free html hit counter Peak Oil Debunked: 170. ELECTRICITY IN MEXICO

Sunday, November 20, 2005


The U.S. is the Saudi Arabia of coal, and this is one of the main reasons the U.S. will retain its strength going forward. In terms of fossil fuel, it is clear the U.S. will be the last man standing, even after both peak oil (2010-2020?) and peak gas (2030, Lahererre(pdf)).

However, it is too simple to just point at the U.S. coal reserve, and say "problem solved". Lots of people are putting dibs on U.S. coal -- too many people if you ask me. For example, it's very clear that the U.S. military will stake a claim. And of course there is the existing claim on U.S. coal by the electric power industry (50% of U.S. electricity is generated by burning coal). The electric car advocates are staking a claim on coal, by promoting plug-ins. The synthetic liquids advocates also say we'll turn to coal to fuel our vehicles. People in the U.S. switching from gas/oil to electric heating are also (more likely than not) turning to coal.

In the U.S., there are really only two near-term options for large-scale power generation: coal and nuclear. Natural gas is declining, and some relief may be available from LNG, but LNG will not be fueling the U.S. power grid any time soon. Neither will renewables. The path of least resistance is clearly to burn more coal, and that's what will be powering the electric vehicles of the near-term future.

But that's not the end of it. Mexico too will put demands on U.S. coal. Check this out from the latest DOE Country Analysis Brief on Mexico:
In 2002, Mexico ’s installed electric power generating capacity was 42.3 gigawatts. In the same year, the country generated an estimated 198.6 billion kilowatthours (Bkwh) of electricity, of which thermal (oil, natural gas, and coal) electricity generation account for 81%. According to Sener, total power generating capacity as of May 2004 was 50.7 gigawatts. Oil-fired power plants accounted for the largest share of Mexico 's thermal electricity generation, but many of these plants are being converted to natural gas. According to Sener, fuel oil accounted for 49.4% of thermal feedstock in 2002. Currently, only about 6% of electrical generating capacity is coal-fired. By 2012, natural gas is forecast to account for 63% of Mexico 's power output while fuel oil's share is expected to drop to 24.2%. In 2002, hydropower accounted for 12% of Mexico 's total electricity generation, followed by nuclear with 4.5% and geothermal with 2.5%. Mexico also has one wind-power installation in Oaxaca , which generated 0.005% of the country's total electricity generation. There are plans to increase Mexico 's wind capacity, which has not been added to since 1999.
Notice that oil accounted for 40% of Mexico's power generation in 2002. In the 1990s, Mexico had the highest percentage of oil-fired generation in the OECD (59% of electricity generated from oil). This is in a country where oil is currently peaking (or will do so shortly). Notice also that NG-fired capacity is increasing, in a continent where NG is also in decline.

So it's not really a question of whether the lights can be kept on in the U.S. That's not in doubt because oil only accounts for about 3% of U.S. power generation. The question is how to keep the lights on Mexico. (We should also note in passing that the electric grid of northern Mexico is connected to the grid of the southwestern U.S.)

Henry Groppe has mentioned the idea of freeing up oil for vehicles by switching oil-fired electricity nations like Mexico to another fuel source:
On the supply side, he believes oil is pretty much at peak and will flatten out and then start declining. But what caught my attention was his opinion on the demand side. He believes that something like 20mbpd of the current 84mbpd of oil demand is going for heat and power generation primarily in developing countries. He thinks that with oil in the $50-$60 range, all of this will get converted to coal or natural gas, and that, along with vehicle fuel efficiency, will be the main initial responses to peaking, and will keep us out of serious economic pain for a decade or so.
I'm skeptical about the idea of converting Mexico to natural gas because North American NG is peaking. We're getting too many claims on a shrinking North American NG pie. I don't see massive LNG imports being a solution for Mexico either. It's hard enough trying to switch the U.S. to LNG, let alone switch the U.S. and Mexico at the same time. (Then again, Mexico may be the place to locate LNG ports due to U.S. NIMBYism.) At any rate, Mexico and the U.S. will be joined at the hip on the NG front, no matter how events pan out.

Switching the Mexican grid to Mexican coal isn't an option. If Mexico generated as much electricity from coal as the U.S., their reserves would run out in a little over a year. So that leaves two near-term options: U.S. coal and nuclear. I take it nuclear is out because: a) nuclear accounted for only 4.5% of Mexican power generation in 2002, and b) the U.S. may not be comfortable with a massively nuclear Mexico.

