for the US to replace its 18m barrels of oil with coal to methanol would need 2.4 bn tons – more than double the current annual consumption of about 1.1bn tons.

     

    Any way you slice it, these are massive numbers.

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  39. By Addoeh on June 11, 2011 at 8:57 am

    These guys should at least have to take a basic economics course before being elected. Of course what would happen is if oil prices spiked, refiners would just stop making gasoline.

    Or at least a history class. Nixon tried it and it failed, miserably.

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  40. By rrapier on June 11, 2011 at 1:16 pm

    Optimist said:

    The way I see it, volatility is caused by the intentional opaqueness of the oil market, brought to us courtesy of our allies, the Saudis. With friends like those. Uncertainty, not speculation…


     

    But that’s exactly what I view speculation as — uncertainty driving prices. When the market is tighter, that uncertainty can drive prices much faster (in either direction). When oil prices fall because Saudi says they are going to put more oil on the market, that is speculation. Supplies didn’t suddenly increase, but the perception that they will increase is there, and that impacts prices. That is what I view as speculation.

    RR

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  41. By thomas398 on June 11, 2011 at 2:30 pm

    I agree that oil market is very tight and a certain amount of volatility is warrented.  I do think that lax margin requirements cause bigger and longer moves in either direction.  I can’t see how a requirement to put 80% down on a crude oil bet would hurt the market. Raising margin requirments would get rid of hedge funds trading with borrowed money.   

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  42. By Rufus on June 11, 2011 at 2:41 pm

    China has big problems supplying enough electricity, now. They will soon be importing the equivalent of our Powder River Basin production.

    I’m not sure what their long-term answer (if they can even come up with one) will be, but I’m pretty sure it won’t be coal-to-methanol.

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  43. By klr on June 11, 2011 at 2:57 pm

    Robert:  what are you getting at in re:  shale?  The gas and oil resources have next to nothing to do with each other, it seems to me.  The former has an entirely different economic prospectus, independent companies can garner financing from the public, capital costs are per well at <$10 mil, thousands of wells are needed per year to combat declines, neglible water usage for environmental impact (although the fracking fluids issue is still being debated).  Whereas the latter is massively capital intensive upfront, has exceedingly high environmental impacts at all stages of production, etc.  I’d sooner liken it to UDW, which is why I’ve always had very grave doubts about it ever producing much of anything – imagine a deepwater platform that was also draining reservoirs through multiple states and leaving monstrous piles of rubble visible from highways.

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  44. By rrapier on June 12, 2011 at 2:16 am

    KLR said:

    Robert:  what are you getting at in re:  shale? 


     

    Several themes, but one is that what will be extracted is a small fraction of the actual resource.

    RR

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  45. By Kit P on June 12, 2011 at 8:36 am

    “China has big problems supplying enough electricity, now. They will soon be importing the equivalent of our Powder River Basin production. ”

     

    Rufus that is the overarching big picture. Coal is the big dog that pulls the sled of the world economy which is why energy expert start with coal. Electricity drive productivity. Productive people drive big cars which drives up oil production. Cause and effect.

     

    “I’m not sure what their long-term answer (if they can even come up with one) will be, but I’m pretty sure it won’t be coal-to-methanol.”

     

    What does every country do that can no longer produce enough coal? They build nuke plants based on designs of ‘arrogant’ American engineers. China has a massive new build program just like the US did 50 years ago. Again that is not leadership but it is good business for the leaders.

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  46. By moiety on June 12, 2011 at 6:23 pm

    Robert Rapier said:

    KLR said:

    Robert:  what are you getting at in re:  shale? 


     

    Several themes, but one is that what will be extracted is a small fraction of the actual resource.

    RR


     

    Interesting; we see some expansion in ethylene processing due to a change over from liquids/naphtha. In total terms it is a capacity increase but tiny compared to the expansion in Saudi and China.

    My thoughts is that it might have had more legs on it than that? A small fraction of the actual resource is worrying because that would ultimately mean that Germany etc are going towards coal in a big way (from the euro perspective).

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  47. By Wendell Mercantile on June 12, 2011 at 8:40 pm

    I’m not sure what their long-term answer (if they can even come up with one) will be, but I’m pretty sure it won’t be coal-to-methanol.

    Rufus~

    How can you be such a believer in ethanol, but not methanol? Corn-to-ethanol is not sustainable in the long-run w/o subsidies and mandates and cellulose-to-ethanol has yet to prove it can be scaled-up from lab to production and made economically. (For example, look at the $30 per gallon for the biomass jet fuel the Air Force just experimented with.)

    On the other hand, we know coal-to-methanol and natural gas-to-methanol are both possible and economically viable. The only problem is neither is viable for the long-term since coal and NG are both finite resources (at least on a human scale). But methanol from coal and NG could be the fabled “bridge” to get us over the next 50-60 years*.

    As we should all know, the ultimate long-term answer is fusion power, but I don’t expect that in my lifetime.

    ———–
    * And perhaps over the next 100-150 years if we could ever access the methane in the clathrate hydrates under the oceans.

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  48. By Rufus on June 12, 2011 at 9:00 pm

    China is, already, importing enormous amounts of coal, Wendell; and, they still can’t keep all the lights on. It just doesn’t seem rational that they will start converting what coal they do have to transportation fuel (at least, in the form of liquid fuel.)

