Electricity ConsumptionWeak Rebound in Energy Demand
Retail sales of electricity in the industrial sector continue to decline, having fallen by 12 percent during the first quarter of 2009 compared with year-ago levels. Total consumption of electricity is projected to fall by 2.0 percent for the entire year of 2009 and then rise by 0.8 percent in 2010.
Coal Consumption
The projected electric-power-sector consumption of about 990 million short tons of coal in 2009 would be the first time since 2002 that annual consumption would be below the billion-short-ton level. The 5.2-percent decline in coal consumption in the electric power sector is the result of lower total electricity generation coupled with projected increases from other generating sources, including natural gas, nuclear, hydroelectric, and wind. Coal consumption in the electric power sector is expected to increase by 1.6 percent in 2010 as natural gas prices rise and coal regains a larger share of the baseload generation mix. Coal consumption for both steam and coke production is projected to decline by 29 percent in 2009, reflecting very weak industrial activity.
Natural Gas Consumption
Natural gas consumption is projected to decline by 2.3 percent in 2009 and remain unchanged in 2010.
Poor economic conditions are expected to prolong the current slump in natural gas demand over the coming months, led by an 8.2-percent drop among industrial users in 2009. While consumption is expected to fall in the residential and commercial sectors as well this year, competitive natural gas prices relative to coal are projected to lead to a 2.4-percent increase in electric power sector consumption in 2009. Slight consumption increases in the residential, commercial, and industrial sectors next year are expected to result from the projected economic recovery. Natural gas consumption in the electric power sector is expected to decline by 1 percent in 2010 as natural gas prices rise and coal regains a larger share of the baseload generation mix.
U.S. Crude Oil and Liquid Fuels Consumption
Total consumption of liquid fuels and other petroleum products is projected to decrease by 650,000 bbl/d (3.3 percent) in 2009, including a decline of 280,000 bbl/d (7.0 percent) in distillate fuel consumption and 140,000 bbl/d (8.7 percent) in jet fuel consumption. Motor gasoline consumption is projected to remain virtually flat as the significant price decline from last summer offsets some of the impact of the economic downturn. Modest economic recovery in 2010 is expected to contribute to a 310,000-bbl/d (1.6 percent) increase in total liquid fuels consumption.
Take a good look at those charts. They are year over year projections and are far weaker than may appear at first glance. Coal has dropped 5.2% but is expected to rise only 1.6% in 2010.
Liquid fuel consumption dropped 5.7% in 2008 and is expected to drop another 3.3% on top of that in 2009. The 2010 rebound forecast is only 1.6%.
Nuclear Power Plans Scrapped in Canada and US
In response to plunging electrical demand in Ontario, Bruce Power pulls plug on two planned nuclear stations.
Bruce Power has pulled the plug on its ambitious plans to construct two new nuclear stations in Ontario.Bank of Canada Says "Recession Is Over"
The company says the stations, which it had hoped to build at Nanticoke on Lake Erie and at its existing nuclear complex near Port Elgin on Lake Huron, are no longer needed because of plunging electricity demand in the province.
The cancellations follow a similar decision late last month by the Ontario government to shelve a plan to build a new nuclear plant. The province cited the high costs of constructing the station as part of the reason for its decision.
�These are business decisions unique to Ontario and reflect the current realities of the market,� said Duncan Hawthorne, Bruce Power's president. �For more than five years, we've examined our options and refurbishing our existing units has emerged as the most economical.�
Besides the cancellations in Ontario, major utilities in the U.S., including Entergy Corp. and Exelon Corp., have temporarily suspended some of their plans for new nuclear power plants. And last month, Moody's Investors Service, a credit rating firm, warned that it was considering taking a more negative view on utilities considering new nuclear stations.
Shawn-Patrick Stensil, a spokesman for Greenpeace, said the rapidly escalating price tag on new nuclear plants is undermining investor confidence in the technology.
But Murray Elston, Bruce Power's vice-president corporate affairs, rejected the claim, saying that �it really is the fact that right now the capacity of our system to generate is well beyond what our demand is.� He said the company had not yet sought pricing details for the two new plants.
The Bank of Canada is speculating Recession over, growth resumes.
Canada's recession is over, and the country is beginning what will be a long reconstruction of the wealth destroyed by the financial crisis, the Bank of Canada said Thursday.Unwarranted Joy In Canada
Gross domestic product will expand at an annual rate of 1.3 per cent this quarter, compared with an earlier forecast for a contraction of 1 per cent between July and September, the central bank said in its latest monetary policy report.
If the bank's new forecast proves correct, Canada's first recession since the early 1990s lasted three quarters, making it one of the shortest downturns on record.
In Toronto, Finance Minister Jim Flaherty agreed the economy is moving into a phase of �modest� growth.
�Consumer confidence is relatively strong and growing, we are seeing good home sales numbers (and) some improvement in retail sales,� Mr. Flaherty said.
The recession may technically be over soon in both Canada and the US but it will not feel like it to most, nor will Canada see those projected rates of growth.
Expect to see downward revisions to expected growth because they are coming. Weak energy demand is one of the clues that the rebound will be less than most anticipate.
Nearly everyone is overestimating the rebound in jobs and consumer spending while ignoring or discounting the likelihood of a double dip recession, not just in the US, but globally. Odds still favor a harsh double dip recession, or a lingering L-shaped recession sapped by higher taxes and weak consumer demand, where the economy flirts with recession for years to come.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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