papf, I'm taking that one to work tomorrow, ha! Well the lack of a Clinton-Gore energy policy is really coming home to roost out West is it not? This article lays out some of the items we've been discussing here on the Thread for the last few weeks....
Western Energy Crisis Threatens Industry
By Leonard Anderson Dec 10 2:26pm ET
SAN FRANCISCO (Reuters) - A widening energy crisis in the western United States is disrupting industries from computer makers in California's Silicon Valley to pulp and paper producers and aluminum smelters in the Pacific Northwest.
``An energy crisis of electricity shortages and high power and natural gas prices now is becoming an economic emergency,'' Tapan Munroe, a California economist and head of an energy and economic research firm in Moraga, Calif., told Reuters.
The region is confronting the fact that almost no new power plants have been built for 10 years to meet the rising needs of its rapidly growing population and strong economy.
Adding to the problem is a natural gas supply crunch caused by two years of low demand, low prices, and idled drilling rigs.
Gas flowing into Southern California soared last week to $35 per million British thermal units, 16 times its price a year ago and no price relief is likely until the spring.
Tom Lieser, who compiles a widely watched survey of California's economy for the Anderson School at the University of California at Los Angeles, said chronic energy shortages would keep California consumer prices above the national average.
``(Energy) might be...a factor for businesses considering whether to relocate to California,'' he said.
The Golden State was battered last week by power emergencies that cut electricity to several large industrial companies who pay discounted rates for being turned off when supplies run low.
California faces a second week of power cuts, and Oregon and Washington are gearing for trouble as a frigid Alaskan cold front bears down on the region, prompting the governors of Oregon and Washington to jointly urge residents to conserve electricity and natural gas for the next week.
HIGH TECH POWER APPETITE
California's computer industry and its growing appetite for electricity is a big reason for tighter supplies.
While power demand is rising at about 2 percent a year in California, it is surging at 5 percent in Silicon Valley.
``Power blackouts could cost Silicon Valley-based companies an estimated $100 million a day,'' said Michelle Montague-Bruno, a spokeswoman for the Silicon Valley Manufacturing Group, a trade organization representing 190 technology firms.
The bill for lost production in Silicon Valley blackouts during a heat wave last June cost some companies as much as $1 million a minute, she said.
Intel Corp. (INTC.O), the world's No. 1 semiconductor maker, said its chip making operation in Santa Clara would be seriously damaged by a major failure of the power grid, but has spread its risk by building new plants in other states and overseas.
In the Pacific Northwest, sharply higher power prices have already hurt aluminum producers, many of whom moved to the region decades ago due to its abundant supply of cheap hydropower.
Mike Zenker, an analyst at Cambridge Energy Research Associates in Oakland, Calif., said aluminum cutbacks could be especially harmful because U.S. production, which accounts for 16 percent of worldwide output, is concentrated in the Northwest.
Last week, Columbia Falls Aluminum announced a second cutback this year in output from its smelter in Montana, while last month Kaiser Aluminum (KLU.N) said it was cutting production at its Mead smelter in Washington state which was already operating well below capacity.
On Friday, Montreal-based Alcan Aluminium Ltd. (AL.TO) said it will cut output by 50,000 metric tons a year at its Kitimat, British Columbia, smelter to save water needed to generate power.
Northwest forest products companies also are hurting. Georgia-Pacific Corp. (GP.N) is closing down a paper mill in Bellingham, Wash., and laying off nearly 800 workers until the power shortage eases.
With monthly power costs soaring past $10 million from an average of about $1.2 million, the mill can no longer turn a profit, company spokesman Greg Guest said.
While the power shortage has not slowed work at Seattle-based Boeing Co. (BA.N), the giant commercial jet maker said it was shutting off lights and other machinery to save electricity. |
