gas – The Burning Platform

Trump‘s Red Line

Guest Post by Seymour Hersh

Retaliation: Tomahawk missiles from the "USS Porter" on the way to the Shayrat Air Base on April 6, 2017 — Retaliation: Tomahawk missiles from the “USS Porter” on the way to the Shayrat Air Base on April 6, 2017

Quelle: picture alliance / Robert S. Pri/dpa Picture-Alliance / Robert S.

On April 6, United States President Donald Trump authorized an early morning Tomahawk missile strike on Shayrat Air Base in central Syria in retaliation for what he said was a deadly nerve agent attack carried out by the Syrian government two days earlier in the rebel-held town of Khan Sheikhoun. Trump issued the order despite having been warned by the U.S. intelligence community that it had found no evidence that the Syrians had used a chemical weapon.

The available intelligence made clear that the Syrians had targeted a jihadist meeting site on April 4 using a Russian-supplied guided bomb equipped with conventional explosives. Details of the attack, including information on its so-called high-value targets, had been provided by the Russians days in advance to American and allied military officials in Doha, whose mission is to coordinate all U.S., allied, Syrian and Russian Air Force operations in the region.

Continue reading “Trump‘s Red Line”

WHY SO WORRIED?

What a bunch of worry warts. Just because the Fed and Wall Street have driven home ownership rates to an all-time low and increased the number of renters to an all-time high through their warped monetary schemes, while driving rents up at an annual pace of over 8%, why worry?

Just because your monthly rent is at an all-time high, while real median household income is at the same level it was in 1989, why worry?

Just because your healthcare costs are rising at an annual rate of 10% or more, why worry about making your rent payment?

Just because you have $40,000 of student loan debt and a waiter job at Applebees, why worry about that silly rent payment?

Just because filling up your leased SUV is 30% more expensive than it was in mid-February, why worry about rent?

Don’t worry, be happy.

You will find more statistics at Statista

THE FED CAN’T FIND INFLATION ANYWHERE

The lying pricks at the Federal Reserve give speech after speech about no inflation, keeping rates low, and even blathering about negative interest rates. I guess these idiots don’t need to drive cars, eat food, pay rent, buy houses, or essentially live in the real world. Gas prices are up 22% since mid-February. Food prices are up 6% since early January. Rent has been ratcheting higher at a 4% annual rate for awhile. Home prices have been going up 5% to 10%. Various government taxes, fees and tolls have been accelerating at a 5% to 10% pace. And Yellen can’t find any inflation????

Via Anthony Sanders

CRB Foodstuff Index UP 6% Since Jan 4th (24% Annualized) – It’s Beginning To Look A Lot Like Inflation

It’s beginning to look a lot like inflation.

The Commodity Research Board’s Foodstuff index is up 6% since January 4, 2016. That is just in a little over 3 months. That translates to just under 24% growth on an annualized basis.

With US Real Average Weekly Earnings 1982-1984 USD YoY at 0.7%, it really does feel like inflation. Although The Federal Reserve thinks inflation is just shy of 2%.

When The Federal Reserve conducts their closed meeting today (and meets with President Obama), I certainly hope it is to discuss rising food prices and NOT negative interest rates!

HOW’S THAT DEFLATION WORKING OUT FOR YOU?

The BLS put out their monthly CPI lie last week. They issued the proclamation that inflation is dead. Did you know your costs are 0.1% lower than they were one year ago. They then used these deflation numbers to proclaim your real wages soared last month. It’s all good. The American consumer is so flush with cash, they decided to spend less money for the second month in a row. The Wall Street shysters are so happy with declining consumer spending, declining corporate profits, and a global recession, they pushed the NASDAQ up to 5,000 for the first time in 15 years. Hey!!! That was the year 2000. Things really got better after that milestone.

So we know gasoline prices have plummeted in the last year (but are up 20% in the last month), but I’m trying to think of other things I use in my everyday life that have declined in price. Maybe going through the BLS detailed list will jog my memory. Here is the link to their data:

http://www.bls.gov/cpi/cpid1501.pdf

Let’s see how much deflation we’ve experienced in the last year for things we need to live our everyday lives.