So that leaves coal, and now we've got another nation making a claim on U.S. coal, and as a member of NAFTA they certainly have a right to it. We might also wonder whether coal will be the solution for Mexican motoring as well. Will Mexicans be driving electric cars fueled by U.S. coal? Or high-efficiency hybrids fueled by U.S. coal? Or will they just keep it basic, and try to keep the lights on?

And Mexico isn't alone. According to Oil & Gas Journal, lots of countries have no oil, gas or coal: Costa Rica, El Salvador, Guatemala, Haiti, Hondurus, Jamaica, Panama, Paraguay, Puerto Rico, Uruguay etc. Are they all going to turn to massive capital projects like LNG and nuclear? Or are they just going to give up electricity?

It's obvious what needs to give in this equation. Electricity is necessary to live a first-world standard of living, cars are not. Cars are a low priority compared to maintaining the status quo in electric power.
-- by JD


At Monday, November 21, 2005 at 5:03:00 AM PST, Blogger Roland said...

Australia is the Saudi Arabia of coal!! What are you going on about?


Just kidding, but we do have more coal per capita than the US I think.

Henry Groppe's idea was very interesting.

At Monday, November 21, 2005 at 5:11:00 AM PST, Anonymous Anonymous said...

Adding in oil shale, which may enter commercial production in the next decade, the US is clearly going to replace Saudi Arabia as the world's energy savior in a post Peak Oil world. The best thing for the US to do is turn to nuclear for her electricity needs, and then sell the coal to others to keep them from building nukes. But I agree with you that cars are largely frivolous, and owning a car in 2020 will be the equivalent of owning large a motor home today.

At Monday, November 21, 2005 at 5:20:00 AM PST, Blogger JD said...

You definitely have a much larger reserves/population ratio. You could fuel your entire grid (at current power levels) for about 766 years with Aussie coal. The U.S. could only fuel its entire grid (at current power levels) for about 130 years with U.S. coal.

In raw numbers though, the U.S. has 3 times the coal reserves of Australia (US: 270,718 million short tons, AUS: 86,531 million short tons). So the yanks get the honorary sheik's headdress. ;-)

It takes about 7 short tons to provide all the electricity consumed by the average American in one year.

At Monday, November 21, 2005 at 7:44:00 AM PST, Blogger dub_scratch said...

Great post JD.

What I see here in So Cal is an emerging effort by alt car/faux greens to push for a fuel switch for cars, oil to coal. The EV is being promoted as a green renewable energy solution but is clearly going to have to run on coal in order to power all our car crashes & traffic jams.

One grassroots group here is called Calcars. They want the government to massively subsidize this awful energy wasting project, a.k.a the EV. They present themselves as environmentalist but in reality are car advocates who care more about the sustainability of the dumbshit box than anything else. One of their leaders I met here, Paul Scott. I can say that he is a flaming asshole. He claims that he is advocating renewable energy by promoting EVs. He got angry when I called him out on his shit and pointed out that EVs are a big customer for renewable electricity that will have to run on coal instead. Renewables have no chance at powering our huge car fleet.

What troubles me is that these people have a lot of political pull and support from enviro groups like Sierra Klub and the NRDC.

These people need to be challenged on their claims and the public needs to be educated on what the EV really is. It is nothing more than a non-renewable fuel switch for miserable cars.

At Monday, November 21, 2005 at 8:38:00 AM PST, Anonymous Anonymous said...

Chris - If there are going to be cars, EVs are a better option than anything else that's out there...if we start building more nuke plants, windfarms, etc, they WOULD be promoting renewable energy. They require electricity, they don't care where it comes from. It will just surely be coal for a while. They're surely a better idea than hydrogen cars or anything reliable on smaller amounts of oil like hybrids.

At Monday, November 21, 2005 at 8:40:00 AM PST, Anonymous Anonymous said...

I think the mexican border will probably get renewed interest once they start demanding a big piece of our energy pie, depending on who is in office when peak oil hits.

After all, the US will be too busy short term after peak oil to worry about anything but itself.

At Monday, November 21, 2005 at 9:04:00 AM PST, Blogger dub_scratch said...

Look anonymous, cars are not inevitable at all. I live a completely first world lifestyle car free. Why am I not wasting away? But by promoting the subsidization of alternative cars & EVs, people are insuring that "there are going to be cars." By advocating EVs one is anti-green & pro car, regardless of their stated objectives.

You say "they WOULD be promoting renewable energy." Please anonymous, tell us how building a huge gigantic customer for electricity is promoting renewable energy. That is ridicules logic. Don't we have enough electrical uses that are reason enough for building renewable energy? What about refrigerators? We have a lot of them. Are they not promoting renewable energy? The fact of the matter is that there is no chance at powering traffic jams with renewables. None!

