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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: elmatador who wrote (41655)11/17/2003 11:47:09 PM
From: Raymond Duray  Read Replies (2) of 74559
 
Re: There's no sense in trying to find new sources of energy now.
generation capacity was overbuilt in the second half of the 90's.

That is a completely illogical conclusion. For example, while new natural gas combined cycle generation may be an excellent choice in Kuala Lumpur, it is proving to have been a disastrous case of misinformed capital expense in the U.S. As you may be aware, most new generation in the U.S. in the past decade is natural gas fired turbines. An excellent clean source of combustion. The proverbial fly in the ointment is that the development of about 40,000 megawatts of this particular type of generation was based on economic studies that priced the gas at about $2/mcf. Today, gas is priced around $4.50/mcf after having come down from a peak of over $10 and an average price over the last year of over $5.

So, most new plants are economic white elephants. Construction on some has been halted mid-course. Lots of 20 year old and inefficient NG plants are being de-commissioned (a good thing).

But the "market" has managed to create a nightmare for the very greedsters who destroyed a perfectly adequate regulatory regime that matched supply and demand for decades. The only saving grace for the greedsters, i.e. utility executives, is that they still have the clout to screw the ratepayers instead of themselves.

Alternative sources of power would be good. America is just now waking up to the fact that the abundant natural gas reserves that $100's of billions worth of investment was based on was mere illusion.

The IPP fiasco, though not quite as much a media story as the implosion of the dot.bombs, wasted at least as much capital. Capital that America simply can no longer afford to piss away.
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