South Africa is desperate for allies, economic allies. The country is failing and the people are suffering. There is international outrage right now misdirected at South Africa for its desire to host the Bric summit with Russia, China, Brazil, and India. The International Criminal Court (ICC) wants to arrest Putin for his war crimes, and President Cyril Ramaphosa is defending his position to invite Putin before the invitations for the event have even gone out. I warned that countries who were previously banned from discussions at the big table would turn to China and Russia for support since the West has abandoned them. “What about Ukraine!” the media cries. Well, what about South Africa? No one comments that the conditions in South Africa are WORSE than in Ukraine during an active war.
South Africa was in a bad spot economically long before COVID. GDP grew by a mere 1% between 2012 and 2021, according to the World Bank. The nation’s entire infrastructure is crumbling, and the power grid is on the verge of complete failure. Blackouts are common, and many blame state-owned power plant Eskom which routinely cuts off the power grid to produce “rolling blackouts” to conserve power. These “rolling blackouts” can last over 12 hours. This affects fuel availability, phone and internet coverage, traffic lights, power to hospitals, etc. It also limits the availability of food and water. Crime is more prevalent during blackouts as there are no cameras or security systems. Rape and crimes against women are disgustingly common. Civil unrest is so prevalent that the president issued a “state of disaster” warning on February 9, long after the situation became irreparable.
(click on the image for higher resolution)
Statistics vary but there are about 82 murders per day in South Africa. The South African Police Service reported 7,555 murders from October to December 2022. As you can see from the chart above, crime is rapidly escalating. People are murdering farmers and anyone with a surplus of food. “Most murders take place in a public place, such as a street or an open field or a parking area – or at the residence of the victim (including places known to the victim or perpetrator),” Business Tech reported. “The Purge” is essentially taking place in South Africa right now.
So what is the world police doing about this situation since they care so much about helpless nations? Nothing. The US government issued a warning that Eskom’s power grid will collapse.They are warning that there will be no water, sewage pumps, or fuel, and the nation will effectively come to a standstill. Eskom said that in the “best case scenario,” it would take 6 to 14 days to restart the power grid. Experts believe it will take longer if they can manage to restore the power at all. “What’s left after a blackout would be what was left after a civil war,” an anonymous source said.
Poverty and the ongoing conflict have destroyed South Africa. The media would like people to believe that the nation is an enemy of the West because it is remaining neutral in the Russia-Ukraine conflict. How exactly is it supposed to offer any aid when its own people are starving? The West even had the audacity to ask South Africa to support the climate change agenda, as if they have access to stable energy. One can only hope that the Bric summit is permitted this year and Xi and Putin can offer aid to South Africa’s people.
Posted originally on the conservative tree house on December 15, 2022 | Sundance
Friends, in the late summer and fall of 2021 CTH warned of massive waves of price increases that would push inflation to record highs. We watched as each wave arrived almost on schedule throughout 2022, and as a direct result of Joe Biden energy and economic policy, prices necessarily skyrocketed.
In essence in 2021 we were warning about the expenditure side of the ledger that all working-class and fixed income families would experience. We advised to take every proactive measure possible to avoid future price increases.
Now, unfortunately, we begin moving those same warnings to the other side of the ledger; because as a natural consequence of consumer checkbook pain, the financial pressure always transfers to the income and employment side of the economic dynamic.
Keep in mind, retail sales are calculated in dollars spent by consumers. November 2022 retail sales as reported by the commerce department today [DATA pdf], reflect a 0.6% decrease in spending vs October. November data includes Thanksgiving, Black Friday and the traditional early holiday shopping. 0.6% less dollars were spent, despite prices being double digits higher than the prior year.
When the prices you are charging for goods and/or services are 10, 20, even as high as 60 percent more than prior year, yet your sales are running flat to negative – that means consumer purchases of those goods/services are substantially lower.
If you were selling 100 widgets for $1 each in 2021, you gross $100. If your widgets now sell for $1.25 and you gross $94 in 2022 sales, you have sold 75 widgets.
In 2021 you sold 100 widgets, in 2022 you sold 75 widgets, a difference of 25 widgets.
