Podcast: Josiah Neeley: energy matters, the implications of recent geopolitical events for energy policy
On this episode of Unsupervised Learning Razib talks to Josiah Neeley, Senior Fellow in Energy at the R Street Institute and co-host of the Urbane Cowboys podcast. They discuss the past, present and future of the energy markets, and how best to understand the workings of the global energy ecosystem. Considering geopolitical events in Europe, with Russia’s invasion of Ukraine, they dive right into how distribution differences between oil and gas will conspire to keep Europeans dependent on Russia for energy for the foreseeable future, blocked from immediately switching to other options. They also address the fact that Russia’s leverage as a petrostate has been diminished by a revolution in oil extraction technology that has at the same time made the US a net exporter of crude.
Neeley says it’s critical we acknowledge how disaggregated the energy markets are. While crude oil is a global market defined by a single price that is highly responsive to international events, natural gas prices are very localized. Unlike oil, natural gas is not easy to transport, so there is no pooled market. Energy policy is not singular because energy is defined by diverse technologies with specific constraints and demands. Constant innovation means that in the near future advances in liquifying natural gas (LNG) may make it a more global commodity.
Then they discuss what it means to be a renewable energy, the dependence of wind and solar on battery technology, and the fact that, depending on how you think about it, most of our energy is ultimately solar (fossil fuels deriving from organisms whose original energy input was from the sun). Neeley points out that while solar and wind are highly variable inputs, fossil fuels and nuclear energy are relatively constant, resulting in the vastly greater necessity for battery technology in the former two. Meanwhile, because immediate solar technology is arguably the most visible form of energy production (since you probably know exactly how many houses on your block have solar panels, but probably zero run a backyard coal-fired plant) Neeley notes this means Americans often overestimate the relative importance of solar compared to other sources.
Finally, they explore the geopolitical dependencies that plague the various energy sources and the peculiar relative stagnation of nuclear technology. Neeley observes that, unlike most innovations, thanks to an accumulation of safety regulations, nuclear power plants have actually become more, not less, expensive, over the last fifty years, resulting in some unfavorable economics. Additionally, nuclear energy requires a high human capital input from engineers and technicians. This may explain why heavy reliance on nuclear power is limited mostly to medium-sized European countries, and it has gained little traction in the developing world.