OUR THOUGHTS ON:

Signs of the (Energy) Times

Energy & Resources

By John Null

Google has received approval from the Federal Energy Regulatory Commission to become an electricity marketer. Google apparently has no plans to enter the retail or wholesale energy markets but instead hopes to better manage its own energy supplies and gain better access to renewable energy sources. Of other interest in the electricity arena, the U.S. Energy Information Association reports that electricity generation was down 3.8% in October 2009 versus October 2008. It was the 15th consecutive month that net generation was down and mirrors similar declines in industrial production reported by the Federal Reserve.

The U.S. Department of Labor reported that core consumer prices dropped in January 2010, the first time since December 1982. The core CPI strips out the more volatile food and energy prices. Overall, consumer prices for January 2010 rose slightly from December 2009, mostly a result of increasing energy prices. In the month of January, energy prices increased 2.8%, largely reflecting the 4.4% increase in gasoline costs.

On the alternative energy front, First Solar Inc. reported increases in both revenue and profit in 2009 versus 2008. Competing technologies and public demand continue to be struggles for the solar-power industry but those in the capital markets feel the industry is on good footing with strong government policy support and more manageable operating costs.

Representatives Waxman and Markey continue their pursuit of clean energy with investigations of companies that provide fracturing services to the oil and gas industry. They are concerned that the chemicals used in the process that improves the flow of oil and gas could contaminate drinking-water supplies. Increases in fracturing services reflect the drilling boom that has resulted in increased gas production of 20% since 2005.

The Obama Administration continues to drive a resurgent nuclear power industry. The government recently announced more than $8 billion in new loan guarantees for the first new nuclear power plant in the United States in almost 30 years. Obama has expressed interest in increasing such guarantees to spur further construction. There is also some interest in manufacturing smaller reactors with lower costs and shorter construction times. Some suggest these smaller reactors could replace coal-fired plants that may become obsolete under new emissions restrictions. Westinghouse has expressed interest in considering such designs which ultimately need approval by the U.S. Nuclear Regulatory Commission.

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