Everything attached to the raw material, creation, manufacturing, distribution and sale of those 25 missing widgets is no longer part of the economic activity associated with your widget business. You are now telling your suppliers you don’t need as many widgets, because they are not selling. You have lost 25% of your business in this scenario.
Everything associated with the drop in consumer spending now begins to downsize. Downsizing means less labor needed. This process triggers the economic impact shifting from the consumer sales side of the ledger to the income side of the ledger for employers, employees and workers.
If this consumer spending trend continues, and there is absolutely no reason to think it will reverse, we are entering a phase of serious financial instability for the American worker, at a scale that will dwarf the 2006/’07 and ’08 recession.
I am not a doomsayer pundit on economic matters. I am a proactive planner on economic forecasts. With consumer credit costing more, with fed interest rates climbing, with import orders cancelled, with shipping costs dropping, with consumer spending contracting, with fewer units moving, with inventories climbing, all of the data only points in one direction.
Serious consumer defaults are looming.
Government policy has been hammering the demand side of the economy, proclaiming -falsely- that excessive consumer demand was the cause of inflation. This game of economic pretending is about to get very serious.
Consumer spending, as measured in actual units created and purchased in the economy, has been contracting since the third quarter of 2021 (started June, July, August ’21). Simultaneously, consumer spending as measured in actual dollars spent to purchase food, fuel and energy, has been skyrocketing. This is a supply side inflationary cycle with no soft landing.
(Wall Street Journal) – U.S. retail spending and manufacturing weakened in November, signs of a slowing economy as the Federal Reserve continues its battle against high inflation.
November retail sales fell 0.6% from the prior month for the biggest decline this year, the Commerce Department said Thursday. Budget-conscious shoppers pulled back sharply on holiday-related purchases, home projects and autos. Manufacturing output declined 0.6%, the first drop since June, the Fed said in a separate report.
The Fed on Wednesday raised its benchmark interest rate 0.5 percentage point to a 15-year high and signaled plans to continue lifting rates through the spring. Fed officials have increased rates at the fastest pace since the 1980s to cool the economy and bring down inflation, which is running near a 40-year high.
“Most households are acting strategically, planning for a road ahead that may be more difficult to traverse, with higher interest rates, the housing slump, and ongoing inflation—and the very real possibility of a recession,” said Craig Johnson, president of the retail consulting firm Customer Growth Partners. (read more)
Businesses are going to start cutting expenses in order to survive.
The number one expense for almost all businesses is the labor cost.
Non-essential and high wage labor is going to get removed first.
Posted originally on the CTH on December 8, 2022 | Sundance
It is always worth a reminder when reviewing anything from Blackrock, that the institutional investment firm has strong ties to almost every sphere of White House policy.
Today Blackrock is warning of severe economic conditions looming, the unspoken origin traces to the collective western economic shift in energy policy, aka “Build Back Better.”
As noted in the Blackrock warning, under the auspices of inflation control, central banks can try and shrink economic activity – but they are limited. Organically, economies will free fall once the full weight of BBB energy policy accumulates.
(Business Insider) – […] A worldwide recession is just around the corner as central banks boost borrowing costs aggressively to tame inflation — and this time, it will ignite more market turbulence than ever before, according to BlackRock.
The global economy has already exited a four-decade era of stable growth and inflation to enter a period of heightened instability — and the new regime of increased unpredictability is here to stay, according to the world’s biggest asset manager.
That means policymakers will no longer be able to support markets as much as they did during past recessions, a team of BlackRock strategists led by vice chairman Philipp Hildebrand wrote in a report titled 2023 Global Outlook.
“Recession is foretold as central banks race to try to tame inflation. It’s the opposite of past recessions,” they said. “Central bankers won’t ride to the rescue when growth slows in this new regime, contrary to what investors have come to expect. Equity valuations don’t yet reflect the damage ahead.” (read more)
This type of macroeconomic prediction should not come as a surprise to most CTH readers, because we have been outlining the natural conclusion of consequence.
Once the decision was collectively made to shrink the use of oil, coal and natural gas for energy development, the subsequent inflationary impact would lead to a need to shrink economic activity. Raising interest rates to shrink demand does make the economy contract; however, the energy driven supply side inflation continues.