Beef and veal +22.5%

Ground beef +21.0%

Steaks +14.9%

Pork +7.4%

Ham +11.5%

Whole Chicken +6.1%

Continue reading “HOW’S THAT DEFLATION WORKING OUT FOR YOU?”

PUTIN IS PISSED

Obama, NATO and their puppet in Kiev are starting to piss Putin off. I hope Europeans have extra warm coats and plenty of blankets and firewood. Mr. Putin does have some cards to play. Who would you bet on in a game of poker? Putin or Obama?

Putin Slams Ukraine Decision To Cut-Off Gas To East As “Genocidal”

Submitted by Tyler Durden on 02/25/2015 14:09 -0500

Ukrainian authorities decision to halt gas supplies to Donetsk amid the ongoing humanitarian catastrophe occurring there “bear the hallmarks of genocide,” blasted Russia’s Vladimir Putin during an awkward press conference with Cyprus’ President Nicos Anastasiades (who he had just agreed bilateral military and trade deals with). “Apparently, some responsible leaders of the modern-day Ukraine are unable to understand the importance of humanitarian issues,” Sputnik News reports Putin concluded. In an attempt to gain leverage and force Ukraine’s hand however, Russia’s Gazprom has indicated it intends to suspend gas deliveries to Ukraine (and thus Europe via pipelines) unless Kiev makes a further prepayment.

Amid the cease-less-fire, Vladimir Putin is displeased…

Russian President Vladimir Putin said Wednesday the decision of the Ukrainian authorities to halt gas supplies to Donetsk amid the ongoing humanitarian catastrophe “bear hallmarks of genocide”.

“As if hunger [in Donetsk and Luhansk] was not enough – the OSCE has already stated that the region is experiencing a humanitarian catastrophe – they had their gas supplies cut off. What would you call it? I would say this bears the hallmarks of genocide,” he said during a meeting with President of Cyprus Nicos Anastasiades.

“Apparently, some responsible leaders of the modern-day Ukraine are unable to understand the importance of humanitarian issues. It seems that the very notion of humanism has been forgotten,” he added.

And, in apparently unconnected news, Russia intends to suspend gas deliveries to Ukraine unless Kiev makes a further prepayment as its current balance only covers three or four days’ gas supply, Russian President Vladimir Putin said Wednesday…

Continue reading “PUTIN IS PISSED”

Political Gas —— Muck’s Half Minute

Oh my! Good times are coming round the corner again! The underclass can actually afford to gas up the old junker and drive downtown to the grease parlor and get a Big Mac.. Or maybe put the Mac in a picnic basket and go visit Aunt Bea in the next county!

Trucking companies can shave a few cents a mile off their OTR rates (grudgingly!) and – if it continues – the poor consumer may even benefit a little bit at the bottom of the food chain.

Have we found more gasoline? Hmmmm! Maybe for a little bit in Alberta and plus a few other tar sand and shale oil locations like North Dakota and Pennsylvania and a few lesser finds. These oil fields sandwiched between layers of rock are very expensive in terms of lower ROI (return on investment) and are not sustainable in any sort of even medium term. To maintain flow you have to keep drilling more and more wells because their half life can be measured in months rather than years. The Bakken formation for example, half life of a producing well is 24 months and exhaustion after 5 years max. Costs go way up as time passes because much more fracking is required in the later half of a shale oil wells’ life.

We are assured that pretty quick now we will become the biggest oil exporter in the world, making Saudi and Russia look like small time operations sucking up leavings at the borders of the huge US Oil Pond…

Believe me, it is not going to happen that way. A shale oil well has a half life of a gnat geologically speaking and very rapidly on a human time scale – not geologically, the ROI (return on investment) of obtaining oil from shale or tar sands at a profit will implode for lack of investment capital which dies from the ROI going through the floor and misallocated investment bubbles (like shale oil!). The current glut of oil and jaw breaking drop in world crude prices will only hurry the bubble into the “pop” phase. In fact I could swear I hear a “pop” already.