You are right about EVs running on coal for a while. And after we have exhausted coal and completely trashed the landscape with coal fired EVs, then it will be time for giving up the retarded dumbshit box for good.

At Monday, November 21, 2005 at 1:12:00 PM PST, Anonymous Anonymous said...

It's not like we weren't going to mine the coal if we didn't build the EVs. I also didn't say cars were required. I just said IF THERE ARE CARS. There is absolutely nothing about an EV that is more environmentally destructive than our current society.

And there are going to be cars. Maybe only a small segment of the population will still have them, but there is absolutely no chance that all forms of cars will go extinct in the next 100 years unless there's an apocalypse. Some people are not going to give them up no matter what, and you will need some kind of vehicles to transport goods from specific locations to train tracks or whatever you're advocating for primary transportation. I'd rather have electric trucks than coal powered crappers like will probably happen otherwise.

At Monday, November 21, 2005 at 1:16:00 PM PST, Anonymous Anonymous said...

Oh, and finally I never said we'd power them exclusively with renewables. I completely agree we can't power anywhere close to everything, even just normal electricity generation, with current renewable technology. Nuclear is full capable of providing all the electricity we get now and more for hundreds (if not thousands) of years. Any objections you may have to the technology isn't going to change that fact, or the fact that we're going to start building more plants sooner or later unless some ridiculous apocalypse happens that will make it impossible.

At Monday, November 21, 2005 at 3:40:00 PM PST, Blogger Roland said...

Cars are unnecessary in big cities, particularly once car-dependent cities get their acts together and fix the public transport (like was done in Curitiba, Brazil).

But cars aren't going to go away altogether. What about people in country towns? What about agriculture? What about police cars, ambulances and firetrucks? For now at least, we should be building electric tractors and civil vehicles.

It's much easier to convince people to get an electric car than to ditch the car completely. Once you're on an electric car, you're off oil. If everyone drove an electric car, we wouldn't be worried about Peak Oil, we'd be worried about Peak Coal, which is decades away. Electric cars are an excellent transitional step between the SUV and the maglev PVT system, or whatever.

At Monday, November 21, 2005 at 5:37:00 PM PST, Blogger dub_scratch said...

I'm sure we will see some electric cars in the future. Sure, fine. But advocates for EVs are misrepresenting the realistic prospects of these. They also have a massive government subsidy agenda as well.

We are told by these same faux-greens that the success of the car in our culture is due to the so-called 'free-market' and that non-car transport is due to 'big-government'. The hypocrisy runs thick with the pro-car rightwing & the alt-car/faux greens.

I believe that without government handouts, the EV will have a very very small role to play in transport of the future. In the US, we have a fleet of 220 million cars (with about 300 million people). Cars have long replacement cycles. When we drop our mileage-- which is what we all can agree we should and will do-- these cycles will get longer. Plus we will get adequate fuel conservation levels. And as fuel prices rise and we drive less & less, fuel economy becomes less in importance. It does not matter what a Hummer gets in MPG if you rarely drive it.

I think we should skip the EV folly. Without the government, I'm sure we will do that.

At Monday, November 21, 2005 at 7:57:00 PM PST, Anonymous Anonymous said...

Are you saying you'd rather all new cars continue to burn gasoline instead of be EVs? I just think that if we're going to continue producing cars they should be as gas-independent as possible, cause we need the oil for more important things. I don't see how you could disagree with all NEW cars being EVs instead, I guess. Although I guess if you were trying to avoid the possibility of car culture rebuilding itself as EVs instead of ICE vehicles you would.

At Monday, November 21, 2005 at 10:12:00 PM PST, Blogger dub_scratch said...

No, anonymous. What I'm saying is that we should stop having new cars, period! We should instead deal with this energy problem with greatly reducing our driving. With such a move we would be able to achieve all of the promised benefits of EVs in spades, without the risks and investments. We can also extract value and use from all the cars, trucks & SUVs you see today.

The big problem I have with all alternative car schemes is that they are all predicated on a wasteful car fleet replacement. The other problem is that they will all need huge government subsidies in order to be implemented. Haven't we subsidized the auto enough? Actually, that has been the problem. Look at what that has done to consumption here. We can't afford it anymore.

So I really hope that someday soon we as a culture will end the flow of new cars to a large degree, before we are forced to. And if we do do that, then I think it would be thoroughly irrelevant what type of drive train goes into the few new cars we see.

EVs and alt car schemes are a means of avoiding what we should do. Making great reductions to the amount of driving we do is our trump card. It trumps EVs.

At Monday, November 21, 2005 at 10:31:00 PM PST, Blogger Roland said...

I agree with the principle that we should ditch cars as soon as possible, but it's just not going to happen. EVs are a compromise.