Nothing can stop supply side inflation, except a massive decline in energy use.
A severe reduction in energy use, similar in scale to the energy use reduction when pandemic lockdowns were in full effect, can only lead to the same overall economic conditions as present within the lockdown. Which is to say, almost no economic activity.
Posted originally on the CTH on December 2, 2022 | Sundance
A slight drop in the overall national pretending index is noted today; actually, more like a twitch toward the reality side of the meter.
CTH has been outlining the supply side inflation issue in the highly consumable goods sector, specifically the foods sector, for almost two years now. Mainstream and financial pundits have denied its existence.
According to the Friedman view of traditional economics, only monetary policy drives inflation. However, Friedman never lived in -nor fathomed- an era when the collective western governments would intentionally shrink the economy in order to save the planet via climate change.
The intentional diminishment of energy production is the #1 source of increasing consumer prices. Inflation is not an issue of high demand for the subsequent goods produced. Raising interest rates diminishes demand for durable goods but has zero impact on the increasingly higher prices of intentionally scare resources like oil, coal and natural gas.
While maintaining the pretending due to the alignment with multinational and corporate interests, the Wall Street Journal starts admitting today that prices are not likely to drop, regardless of commodity prices. Even with abundant harvests, strong grain & soybean production, abundant pork and beef commodities, the costs associated with the production of food products will stop any downward price pressure.
(WSJ) Global prices for commodities such as wheat and sugar have fallen back to where they were a year ago, but consumers are still likely to feel the pinch at the checkout.
[…] Higher energy and power costs are also fueling food-price inflation. “That product on the shelf has a lot of the oil price built in,” said Kathy Kriskey, a commodity strategist at Invesco.
Costlier energy means it costs more to transport and package food, while supermarkets are paying more to power their stores. Higher gas prices also lead to increased fertilizer costs, while wage bills are also rising rapidly.
Supermarkets have more incentive to freeze than to lower prices, Ms. Kriskey added, since that gives them more flexibility if other input costs such as energy rise further in the coming months. (read more)
Now think about the inflation dynamic from a source origination position.
If the variable of abundance/scarcity is removed from the equation and yet high consumer prices remain – then what was the primary originating cost pressure on the end product?
The globalists can keep pretending, which they certainly are, and yet the answer to that question is obvious.
Our current level of inflation is not an outcome of consumer demand and/or monetary supply. The current level of inflation is a direct outcome of lowering traditional energy development, raising the cost of energy production, making oil, coal and natural gas more expensive, and then watching prices rise from the supply side origination.
The scale of inflation is a direct outcome of the scale of energy price increase. As long as energy prices remain high, regardless of the abundance of the commodity the price for the foodstuff will remain high. Food inflation has nothing to do with food scarcity and everything to do with increases in the costs to produce food.
We are in a price plateau right now, waiting to see how much further energy production will be restricted.
This is what western political leaders call “managing the transition”. Put another way, they are managing the overall decline of western civilization.
COMMENT #1: The “Dutch Farming Crisis” crack-down in Netherlands says it all. As a former UK citizen repatriated to The Netherlands, life in Holland has been ideal, plenty on the super market shelves with a strong export market of food to rest of Europe. Food growing science at it’s finest. Economical, productive and effective for all.
The recent crack down on farmers to curb use of Nitrogen base fertilizer (Nitrogen being the most abundant gas on the planet!!!) has come as an unexpected and unjustified shock, to Netherlands and the good of all. Within the time frame of one year, we have gone from a land of plenty to a land of maybe. Not wasting one once of food, meanwhile stocking up on goods in case the supplies are no longer there tomorrow. It’s not how I envisioned bringing up my two boys, but reflects strongly on the tales my parents told me of their experiences surviving the second world war.
Klaus and his rotten army have done what they set out to do. To bear hardship on the population. But my parents survived and lived to see a better world, I too strive to follow in their footsteps. PS. incidentally, Ammonia is a by-product of burning water as a fuel.
SW
COMMENT #2: Dear Mr. Armstrong,
Your article about the Dutch farmers is all true. But this story goes deeper. Is not about them stopping theirs farms because of these insane climate policies. All eyes are on the farmers while the big industries and airports aren’t even part of the discussion. All this of course knowing that nitrogen is just another fake crisis.