The destruction by the Federal Reserve and Wall Street of all real pricing mechanisms insures that the capital markets will disconnect ever faster from reality, thus making it totally impossible to calculate ROI on anything and as a result the rapid multiplication of totally bogus and inappropriate investments will continue – until it stops!

However, back to todays’ subject.

Gasoline prices are very important to consumers (voters). When prices go down, expenditures on toys go up. Never mind the .2% increase in jobs or the .4% decrease in those seeking jobs (hence not unemployed) those percentage quivering figures reflect quaking finger strokes of zombies (slightly defined as “employed) at the Bureau of Lies and Scams or perhaps the massive rumor mill called the Census Bureau which daily, weekly or monthly receive memos from various underlings passing time in the Executive Branch instructing these bureaus exactly what numbers to plug in where in these totally false and useless reports.

Remember, anytime one of the Bureaus that grow, leech like, under the paving stones of Washington and issues a “.2%” this or a “.4%” that, those figures are far exceeded by the error window of the results that can be expected after so called statistical analysis of the biased or totally false data. They are totally bogus and not worthy of even considering.

So we have the wonderful situation (and have had for 50 years) where decisions are make (usually wrong), policies formed (without accurate intelligence), military action taken, thousands of lives lost, countries bankrupt, wars fought, all based on bullshit. (Terrorism is the exception and we can’t even do that right.)

In the short term, however, just like printing money, issuing unbacked sub-prime paper, floating bogus bonds that will never repaid, making direct central bank (or their proxies) purchases of bad bank debt to direct (leveraged) purchased stock market securities and other Ponzi Schemes it seems to both the observant and ignorant (and the two are, by no means exclusive!) to be working well. Of course, the entire middle class might have a few bones to pick with that evaluation as the whole shebang will eat our lunch one day real soon now and there will be nowhere to hide. The middle class (as it used to be defined) is already choosing whether to pay the rent, eat or pay for medical services (especially drugs – but that’s a whole different racket).

But back to our main subject. Gas prices. I’ve noticed that a particular ordure saturating the air whenever I fill up my family chariot. I drive a Prius, so I fill up about once a month whether it needs it or not. But the ordure that issues from fume leakage from the fill cap area has a distinct characteristic about it. The gas ordure smells exactly the same as the fragrance you notice whenever you are in close association with a politician!

How does this happen, you ask?

Dear reader, the 4th of November rapidly passed and since every lying, crooked politician in the country has attempted to take credit for lower oil and gas prices in order to convince stupid voters to vote for those same equally stupid politicians in 2016.

Either of two results may come to be. On November 5, 2014, all stops will be removed monetarily and fiscally and every effort will be made to extend the lower prices through the 2016 elections. That result is less likely because it so far away and so many things can go wrong for a “fix” like that to succeed.
The gas price before the general elections in November, 2016, will be interesting to watch though..

I hesitate to even try and guess because the totally out of control U.S. national un-repayable debt situation may, between now and then, overpower every other troubling worm hole and rotten structure in our nation’s future.

Who’s worse off? Japan is temporarily better off because they import every ounce of resources they use, have a national debt of 250% of GDP, an ever growing old age colony and ever shrinking work force (they to not tolerate immigration at all) which, in all, puts them first in line to regress to Medieval times before any other industrialized nation.

Ah, the complexity of it all. Bear in mind that this may all happen (When? Who knows) or it may not, depending on so many thousands of variables that any attempt to forecast the future beyond tomorrow is like looking through a broken and smokey crystal ball!

All we can do is try to catch the shorter-run consequences of stupidity and use that tentative short term information to protect ourselves – as those lower gas prices yell in your ear, “Hey – let’s go buy a Hummer!’ which may not be the wisest conclusion to reach.

CHILLY WINTER AHEAD FOR EUROPE

Putin will be in the driver’s seat come Winter. The EU will rue the day they agreed to the U.S. economic sanctions against Russia. When they are freezing their asses off and their economies are a shambles in January, the sanctions will be lifted. Book it Dano.