    You said it, yourself – Finite Fossil Fuel

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  49. By Rufus on June 12, 2011 at 9:07 pm

    As for Nat Gas: Remember, just a couple of years ago we were paying $13.50/1,000cf for nat gas, and we’re Still importing approx. 10% of what we use.

    BTW, have you noticed that nat gas is up about 35% in the last year?

    Prices are made “at the margins.” What would nat gas cost if we started using 50%, or 100% more? Even 20% more?

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  50. By Wendell Mercantile on June 12, 2011 at 9:38 pm

    You said it, yourself – Finite Fossil Fuel

    That’s right Rufus, finite — but not in yours or my lifetime. Methanol is a known, and could be the liquid fuel in the U.S. for three or four decades. The authentic “bridge” fuel, if you will. Not the spinmeister “bridge” the ethanol lobby likes to talk about.

    BTW, have you noticed that nat gas is up about 35% in the last year?

    How much has corn gone up in the last year?

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  51. By Rufus on June 12, 2011 at 10:37 pm

    Corn will be going down, now. I doubt that about nat gas. In any case, we grow more corn every year; we can’t grow more fossil fuels.

    As for coal: you know, coal is like oil. There is coal; then there is “:recoverable,(at a reasonable price,) usable coal.”

    As an example, those Powder River Basin surface mines that are yielding all that low-sulfur, low-priced coal (40% of U.S. Consumption) are expected to be “played out” inside of 20 yrs. After that, you have to dig a lot deeper, or go to the high-sulfur in Illinois, and elsewhere.

    Also, to be considered: The price of coal in the U.S. is closely correlated with the price of Diesel Fuel. Up to 80% of the cost of coal is Transportation. The cost of Rail Transportation tracks the cost of Truck Transportation, and the cost of Truck Transportation closely tracks the cost of Diesel.

    Bottom Line: You believe that “100 yrs of coal” story if you wish, but many aren’t buying it. I know I’m not.

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  52. By thomas398 on June 13, 2011 at 9:21 am

    Fear not gentlemen, we will all live to see hybrids bridge us to fully electric light duty vehicles.  The rich countries will gradually electrify, leaving oil for the transportation sectors of emerging markets.

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  53. By Wendell Mercantile on June 13, 2011 at 9:56 am

    The price of coal in the U.S. is closely correlated with the price of Diesel Fuel.

    And there is no correlation between the price of producing corn and corn ethanol and the cost of diesel fuel, natural gas, and synthetic ammonia fertilizer?

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  54. By Optimist on June 13, 2011 at 3:29 pm

    But that’s exactly what I view speculation as — uncertainty driving prices.

    From a (cheap) pocket reference dictionary:

    Speculate: 1. guess, conjecture. 2. engage in (risky) commercial transactions.

    Most people use definition #2 when refering to speculation. You are using #1. That’s quite a big difference.

    There are many who share the opinion that if we just outlawed futures trading for oil, the price would drop substantially and do so overnight. Your comments on speculation border on support for this view, due to the fact that you mean #1, but most of us hear #2.

    Uncertainty, OTOH, is not something lawmakers can do much about, other than leaning on OPEC, which would be 180° different to what the last eight administrations have been doing.

    I’m sure there is no shortage of topics, but this may warrant its own posting…

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  55. By Kit P on June 13, 2011 at 5:17 pm

    Post deleted because Kit doesn’t know how not to be a jerk — RR

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  56. By rrapier on June 14, 2011 at 8:11 am

    Optimist said:

    But that’s exactly what I view speculation as — uncertainty driving prices.

    From a (cheap) pocket reference dictionary:

    Speculate: 1. guess, conjecture. 2. engage in (risky) commercial transactions.

    Most people use definition #2 when refering to speculation. You are using #1. That’s quite a big difference.


     

    I don’t see that. #2 is risky precisely because you are engaged in some leveling of guessing. That guessing is based on market expectations, like expectations that Libyan oil will be offline for an extended period of time. If enough people are guessing in the same direction, they can influence prices in a hurry. Prices don’t go from $150 to $30 in six months because demand changed that much; they changed because people’s expectations changed. Speculation drove prices down very quickly.

    RR (now in Germany)

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  57. By rrapier on June 14, 2011 at 8:15 am

    Kit P said:

    Also think it is despicable to make false claims about renewable energy when forced labor is used to mine coal.


     

    I don’t have any idea what that is supposed to mean, nor does it appear to make any sense.

    RR

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  58. By Kit P on June 14, 2011 at 9:06 am

    Post deleted because Kit doesn’t know how not to be a jerk — RR

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  59. By rrapier on June 14, 2011 at 4:30 pm

    Kit P said:

    RR I do not like you very much. You rag on American farmers and give China a free pass. I think that is despicable.


     

    Then don’t let the door hit you on the way out. By all means, find somewhere else to hang out. I am busy right now; no time for your lies and childish behavior. I am just going to delete a few posts, including this one I quoted.

    In fact, I have gotten so many complaints about you, but have continued to let you post for so long — and yet you continue to behave as a complete horse’s ass. So I am just going to delete all of your posts for the next week. I am in Germnay, and quite busy, so I don’t have time to read through your posts to figure out if you insulted someone. I am just going to assume your posts contain their typical insults and delete them.

    One week. Goodbye. Feel free to post all you want between now and the time I get up, and I will just delete them all.

    RR

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