What they really want is the land of the farmers. They claim they need it to build houses. There is an enormous shortage of affordable houses. Partly because these insane politicians claim houses can’t be build because of the nitrogen problems. All the while the same politicians are welcoming ten of thousands of refugees and immigrants. This while our own young people can’t even get or afford a house.
So in the end the farmers need to be removed of their company and property because our corrupt leaders are flooding our country with immigrants. Immigrants that are here because of the free money. They don’t share our values, they don’t want to work. They just want their free lunch.
It’s all part of their Great Reset.
Keep up the good work! SL
REPLY: I have spoken with scientists in the field and this entire agenda is just so outrageous. I suppose this is our fault for electing people with ZERO experience to public office who just real the cue cards that are written for them. This only adds to the chaos our computer projected for 2023 which we first published back in 2019. I an stunned myself to witness how everything is unfolding as our computer forecast well in advance.
I have said before, I had the mandate from Hong King to negotiate with Australia to try to buy land for them to move before the hand-over back to China in 1998. I met with former Prime Minister Paul Keating. Nothing I proposed was acceptable. I finally asked – Is this racist? He said no! They are fleeing communism and would vote conservative. He was the Labour Government. Australia would not let Hong Kong move because it would have changed their politics.
All of this overwhelming hoard of refugees into Europe and what Biden is doing in the United States, is all about trying to shift the balance of power to the left assuming all of these people who have nothing will vote for them and shake ever last penny from those who have made our countries what they are today.
Between the Climate Change nonsense and this mass invasion of the have-nots, they are destroying our very way of life all to simply retain power.
Posted originally on the Conservative tree house on November 22, 2022 | Sundance
The Associated Press received a lot of international scorn for reporting incorrectly that Russia fired missiles into Poland {Backstory}.
As soon as the AP attributed the missile attack to Russia almost immediately other media outlets began promoting calls for a NATO led war against Russia. Additionally, the G20 summit was taking place and various international leaders began discussing an article-5 convention against Russia.
However, the single source of the AP report was wrong, a senior U.S. intelligence official, if there actually was a source. It was the Ukraine military who fired the missile into Poland, not Russia.
The Daily Beast notes today that the Associated Press has fired James LaPorta, the journalist who made the claim of Russian origin.
(Via Daily Beast) – The Associated Press scared much of the world last Tuesday when it alerted readers that “a senior U.S. intelligence official” said “Russian missiles crossed into NATO member Poland, killing two people.”
That report, which was widely cited across the internet and on cable news, was taken offline the following day and replaced with an editor’s note admitting the single source was wrong and that “subsequent reporting showed that the missiles were Russian-made and most likely fired by Ukraine in defense against a Russian attack.”
On Monday, the AP fired James LaPorta, the investigative reporter responsible for that story, Confider has learned.
The piece, which was originally co-bylined with John Leicester (who is still working at the AP), attributed the information to a single “senior U.S. intelligence official,” despite the AP’s rule that it “routinely seeks and requires more than one source when sourcing is anonymous.” (read more)
We have been hearing a lot of talk about nuclear war as if it were nothing. One aspect that has been missing is what happens to us when our electric grid is turned into dust. I want to talk about just one aspect – transformers. Whether at the power plant, or at the receiving end, large power transformers are essential. We are talking about 100MVA and larger. These things take several years to build, assuming the material supply chains and production facilities are intact and functional. If not, all time frames are significantly extended. Further, our existing power transformers are nearing end of life. Imagine what would happen if a significant amount of electrical infrastructure was damaged. Here is an article to help understand.
Large electric transformers are inconvenient machines. They are large and heavy, which means they usually need to be delivered by sea freight, not air freight, which would be faster. They must be designed by specially trained engineers and assembled by experienced technicians. They require expensive and often rare materials, like copper, specifically milled steel, high-cellulose paper and other hard to come by components. They have extremely exacting technical specifications, which limits production and keeps new producers out of the market. They must be built to exacting standards for safety and reliability, which requires extensive testing and often customized manufacture.