Europeans can count on Russia to supply all the gas they need to stay warm this winter, according to Vladimir Putin. But the President warned that any action by Ukraine to disrupt the transit of fuel, will be felt across the EU. Read More: http://on.rt.com/sax0ov

ARE YOU GREENER THAN AN ICELANDER?

Submitted by Andrew Topf via OilPrice.com,

Next time you get into your car and drive to the supermarket, think about how much energy you consume on an annual basis. It is widely assumed that Westerners are some of the world’s worst energy pigs. While Americans make up just 5 percent of the global population, they use 20 percent of its energy, eat 15 percent of its meat, and produce 40 percent of the earth’s garbage.

Europeans and people in the Middle East, it turns out, aren’t winning any awards for energy conservation, either.

Oilprice.com set out to discover which countries use the most energy and why.

While some of the guilty parties are obvious, others may surprise you.

A note about the figures: we used kilograms of oil equivalent (koe) per capita, which refers to the amount of energy that can be extracted from one kilogram of crude oil. “Koe per capita” can be used to compare energy from different sources, including fossil fuels and renewables, and does here. The numbers represent the most recent data available from the World Bank.

(Image Source: Oilprice.com)

1. Iceland – 18,774 kg. Yes, that’s right, Iceland. Of all the countries in the world, including the richest and largest oil producers, Iceland consumes the most energy per person. How can that be? The reason is basically overabundance. With most of Iceland’s energy coming from hydroelectric and geothermal power, Icelanders are some of the planet’s least energy-conscious. Click here for a fascinating video of why the Nordic nation uses so much energy.

2. Qatar – 17,418 kg. Qataris are addicted to oil. According to National Geographic, the population is provided with free electricity and water, which has been described as “liquid electricity” because it is often produced through desalination, a very energy-intensive process. Qatar’s per capita emissions are the highest in the world, and three times that of the United States.

3. Trinidad and Tobago – 15,691 kg. Trinidad and Tobago is one of the richest countries in the Caribbean, and the region’s leading producer of oil and gas; it houses one of the largest natural gas processing facilities in the Western Hemisphere. T&T is the largest LNG exporter to the United States. Its electricity sector is entirely fueled by natural gas.

4. Kuwait – 10,408 kg. Despite holding the sixth-largest oil reserves in the world, and an estimated 63 trillion cubic feet of natural gas reserves, the demand for electricity in Kuwait often outstrips supply. According to the U.S. Energy Information Administration (EIA), Kuwait is perpetually in electricity supply shortage and experiences frequent blackouts each summer. The country has become a net importer of natural gas to address the imbalance.

5. Brunei – 9,427 kg. The tiny sultanate on the island of Borneo, apart from being a substantial producer and exporter of oil and natural gas to Asia, is also a habitual power hog. The nation of roughly half a million has the region’s highest number of cars per capita. Brunei also subsidizes both vehicle fuel and electricity, which is sold to the public at below-market prices.

6. Luxembourg – 7,684 kg. Landlocked Luxembourg is almost totally dependent on energy imports, mostly oil and gas. Energy consumption has increased 32 percent since 1990, with transportation responsible for 60 percent of the intake, according to an EU fact sheet.

7. United Arab Emirates – 7,407 kg. Nothing says conspicuous energy consumption like Ski Dubai. The indoor resort featuring an 85-meter-high mountain of man-made snow burns the equivalent of 3,500 barrels of oil a day. The World Resource Institute estimates the UAE uses 481 tonnes of oil equivalent to produce $1 million of GDP, compared to Norway’s 172 tonnes.

8. Canada – 7,333 kg. Oh, Canada. Kind, peace-loving Canadians certainly love their cars, along with space heaters, hot tubs and other energy-sucking toys. But while many equate Canada’s energy sector with the oil sands, it is, in fact, other forms of energy that account for the lion’s share of consumption. EcoSpark published a pie chart showing over half (57.6 percent) of Canada’s electricity comes from hydro, with coal the second most popular choice at 18 percent. Nuclear is third (14.6 percent), with oil and gas comprising just 6.3 percent and 1.5 percent, respectively.

