The Future of Fuel Diversity: Crisis or Euphoria?

Deck: 
The fragmented electric industry structure poses an obstacle to a more stable, diverse, and secure power supply.
Fortnightly Magazine - October 2004
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The Future of Fuel Diversity

The fragmented electric industry structure poses an obstacle to a more stable, diverse, and secure power supply.

Daily news headlines have drawn attention to concerns about fuels, especially the rising prices of oil and natural gas. Fears of interruptions of oil exports from Iraq, Iran, Russia, and Venezuela (take your pick) roil the energy market. But coal is not exempt from bad news, as production declines reduce output from Eastern U.S. mines while rail transport bottlenecks limit deliveries of Western and Eastern coals. Meanwhile, state attorneys general seeking stiffer enforcement of environmental rules have brought lawsuits against owners of coal-fired power plants.

Amid all of these signs, the benefit of fuel diversity is clear. But the United States is not on course to maintain electric fuel diversity and avoid price shocks. The underlying public policy issue has been dormant since the oil shock of 1973-1974 and the subsequent oil and gas price deflation of 1982-1998. Structural changes in the power sector in the late 1990s have only added to the complexity of determining who, if anyone, is steering the ship.

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