As inconvenient as large transformers are, the power grid as we know it could not function without them, or even without enough of them. According to the Energy Department’s Office of Electricity, over 90 percent of the electricity consumed in the U.S. passes through a large power transformer.
Before a pandemic sent shudders through global supply chains, the U.S. was 82% reliant upon imports to meet its need for large transformers, according to a 2020 study by the Commerce Department. The U.S. power grid’s increasingly talked-about issue with aging equipment also extends to transformers. The average age of installed large transformers in the U.S. is about 40 years, which is at the end of their expected operational life. Older transformers are more likely to fail and need replacement, but a look at these statistics is enough to show that the U.S. was already sitting in a risky spot before supply chains became a common topic in the mainstream.
Today, people in the industry are reporting longer lead times to get needed equipment, including transformers. Jim Templeton, a third-party consultant to POWER Engineers with 40-plus years in the industry and his own consulting firm, JB Templeton Consulting LLC, said an aging power grid and ongoing supply chain issues are mixing in disruptive ways.
“I deal with a number of different clients on the utility side and about a year ago we started to see lead times from transformer manufacturers creep up. Before the pandemic, you could get a large transformer ordered in less than a year. Today that is rare. A relatively large manufacturer in the US was at about 38 months. That used to be 38 weeks if you were to compare,” Templeton said.
The dramatically lengthening lead times for needed parts is throwing utilities’ emergency contingency plans into confusion.
“The danger I see in this is you don’t know in that 38-month period will you lose another transformer and what will you then need to repair that spot on the grid? Our grid is, I think, fairly old. There’s a lot of aging transformers on the grid. Dealing with my clients, they are trying to come up with how do I respond to an emergency situation,” Templeton said.
Scott Marshall. principal engineer with POWER Engineers, said equipment distributors used to have reservation slots for emergency situations, but now are not able to find used transformers.
“When I was with a utility, we could go to a transformer supplier in an emergency and get what we needed in about six months. That quick replacement we used to be able to get, you might be waiting a year or more. They can’t find those slots for you,” Marshall said. “They may put in a dicey unit just to get the power flowing, knowing that they may have to replace it in one or two years.”
In a video interview with T&D World, Templeton said many utilities get their equipment, including transformers, from an approved supplier list. The tightening of certain supplies led to utilities going off their usual lists and make compromises just to get needed gear.
“[Utilities having trouble finding equipment] now have to open up the doors to a much larger set of potential suppliers, ones they’ve never had a relationship with before just to get what they need. That might not sound horrible, but these relationships have a positive effect on the procurement slide,” Templeton said. “Now people are having to purchase from companies and countries that they never worked with before.”
It is still relatively easy to get a 10 MVA transformer from a supplier utilities know and are used to dealing with, but a 1000 MVA transformer might not be available from a reliable source, Templeton said.
Root Causes
The Energy Department is looking into the drivers of these shortages, and they are complicated and global. According to a “deep dive” supply chain assessment released by the DOE in February 2022, produced as part of an executive order to investigate supply chain disruptions, raw material shortages are to blame for the manufacturing shortfalls of critical power grid equipment like transformers. The report focuses on raw material supplies, such as rare earth metals for energy storage batteries. However, just as much time is spent on grain-oriented electrical steel (GOES), which is a critical component in transformer cores and laminations.
The GOES it takes to build a transformer can make up a quarter of the finished good’s production cost. In a large transformer weighing some 400 tons, GOES is a large part of that weight.
According to a Commerce Department report from October 15, 2020, the U.S. manufacturing bas for GOES is on life support, with only one company, AK Steel, Inc., a unit of Cleveland Cliffs Inc., milling GOES at two factories in Ohio and Pennsylvania. These factories are not profitable, and the CEO has said the company may close the last GOES plants in the U.S., leaving the country entirely dependent on imports, according to the Commerce Department. Most of the GOES in the world comes from China (including Hong Kong), Japan, France, German, India, Poland, the Czech Republic, Russia, Brazil and South Korea.
Also, much of this supply is used internally and not exported, the Commerce Department notes. This is because countries like China and India are in the process of large power grid buildouts.