9. United States – 6,793 kg. As the world’s largest economy and richest nation, the U.S. should obviously be included as a top 10 energy glutton. However, one puzzling fact is that despite annual economic growth, per-capita U.S. energy consumption has remained around the same level since the 1970s. According to the EIA, one explanation is that the U.S. has simply shifted the energy required to satisfy greater consumption to manufacturing centers offshore.

10. Finland – 6,183 kg. With over a third of its territory above the Arctic Circle, a cold climate, sparse population and a highly industrialized economy, it is no wonder that Finland is among the highest per-capita energy users in Europe. However, according to the International Energy Agency, Finland plans to diversify its economy away from carbon-based fuels, through a shift to renewables, including biomass, and has approved construction of two new nuclear plants.

RESOURCE WARS

The two articles below reflect the desperate times that lie ahead. Despite the propaganda and misinformation about the wars in the Middle East and in the Ukraine being about terrorism and the noble spreading of democracy, they are solely being fought over energy resources. Iraq has the 5th highest proven oil reserves in the world, behind Saudi Arabia, Venezuela, Canada, and Iran. They have 6 times the reserves of the United States. We aren’t going to war against 30,000 ISIS terrorists. We are protecting “our” oil. The Israeli/U.S. fear mongering and sanctions against Iran are to weaken a country that sits on top of 151 billion barrels of “our” oil. A nuclear Iran could not be invaded without potential dire consequences for the invader.

The war against Syria is about a gas pipeline that Saudi Arabia and Qatar want to build across their land to Europe. This is because Russia has complete control over the fate of Europe with their gas pipelines through the Ukraine. The America/EU engineered overthrow of a democratically elected government in the Ukraine was simply because the president was moving closer to Russia and away from the EU/U.S. alliance. The propaganda about evil Putin and the false flag shooting down of a Malaysian airliner are nothing but chess pieces in the global resource war.

Russia has the 8th highest level of proven oil reserves on the planet. The new discovery in the arctic could up those reserves dramatically. This would really throw a monkey wrench into the U.S./EU plan to try and make Putin bow to their economic pressure. The U.S. leadership knows the shale oil and shale gas “miracle” is essentially a Wall Street engineered fraud that will peak out in the next few years and then decline precipitously. They are desperately seeking a solution, but Russia and China have begun to foil their plans.

The various competing factions and ideologies in the U.S. are setting us up for a nasty turn of events. The neo-cons, military industrial complex, and greenies have blocked all rational methods of expanding the use of safer, cheaper, and smaller nuclear energy technologies. The military like the existing nuclear power plants because they provide the uranium needed for their weapons. Meanwhile the Chinese are treating nuclear power solutions like a Manhattan Project. Obama shuts down coal powered plants, even though we have ample supplies of coal under our feet. While we fiddle, our future burns.

As worldwide peak cheap oil becomes more expensive, the worldwide economy will continue to slow. As the shale boom goes bust, we produce less energy from coal, and our nuclear expansion wallows in cost overruns and bureaucracy, the only option will be war. The oligarch billionaires will use their control of the media and politicians to peddle stories of imminent threats, terrorists, and evil empires, as their excuse to go to war. But the wars will be about energy resources, as they have always been. This Fourth Turning will end with a showdown between the U.S./EU and Russia/China. I have a feeling their won’t be any winners.

“I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones.” ― Albert Einstein

Russia Discovers Massive Arctic Oil Field Which May Be Larger Than Gulf Of Mexico

Submitted by Tyler Durden on 09/27/2014 22:30 -0400

In a dramatic stroke of luck for the Kremlin, this morning there is hardly a person in the world who is happier than Russian president Vladimir Putin because overnight state-run run OAO Rosneft announced it has discovered what may be a treasure trove of black oil, one which could boost Russia’s coffers by hundreds of billions if not more, when a vast pool of crude was discovered in the Kara Sea region of the Arctic Ocean, showing the region has the potential to become one of the world’s most important crude-producing areas, arguably bigger than the Gulf Of Mexico. The announcement was made by Igor Sechin, Rosneft’s chief executive officer, who spent two days sailing on a Russian research ship to the drilling rig where the find was unveiled today.

