Tel: (845) 626-2627   Home   Contact  
Sun Volt

Sun Volt Solar

earth, the final frontier

Clean Energy, Clean Environment

We are at a cross roads in human history, we can choose to continue on as we have been, or we can make a change to improve our future and quite possibly the future for several generations to come. We are here to promote energy independence, a better environment, a secure future and a higher return on investment for your hard earned dollar. It is what I believe in, it is why I am in the solar business.

Cheap oil=Less solar?

18 Dec 08 | Conservation, Solar Electric, Solar Hot Water, solar thermal

The price of a barrel of oil has dropped more than 70% since it’s all time high of $147.00/bbl in July.  Prices for home heating oil, gasoline, propane and kerosene have dropped accordingly.  All of this seems like welcome relief and great news for the ordinary homeowner especially as this winter looks to be a bad one weather wise.

OPEC meet yesterday and agreed to cut production by 2.2 Million Barrels per Day (MBD).  Non-OPEC oil producers have promised to follow suit.  Will this have an effect on the plummeting value of crude oil?  Apparently not, as oil prices fell below $40.00 per barrel today.  What really seems to be driving the price of oil down is the recession and the fact that people are driving less.  How much less?  About 5% or so.

It might be reasonable to extrapolate a few things from this:

  1. A 5% reduction in driving translates to a 70% reduction in the cost of a barrel of oil, then a relatively small conversion (about 10-15%) of the US fleet to Plug in Electric Vehicles (PEVs) powered by solar, wind or non-fossil fuels would have a significant effect on the price of gasoline.
  2. Use of hybrid technology for public service vehicles, taxi’s, government business, mail delivery, police, etc could reduce government fuel use, costs, and reduce pollution.
  3. Rail transport is the most efficient way to move bulk goods across land.  A typical freight train can transport 1 ton goods 450 miles on one gallon of diesel fuel.  A typical Tractor Trailer (18 wheel truck, 80,000 lbs GVW) moves 1 ton of freight about 250 miles on one gallon of fuel.  Reducing cross country truck transport, using rail instead, then using truck for the last mile deliveries would significantly reduce diesel fuel usage, thus prices.

That is, if the markets are not manipulated by traders to drive up energy prices.  I have a strong feeling that in the next year or two we will find out that the $147.00 barrel of oil was a farce, just like the ENRON induced electrical shortages in California a few years ago.

To all those that say a 10 or 20% renewable energy target by 2015 will make not matter, I beg to differ.  Every little reduction matters.  Many many small reductions through improved efficiency, better technology, and renewable energy systems will add up to a large number.

If anything, the low price of oil shows that we are still vulnerable to unscrupulous operators that would seek to profiteer.  As energy prices drop, we should look at is as an opportunity to install renewable systems while prices are favorable.

For example, the cost of raw materials is coming down.  The price of copper (a significant part of solar thermal collectors are made from copper) has dropped from $9,000 per metric ton to a little under $3,000 per metric ton. Pure Silicon (major component in PV cells) is still high, but has dropped slightly over the last year.

One other possible bad effect of cheap oil.  The oil companies are not going to do any exporation and development of new fields as there is no profit in it for them.  Even if the regulations were relaxed and new leases signed, the whole “Drill baby, Drill” mantra may be met with “No thanks, we’ll just sell what we already have.”  In which case, we may indeed be driving ourselves over a cliff.

Tags:

18 Dec 08 | Conservation, Solar Electric, Solar Hot Water, solar thermal
«
»


Reader's Comments

  1. Cheap oil=Less solar? | Sun Volt Solar Blog | Cost Fuel | December 18th, 2008 at 2:05 pm

    [...] original post here: Cheap oil=Less solar? | Sun Volt Solar Blog Share and Enjoy: These icons link to social bookmarking sites where readers can share and [...]

  2. Jim Hamilton | December 19th, 2008 at 9:59 pm

    Well, it doesn’t mean less solar at MY house! Just today we’ve finished our install on a large PV solar system. It should be operational in a few weeks after the necessary inspections and a fence getting built.

    If anyone is interested, I’ve documented the install on my web site. If you’ve ever wondered how solar is installed on an existing home, check it out at: http://www.jjhamilton.com/solar

    Jimmyd

  3. Paul Thurst | December 19th, 2008 at 10:04 pm

    Jim, congrats on the PV system, it really looks good! What installer did you use?

  4. Sascha Deri | December 30th, 2008 at 2:59 am

    My hope is that despite the slide in petroleum prices but with the collapse of Wall Street people will learn/understand that renewable energy technologies for homes are in fact a safer, more stable and better investment than any stocks.

    Take one of the more expensive renewable energy systems – solar electric – it gives you back 5-8% per year. If you have a local rebate program & you include the 2009 federal tax credit (US) then that number increases significantly.

    Now let’s take one of the more attractive renewable energy technologies – solar thermal (i.e. solar water heating and solar air heating). These systems usually pay for themselves in 3-8 years and like solar electric systems last decades. So you’re getting 12-33% back on your fixed investment every year.

    The only downside is that you won’t keep stock traders and brokers employed and may instead employee dozens of other folks instead probably firmly grasping onto the middle class.

  5. Paul Thurst | December 31st, 2008 at 12:47 pm

    Sascha,

    It will take a sustained public relations campaign to ween the public off of cheap energy. In general, we have been lead down the road of “cheaper is better, the future is later,” type thinking. If it is not right in front of their faces or effecting the size of their wallet, most people don’t care.

    Hopefully, that will change soon. In the mean time, the best we can do is live the example and talk about it with our friends and neighbors. Thanks for commenting.

  6. Heat Pump Reviews | March 26th, 2009 at 8:25 am

    Congrats on you PV system. I do hope we get to a point where its not just a cost factor for energy.



Leave a Reply