“In contrast, the U.S. market is mature, and demand for transformers is largely based on upgrades and replacements of aging infrastructure, including efforts to install smart grids to increase energy efficiency. The average transformer in the United States is 38 years old, with 70 percent of U.S. transformers older than 25 years,” according to the Commerce Department report, “The Effects and Imports of Transformer Components on the National Security.”
The Commerce Department said this situation is a threat to both the bulk power grid and national security. Perhaps underscoring the seriousness of the situation, many portions of the report are redacted. The report goes on to identify 16 critical sectors of the economy that could not operate without large transformers, including power plants, hospitals, waste systems, critical manufacturing, transportation systems, large commercial facilities and government facilities including military bases.
Impact on Utilities
Michael Ho, Director of Support Services at Hawaiian Electric, said his utility has seen lead times jump from 16 weeks to 142 weeks for single-phase pad-mounted transformers. Just within the past few months, lead times have more than doubled.
“We have been able to rely upon our current inventory levels to cover short-term demand thus far, and have not had any significant impacts or delays to projects as of yet.
However, while we have a steady stream of orders in place with transformer manufacturers to replenish our inventory, there is a growing concern that we could deplete our stock if demand is higher than forecasted or if the lead times continue to increase,” Ho said. “Without enough transformers in inventory, we will not be able to cover all of the transformers that are needed for projects such as new customer installations, upgrades, maintenance and emergency replacements.”
Ho said Hawaiian Electric and other utilities are urging developers and contractors to plan carefully to minimize impact on end users, communicating their plans and equipment needs to utilities as far ahead as possible to allow for longer order times.
“Projects that require non-standard transformers that aren’t frequently used have a higher potential risk since limited inventory is kept on hand for these types of transformers and there will be a significant delay in ordering and receiving new transformers,” Ho said.
Prices, along with lead times, are ballooning as well as the materials and freight costs are increasing.
“We’ve also had to dedicate much more time and cost to managing the situation, including added communication and planning. There’s also the potential of delayed revenue from new services should customer projects get delayed,” Ho said. “we’re working more closely and having more frequent meetings with our distributors to get up-to-date information on the production and delivery of our orders. We’ve also had to reach out to additional manufacturers and distributors as we seek out additional sources of supply for our materials.”
Ho said his utility is looking into repairing or refurbishing used transformers as a way to boost inventory levels and sidestep long lead times.
“We will also need to look at all alternatives for utilizing other substitute (e.g. higher kva) transformers that may be available or redesigning the system on a temporary or permanent basis,” Ho said.
Rebuilding Back Better
Scott Marshall said this might not be a desirable option for many utilities as repairing and refurbishing can be expensive.
“I haven’t had one refurbished for a while and I’m always reluctant to do it,” Marshall said. “If it’s an older unit, say 30 years old, to really refurb it, you spend a lot of money on it. Sometimes as much as 80% as new.”
Transformer components like gauges, bushings and low-tap changers have to be replaced when a unit gets too old. Besides this, many refurbishment facilities may not have the robust testing capabilities they once did, which can lead to more core losses and less efficiency.
Jim Templeton said in his time managing a large transformer manufacturing facility in the U.S., the refurbishment industry was more developed than it is today.
“Scott said it cost 80% of new to send a unit to a place like that, and we averaged about 75% of the new price. But our advantage was lead time. We could turn it around quicker than the OEM guys could turn it out,” Templeton said.
2022 would be an ideal market for a refurbisher. However, in the 2000s, it became cheaper to buy new large transformers and many remanufacturers went out of business as transformers became “throw-away items,” Templeton said.
This touches upon another driver of transformer scarcity in North America. Besides a lack of materials, there is a lack of manufacturing capacity and the skilled engineering workforce to bring production up to where it needs to be.
“I am often asked where I can go to get an engineer,” Templeton said. “My answer usually was Ukraine, which is not easy to get into now. India also has universities with those programs because they have transformer industries and wanted to have workers to go into those factories. The reason why U.S. schools are not teaching these programs is because the manufacturing jobs left.”
Marshall said manufacturers reported to him a scarcity of skilled labor.