The oil production platform at the Sakhalin-I field in Russia,
partly owned by ONGC Videsh Ltd., Rosneft Oil Co., Exxon Mobil
Corp. and Japan’s Sakhalin Oil and Gas Development Co. on June 9, 2009.

Well, one person who may have been as happy as Putin is the CEO of Exxon Mobil, since the well was discovered with the help of America’s biggest energy company (and second largest by market cap after AAPL). Then again, maybe not: as Bloomberg explains “the well was drilled before the Oct. 10 deadline Exxon was granted by the U.S. government under sanctions barring American companies from working in Russia’s Arctic offshore. Rosneft and Exxon won’t be able to do more drilling, putting the exploration and development of the area on hold despite the find announced today.”

Which means instead of generating billions in E&P revenue, XOM could end up with, well, nothing. And that would be quite a shock to the US company because the unveiled Arctic field may hold about 1 billion barrels of oil and similar geology nearby means the surrounding area may hold more than the U.S. part of the Gulf or Mexico, he said.

For a sense of how big the spoils are we go to another piece by Bloomberg, which tells us that “Universitetskaya, the geological structure being drilled, is the size of the city of Moscow and large enough to contain more than 9 billion barrels, a trove worth more than $900 billion at today’s prices.”

The only way to reach the prospect is a four-day voyage from Murmansk, the largest city north of the Arctic circle. Everything will have to shipped in — workers, supplies, equipment — for a few months of drilling, then evacuated before winter renders the sea icebound. Even in the short Arctic summer, a flotilla is needed to keep drifting ice from the rig.

Sadly, said bonanza may be non-recourse to Exxon after Obama made it quite clear that all western companies will have to wind down operations in Russia or else feel the wrath of the DOJ against sanctions breakers. Which leaves XOM two options: ignore Obama’s orders (something which many have been doing of late), or throw in the towel on what may be the largest oil discovery in years.

And while the Exxon C-suite contemplates its choices, here is some more on today’s finding from Bloomberg:

“It exceeded our expectations,” Sechin said in an interview. This discovery is of “exceptional significance in showing the presence of hydrocarbons in the Arctic.”

The development of Arctic oil reserves, an undertaking that will cost hundreds of billions of dollars and take decades, is one of Putin’s grandest ambitions. As Russia’s existing fields in Siberia run dry, the country needs to develop new reserves as it vies with the U.S. to be the world’s largest oil and gas producer.

Output from the Kara Sea field could begin within five to seven years, Sechin said, adding the field discovered today would be named “Victory.”

Duh.

The Kara Sea well — the most expensive in Russian history — targeted a subsea structure named Universitetskaya and its success has been seen as pivotal to that strategy. The start of drilling, which reached a depth of more than 2,000 meters (6,500 feet), was marked with a ceremony involving Putin and Sechin.

The importance of Arctic drilling was one reason that offshore oil exploration was included in the most recent round of U.S. sanctions. Exxon and Rosneft have a venture to explore millions of acres of the Arctic Ocean.

But what’s worse for Exxon is that now that the hard work is done, Rosneft may not need its Western partner much longer:

“Once the well is plugged, there will be a lot of work to do in interpreting the results and this is probably something that Rosneft can do,” Julian Lee, an oil strategist at Bloomberg First Word in London, said before today’s announcement. “Both parties are probably hoping that by the time they are ready to start the next well the sanctions will have been lifted.”

And here is why there is nothing Exxon would like more than to put all the western sanctions against Moscow in the rearview mirror: “The stakes are high for Exxon, whose $408 billion market valuation makes it the world’s largest energy producer. Russia represents the second-biggest exploration prospect worldwide. The Irving, Texas-based company holds drilling rights across 11.4 million acres in Russia, only eclipsed by its 15.1 million U.S. acres.”