Cars are not going to banned tomorrow. Killing the car will take time and work. No matter how hard we try, it will take time to retrofit a city like Detroit or Los Angeles with public transport and smart-growth planning. During that time I would much rather people are driving on electricity than on petrol. Moreover, going carfree is alright in the city, but what if you live in a country town or in a remote area? Rural areas need cars, cities don't.

So here's the plan:

- Ban cars in the inner-city or introduce a congestion charge like in London
- Tax the crap out of cars and pour the money into mass transit, urban planning and subsidies for bicycles
- Develop EVs for people who don't live in the city
- Let petrol prices do the rest

Bam, everyone in the city is using trams and cycleways and country folk are putting into town in EVs or hooning around on electric tractors.

Another idea is to institute a sliding scale for car taxes based on how much you are judged to need them. In rural areas you're allowed to buy a large 4WD if you prove you can't get on and off your property without it (which is rare). In the city SUVs are made virtually unaffordable, EVs are OK if you live somewhere with inadequate public transport, but in the inner-city you are charged so much for parking you can't afford it. I heard that somewhere in Europe you're not allowed to buy a car unless you prove you can park it near your main residence ... since car spaces often cost more than houses, people just don't bother.

At Monday, November 21, 2005 at 10:32:00 PM PST, Blogger Roland said...

Oh, and I think EVs are also a great way to reduce oil demand from India and China, who may be unwilling to abandon their burning ambitions of being a car-based society.

At Tuesday, November 22, 2005 at 2:37:00 AM PST, Blogger Markku said...

In Finland, car tax is 133%. As a result, our car fleet is still more than 2 million for a population of 5 million. I shudder to think how large the car fleet would be without the high tax. Also, because of the fuel tax, petrol (95E) costs almost $6 per gallon. Diesel is about 20% cheaper. Thanks to the combination of high car and fuel taxes, the average car mileage is pretty good.

At Tuesday, November 22, 2005 at 5:16:00 AM PST, Anonymous Anonymous said...

JD wrote "I take it nuclear is out because: a) nuclear accounted for only 4.5% of Mexican power generation in 2002, and b) the U.S. may not be comfortable with a massively nuclear Mexico."

That nuclear acconted for only 4,5 % of Mexican power is just because they only have one nuclear power plant. This might seem to be a bad thing, but it rather is a very good thing, because it means the Mexicans already have nuclear competence.
To say it another way. Nuclear acconuted for similar portions in France in 1970, and look where they are now.

And why would the US "not be comfortable with" a nuclear Mexico? And what does the US have to do with domestic Mexican power issues?

If you ask me, building 20 big reactors in Mexico would be one of the best ways to save massive amounts of oil, while avoiding massive GHG emissions.

At Tuesday, November 22, 2005 at 6:16:00 AM PST, Blogger JD said...

Good points Starvid.

And why would the US "not be comfortable with" a nuclear Mexico?

Partly prejudice, I think. "Nuclear Mexico" sounds like a joke. Americans wonder about the integrity and soundness of Mexican government institutions.

It's also NIMBYism. Can Mexico be trusted not to goof up and blow a Chernobyl cloud over Phoenix or LA? Could Mexico handle a nuclear emergency if one occurred? How about Mexican security for radioactive material? Remember, people are only now warming up to nuclear energy. Most people still think it is insanely dangerous, even in the U.S., let alone in Mexico.

On the other hand, NIMBYism might also be a good reason to put U.S. nuclear plants in Mexico, due to looser regulation.

And what does the US have to do with domestic Mexican power issues?

Good question. Are the Mexicans capable of building a nuclear grid without American cooperation?

Also, Mexico is not alone (as I pointed out in the post). There are lots of countries in the world with no oil, gas or coal. Many of them are burning oil to generate electricity, but they don't have nuclear capability like Mexico. What do we do about them? Coal seems to be the obvious answer.

At Tuesday, November 22, 2005 at 2:17:00 PM PST, Anonymous Anonymous said...

Argentina has sold an experimental nuclear reactor to Australia.

Argentina has two nuclear reactors and is building a third one (almost).

Venezuela is seeking cooperation from Argentina regarding expeerimental nuclear reactors.

I don't see why Mexico couldn't build and manage nuclear power plants, just because they are "latins".

At Tuesday, November 22, 2005 at 7:14:00 PM PST, Blogger JD said...

I don't see why Mexico couldn't build and manage nuclear power plants, just because they are "latins".

I agree with you. I'm just stating well-known U.S. prejudices against Mexico and nuclear power which might surface if (for example) the U.S. Congress moved to aid Mexico in nuclear development.


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