“They are having a lot of trouble finding technicians. When Covid hit, the factory environment became more dangerous, so they had people leave who didn’t want to work in that risky environment. As they tried to bring people back on, it can take at least a year to train people,” Marshall said.
Companies often run lot of training programs, but sometimes cannot recoup their investment when people will move companies after getting their training, Marshall said. It is also challenging to get younger workers to relocate to where they are needed to do the job.
“The younger work force, they say, may not want to pay their dues,” Marshall said. “In some places, the cost of living is so high, which also makes finding skilled labor hard.”
Manufacturing Issues
The protracted pandemic, supply chain and logistical concerns interrupted transformer manufacturing in 2020 and 2021, said Bill Miller, Senior Vice President, Marketing and Sales for Hitachi Energy’s North American Transformer Business.
“This situation has not improved in 2022 – lead-times continue to be long, and customers continue to place advanced orders to respond to these longer lead times. The situation has actually worsened since the start of the year,” Miller said.
Miller said a confluence of issues are to blame, including regional constraints on core steel and conductor materials; growing transportation expenses as well as delays at ports and railways; and the additional tariff costs that apply to goods imported from foreign countries.
“Labor shortages and global trade difficulties do play a big role. The primary shortfall is simply lack of overall investment in the U.S. (by the industry, broadly) to expand manufacturing capabilities for core materials (steel) needed to produce transformers,” Miller said in an email to T&D World.
About 75% of the cost to make a transformer is tied directly to a commodity whose price is subject to constraints and wild swings in cost: specialized steel, copper and oil. All of these have been climbing in price.
Miller said large players in the transformer sector, like Hitachi, will be able to mitigate some of the effects via economies of scale and by drawing upon the capacity of facilities from other parts of the world.
“On the distribution transformer side, utility companies should collaborate to standardize their requirements and reduce variation in designs. More consistent designs would enable simplified and more efficient supply chains,” Miller said, suggesting a possible solution.
In April 2022, the Biden administration introduced programs as part of the $1.2 trillion Infrastructure Investment and Jobs Act to provide $20 million in rebates to replace old distribution transformers and upgrade electric motors. The transformer program is open to utilities and includes $10 million that will be available until it is spent. The DOE estimates applications will open in the third quarter of 2022.
Miller said transformer remanufacturers are under the same constraints OEMs are, however.
“Given the current market conditions, refurbishment doesn’t save a great deal in terms of either time or money and doesn’t do anything to relieve the overall supply chain constraints we are currently seeing,” Miller said.
Even so, transformer service providers are working in unfamiliar new ways to help address the shortage.
“Recondition manufacturers are working together to help each other with supply gaps. Within the industry, competitors are buying/selling transformers from each other to support the customer base,” said Barbara Beaubien, Vice President of Sales and Marketing at Emerald Transformer, which provides a range of transformer services, including remanufacturing.
Emerald Transformer is building a new plant in Waco, Texas to better support its customer base and the state of Texas. Growth in residential construction, in addition to the aging U.S. grid, are powerful drivers affecting the transformer industry, Beaubien said.
“Many more utilities are refurbishing transformers now that hadn’t considered it before they faced the transformer supply shortage with OEMs,” Beaubien said.
After initial tests, transformers are equipped with new gaskets, components and oil with additional testing throughout the rebuild before sanding, priming and painting and a final testing, Beaubien said. New transformers can take as long as two years to be delivered, and most OEMs are quoting 52 weeks plus for padmount transformers. Refurbished transformers can be available in a couple of months in most cases, Beaubien said.
In the Meantime
Templeton said this is a long-term problem with no easy answers, and said utilities need to act accordingly.
“If I was a utility in this position, I’d do everything possible to protect the transformers I have,” Templeton said.
This could include deploying protective relaying, audits of insulation coordination and making sure units are protected from incoming transients and other potential sources of physical damage.
“It appears to me that over the years, the utilities have had more internal pressures brought on them to reduce maintenance costs. PUCs are trying to keep down electric costs, and what I see is utilities are not necessarily given a full complement of dollars to do maintenance,” Templeton said.
This leads to utilities performing condition-based maintenance rather than full maintenance. So a utility may put off vegetation management, then trees fall on lines and transformers explode, thus contributing to a problem affecting the entire industry.