Proving just how major this finding is, and how it may have tipped the balance of power that much more in Russia’s favor is the emergence of paid experts, desperate to talk down the relevance of the Russian discovery:

More drilling and geological analysis will be needed before a reliable estimate can be tallied for the size of the oil resources in the Universitetskaya area and the Russian Arctic as a whole, said Frances Hudson, a global thematic strategist who helps manage $305 billion at Standard Life Investments Ltd. in Edinburgh. Sanctions forbidding U.S. and European cooperation with Russian entities mean that country’s nascent Arctic exploration will be stillborn because Rosneft and its state-controlled sister companies don’t know how to drill in cold offshore conditions alone, she said.

“Extrapolating from a small data sample is perhaps not going to give you the best information,” Hudson said in a telephone interview. “And because of sanctions, it looks like there’s going to be less exploration rather than more.” In addition, the expense and difficulty of operating in such a remote part of the world, where hazards include icebergs and sub-zero temperatures, mean that the developing discoveries may not be economic at today’s oil prices.

Maybe. Then again perhaps the experts’ time is better suited to estimating just how much longer the US shale miracle has left before the US is once again at the mercy of offshore sellers of crude.

In any event one country is sure to have a big smile on its face: China, since today’s finding simply means that as Russia has to ultimately sell the final product to someone, that someone will almost certainly be the Middle Kingdom, which if the “Holy Gas Grail” deal is any indication, will be done at whatever terms Beijing chooses.

Technology revolution in nuclear power could slash costs below coal

A report by UBS said the latest reactors will be obsolete by within 10 to 20 years, yet Britain is locking in prices until 2060

A general view of the security fence at Heysham Nuclear Power Station on March 17, 2011 in Heysham, United Kingdom

Scientists have already designed better reactors based on molten salt technology that promise to slash costs by half or more Photo: Getty Images

By Ambrose Evans-Pritchard

The cost of conventional nuclear power has spiralled to levels that can no longer be justified. All the reactors being built across the world are variants of mid-20th century technology, inherently dirty and dangerous, requiring exorbitant safety controls.

This is a failure of wit and will. Scientists in Britain, France, Canada, the US, China and Japan have already designed better reactors based on molten salt technology that promise to slash costs by half or more, and may even undercut coal. They are much safer, and consume nuclear waste rather than creating more. What stands in the way is a fortress of vested interests.

The World Nuclear Industry Status Report for 2014 found that 49 of the 66 reactors under construction – mostly in Asia – are plagued with delays, and are blowing through their budgets.

Average costs have risen from $1,000 per installed kilowatt to around $8,000/kW over the past decade for new nuclear, which is why Britain could not persuade anybody to build its two reactors at Hinkley Point without fat subsidies and a “strike price” for electricity that is double current levels.

All five new reactors in the US are behind schedule. Finland’s giant EPR reactor at Olkiluoto has been delayed again. It will not be up and running until 2018, nine years late. It was supposed to cost €3.2bn. Analysts now think it will be €8.5bn. It is the same story with France’s Flamanville reactor.

We have reached the end of the road for pressurised water reactors of any kind, whatever new features they boast. The business is not viable – even leaving aside the clean-up costs – and it makes little sense to persist in building them. A report by UBS said the latest reactors will be obsolete by within 10 to 20 years, yet Britain is locking in prices until 2060.

The Alvin Weinberg Foundation in London is tracking seven proposals across the world for molten salt reactors (MSRs) rather than relying on solid uranium fuel. Unlike conventional reactors, these operate at atmospheric pressure. They do not need vast reinforced domes. There is no risk of blowing off the top.

The reactors are more efficient. They burn up 30 times as much of the nuclear fuel and can run off spent fuel. The molten salt is inert so that even if there is a leak, it cools and solidifies. The fission process stops automatically in an accident. There can be no chain-reaction, and therefore no possible disaster along the lines of Chernobyl or Fukushima. That at least is the claim.

The most revolutionary design is by British scientists at Moltex. “I started this three years ago because I was so shocked that EDF was being paid 9.25p per kWh for electricity,” said Ian Scott, the chief inventor. “We believe we can achieve parity with gas (in the UK) at 5.5p, and our real goal is to reach 3.5p and drive coal of out of business,” he said.

