Venezuela orders power cuts for industry

[Bacchus39]

http://news.bbc.co.uk/2/hi/business/8427802.stm


Venezuela has imposed sweeping power cuts on industry and businesses in order to save its limited energy resources and avoid mass blackouts.

The government said the cuts were because of falling water levels at the Guri Hydroelectric dam, which supplies much of the country's power.

Energy Minister Angel Rodriguez said that without cuts, the dam could stop feeding the power grid early next year.

A drought in the region has caused water levels to drop dramatically.

Shopping centres have to turn off their lights by 2100 as part of the widespread rationing, while casinos and bingo halls have to turn theirs off by midnight.

Billboards also have to use energy-efficient light bulbs.

Businesses that do not comply with the new measures will be forced to close for one day, or three days for repeat offenders.

The government also told businesses to draw up plans to cut energy use by 20%.

[Downwinder]

1. Forced conservation seems like a reasonable solution

to a shortage situation, rather than a windfall to corporate interests. There was a day, when that approach was used successfully in the U.S.

[Bacchus39]

2. well, you can't make it rain

still I find it somewhat odd that both Venezuela and Ecuador have energy supply problems. seems rather short sighted. and no-one is happy with power outages.

[Downwinder]

3. Everybody is playing an end game.

How many oil refineries are within 20 feet of sea level?

What is the lead time for a new refinery?

[Bacchus39]

4. what?????? I believe the oil from Ven and Ecuador is refined elsewhere

for the most part. part of the problem I assume.

[Downwinder]

5. Nobody is planning for tomorrow. Everything is for today.

It is like the world is a recovering addict living "one day at a time."

[Braulio]

7. Actually, that's not true

There is a lot of planning going on for tomorrow. The amount and quality of planning changes from country to country, and company to company. However, it's customary for companies building a power plant or a refinery to project forward at least 20 years, sometimes as far as 40 years (although most planners know forecasts beyond 10 years are just scoping guesses).

I'm familiar with the amount of planning that Venezuela has been making - their ministries and PDVSA issue a lot of information from time to time, and President Chavez also puts out a lot of material. The problem in Venezuela's case isn't the lack of planning, it's the poor quality of their plans, and even worse, their failure to carry out plans. In Venezuela today, very little that matters seems to get done - this is the key reason why there are power shortages, their gas production has fallen so low they have to import gas from Colombia, and PDVSA has to regularly revise downwards their oil production targets.

[Braulio]

6. Some answers to your questions

1. Venezuela is suffering a power shortage because the government failed to build power plants on the schedule the government itself set several years ago. It is true there is a drought, but droughts are factored into the power demand forecasts.

2. Venezuela refines all of the fuels and other products it consumes under normal circumstances, it also exports refined fuels. However, recent problems at their refineries (which PDVSA management has called "programmed maintenance") have led to less refining capacity than normal, which has required Venezuela import some refined products to make gasoline.

3. Refineries are usually built close to sea level, because they're supplied by oil tankers. This of course isn't the case for intracontinental refineries such as the ones inside the US, Europe, China, etc. Those are fed by pipelines. All of Venezuela's refineries are close to the ocean, but I'm sure if sea level rises they can be moved or protected by berms.

[Downwinder]

8. The majority of US refineries are on the coast.

The advertised lead time for a new refinery is 10 years.

I don't believe US refineries can handle Venezuela crude due to the high sulfur content.

My point is that no one appears to be planning should there be a rise in sea level.

[Braulio]

9. Of course there is planning

Sea level will rise rather slowly. Building a 5 meter berm around a refinery isn't a big deal, and the rise in sea level forecast for the next century is about 2 meters. Waterworld was just a movie, and it's not as bad as it sounds.

Let's go over the way it works - most refineries are owned by companies with insurance departments. These departments have to decide how much to sole risk, and how much to insure, the deductibles, etc. They pay experts to look at forward projections for hurricanes, floods, earthquakes, terrorist acts, you name it. They deal with insurance companies which in turn have their own experts who set the price for the insurance.

I happen to have been on a job gathering the information for mega insurance contracts about 10 years ago, so I know the way it works. If I owned a refinery, I would worry more about a terrorist strike by an Al Qaida branch office than I would worry about sea level rising.

And I would worry even more about the profit margins if fuel consumption drops because the US car fleet has been forced to be more efficient - this and the environmentally unfriendly, heavily subsidized ethanol threat are the reasons why no sane corporation would build a new refinery in North America.