TPT March 2024

INDUSTRY 360

number of mobile phone users will approach 7.5 billion in 2025, so the aggregate power demand is substantial. The infrastructure – for example, the hardware that comprises the internet and the broadcasting towers needed for mobile phone service – consumes far more power than personal devices do. Fuel in flux The world’s fuel mix has been in flux for some time, mainly driven by the concerns of a warming planet. Whether guided by legislation or incentives, power utilities throughout the industrialised world have been substituting renewable power generation for fossil fuels, but deploying renewables is a slow process. Intentions aside, replacing energy-dense commodities with windmills and solar panels presents difficulties, encompassing engineering, economics and politics. A chief concern here is the growing use of electric vehicles. How much power do they use? Do they use so much energy that their widespread use will overtake the supply?Two examples illustrate the challenges. California is at one extreme, with a large population, 39 million people, and many electric vehicles. About 2.5 per cent of the registered vehicles in the state are electric. So, keeping up with the growing demand is problematic. The other extreme is Portugal, which is well-suited to using wind, solar and hydroelectric sources. Also, its population is small at 10 million, and just 1.6 per cent of all vehicles are electric. It has been widely reported that Portugal’s power grid ran entirely on renewables for six consecutive days late in 2023. The use of coal demonstrates that transitioning from carbon rich to carbon-free fuels will be a series of successes and setbacks. In an article that appeared in The Guardian early in 2024, reporter Jillian Ambrose stated that Britain’s sole remaining coal-fired power plant provided just 1 per cent of the UK’s power demand. The global story is far different. According to the International Energy Agency’s latest Coal Market Update, dated July 2023, coal consumption throughout the world hit a peak in 2022, and it is expected to climb further. Regardless of the UN Climate Change Conference, COP28, many nations have made commitments to reduce the use of fossil fuels without specific plans as to how to proceed. The demise of fossil fuels (again) The end of petroleum has been predicted many times. The world might never run out of petroleum, natural gas, or coal, but extraction gradually becomes less economically viable. How has the price of petroleum fared over the last few decades? According to price data from the United States Energy Information Administration and inflation data from the United States Bureau of Labor Statistics, the ups and downs of the petroleum industry cancelled each other out from 1990 to 2016 and again in 2020 (see Figure 2 and Figure 3). Granted, the price of petroleum took off relative to the pace of inflation since then, but this increase was probably driven in part by non-market factors, such as the war in Ukraine and the upheaval that followed the spread of Covid-19. Trends to watch It’s difficult to say precisely what the future holds. Long-term trends in coal, oil and gas extraction, energy production and energy consumption can get lost in periodic updates and background noise. Still, tube and pipe producers can monitor a few key data points to track industry trends. First are data or statistics concerning the energy sources, whether fossil fuels or renewables. Finding data on the extraction, supply and

Figure 2: Starting from a benchmark price of $24.53 per barrel of West Texas Intermediate oil in 1990, the annual average cost of a barrel of WTI has risen and fallen substantially over the decades, finishing at $77.58 in 2023. The dotted line shows the buying power of the US dollar as it has changed over the same period: $24.53 in 1990 had the same buying power as $57.60 in 2023 Sources: The US Energy Information Administration, the US Bureau of Labor Statistics

Figure 3: This graph is similar to the graph in Figure 2, comparing the average annual spot price of a barrel of WTI to the purchasing power of a dollar (in other words, inflation). Where the ratio is less than 1, the price per barrel of WTI is less than the pace of inflation. This favours consumers and shows that the drilling, extraction and refining process continues to be economically advantageous Sources: The US Energy Information Administration, the US Bureau of Labor Statistics pricing of commodity items isn’t difficult, nor is finding data on the status of renewable sources. Websites such as enerdata. net and iea.org provide detailed information and periodic reports on many energy-related topics. Noteworthy also is the ability of power grids to keep pace with demand. Tracking the supply of electricity can be time consuming, but power disruptions such as brownouts and blackouts usually make the headlines. If power delivery becomes less reliable, a result will be an increased reliance on conventional fuels. Information on vehicle trends, likewise is easy to find. Finally, while some of the decarbonising legislation seems ambitious or even foolhardy, such as some localities abolishing the sale of gasoline- and diesel-powered vehicles, this information is likewise always at hand. Taken together, these information sources can help tube and pipe producers and fabricators keep up with the changes in demand for their products.

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MARCH 2024