The Moltex project can feed off low-grade spent uranium, cleaning up toxic waste in the process. “There are 120 tonnes of purified plutonium from nuclear weapons in Britain. We could burn that up in 10 to 15 years,” he said. What remained would be greatly purified, with a shorter half-life, and could be left safely in salt mines. It does not have to be buried in steel tanks deep underground for 240,000 years. Thereafter the plant could be redesigned to use thorium, a cleaner fuel.

The reactor can be built in factories at low cost. It uses tubes that rest in molten salt, working through a convection process rather than by pumping the material around the reactor. This cuts corrosion. There is minimal risk of leaking deadly cesium or iodine for hundreds of miles around.

Transatomic Power, in Boston, says it can build a “waste-burning reactor” using molten salts in three years, after regulatory approval. The design is based on models built by US physicist Alvin Weinberg at Oak Ridge National Laboratory in the 1960s, but never pursued – some say because the Pentagon wanted the plutonium residue for nuclear warheads.

It would cost $2bn (overnight cost) for a 550-megawatt plant, less than half the Hinkley Point project on a pro-rata basis. Transatomic says it can generate 75 times as much electricity per tonne of uranium as a conventional light-water reactor. The waste would be cut by 95pc, and the worst would be eliminated. It operates in a sub-critical state. If the system overheats, a plug melts at the bottom and salts drain into a cooling basin. Again, these are the claims.

The most advanced project is another Oak Ridge variant designed by Terrestrial’s David LeBlanc, who worked on the original models with Weinberg. It aims to produce power by the early 2020s from small molten salt reactors of up to 300MW, for remote regions and industrial plants. “We think we can take on fossil fuel power on a pure commercial basis. This is a revolution for global energy,” said Simon Irish, the company’s chief executive.

Toronto-based Terrestrial prefers the “dry tinder” of uranium rather than the “wet wood” of thorium, which needs a blowtorch to get started and keep going, typically plutonium 239. But it could use either fuel.

A global race is under way, with the Chinese trying everything at the Shanghai Institute of Nuclear and Applied Physics, reportedly working under “warlike” pressure. They have brought forward their target date for a fully-functioning molten salt reactor – using thorium – from 25 to 10 years.

Ian Scott, at Moltex, originally planned to sell his technology to China, having given up on the West as a lost cause. He was persuaded to stay in Britain, and is talking to ministers. “The first stage will cost around £1bn, to get through the regulatory process and build a prototype. Realistically, only the government can do this,” he said.

A state-venture of such a kind should not be ruled out. The travails of Hinkley Point show that the market cannot or will not deliver nuclear power on tolerable terms. The project has degenerated into a bung for ailing foreign companies. We have had to go along with it as an insurance, because years of drift in energy policy have left us at an acute risk of black-outs in the 2020s.

There is no reason why Britain cannot seize the prize of molten salt reactors, if necessary funded entirely by the government – now able to borrow for 10 years at 2.5pc – and run like a military undertaking. A new Brabazon Committee might not go amiss.

The nation still has world-class physicists. The death of Britain’s own nuclear industry has a silver lining: there are fewer vested interests in the way. We start from scratch. The UK’s “principles-based” philosophy of regulation means that a sudden pivot in technology of this kind could be approved very fast, in contrast to the America’s “rules-based” system. “I would never even think of doing it in the US,” said Dr Scott.

It would be hard to argue that any one of the molten salt technologies would be more expensive than arrays of wind turbines in the Atlantic. Indeed, there is a high likelihood that the best will prove massively cheaply on a kW/hour basis.

Such a project would kickstart Britain’s floundering efforts to rebuild industry. It would offer some hope of plugging a chronic and dangerously high current account deficit, already 5pc of GDP even before North Sea oil and gas fizzles out. It is fracking on steroids for import substitution.

Britain split the atom at the Cavendish Laboratory in Cambridge in 1911. It opened the world’s first commercial reactor at Calder Hall in 1956. Surely it can rise to the challenge once again. If not, let us cheer on the Chinese.