The U.S. power grid, Templeton said, was built differently from the start, using a different engineering philosophy.
“In Europe, they might have two equally sized units sharing the load. So, they split the load in two by running them parallel,” Templeton said. “Our philosophy was we use the asset. It has a nameplate and we use it up to that. In other places around the world, they don’t do that. We will work the livin’ daylights out of our existing units.”
I reported in September that the Heritage Foundation estimated that the average American lost $4,200 since Biden became president. Within only a month, their analysis for October revealed that the average family had lost an average of $7,400. Around $6,100 of the loss came from annual income, while interest rates cost the average American $1,300 annually. For the analysis to nearly double in the course of a month is alarming, and it is reasonable to suspect that losses will become steeper due to current policies.
The Heritage Foundation said this estimate, obviously, does not “fully reflect the pain experienced by families.” They did not factor in losses from retirement accounts or investments. They certainly did not count the number who lost their careers due to pandemic mandates. Nor did they factor in the increased cost of borrowing money, mortgages, or the doomed bond market. They also did not factor in that he caused the public to lose all confidence in the government.
All gains under the Trump era were erased in less than two years. The changes that a new administration can implement are astronomical. The spending packages pushed forth acted as a temporary band-aid over a wound that will never heal. At least the generally uninformed public believed those packages would help, but that tide is turning as they can no longer offer unlimited free handouts. The economy was brought to a screeching halt in 2020, and absolutely nothing has been done by Washington to improve conditions since then. The spending packages lack all common sense and seem to be a deliberate attempt to hurt the country.
Anyone who wants to pay more for everything – go ahead. Those of us who voted for sensible politicians with real plans will send you the bill.
Posted originally on the conservative tree house on October 27, 2022 | sundance
Will big tech and social media remove Joe Biden for violations of misinformation, disinformation and malinformation? Considering his remarks today, they should.
Reading from a teleprompter loaded with lies about the economy, Joe Biden stunningly states that gas prices are lower today than when he took office. Further claiming that gasoline was $5/gal. {Direct Rumble Link} Nothing about any of his economic claims is true. WATCH (1 min):
.
Allowing people to return to work after the pandemic lockdowns is not “creating jobs.” And gasoline was not $5/gal when Joe Biden took office.
Posted originally on the conservative tree house on October 26, 2022 | Sundance
The extreme vitriol against the recent OPEC+ decision to cut oil output, specifically the extreme Biden anger toward Saudi Arabia, now takes on additional context as the New York Times writes about a secretly negotiated deal between the Kingdom and White House officials that was never executed.
As the Times reveals, over the summer the White House thought their team had negotiated a deal with Saudi Arabia for increased oil production that would have lowered oil and gasoline costs in the U.S, strategically timed before the midterm election.
With that agreement in mind, Joe Biden went to Saudi Arabia a few months ago. However, as the western alliance began putting more pressure on Russia and increased the activity within Ukraine, the Saudi’s aligned with OPEC+ to support Russia via lowered oil outputs. The White House felt double-crossed, hence the fury.
(New York Times) – WASHINGTON — As President Biden was planning a politically risky trip to Saudi Arabia this summer, his top aides thought they had struck a secret deal to boost oil production through the end of the year — an arrangement that could have helped justify breaking a campaign pledge to shun the kingdom and its crown prince. It didn’t work out that way.
Mr. Biden went through with the trip. But earlier this month, Saudi Arabia and Russia steered a group of oil-producing countries in voting to slash oil production by two million barrels per day, the opposite of the outcome the administration thought it had secured as the Democratic Party struggles to deal with inflation and high gas prices heading into the November elections.
The move led angry Biden administration officials to reassess America’s relationship with the kingdom and produced a flurry of accusatory statements between the two governments — including a charge by the White House that Saudi Arabia was helping Russia in its war in Ukraine.
[Democrat] Lawmakers who had been told about the trip’s benefits in classified briefings and other conversations that included details of the oil deal — which has not been previously disclosed and was supposed to lead to a surge in production between September and December — have been left fuming that Crown Prince Mohammed bin Salman duped the administration. (read more)
This approach makes sense from the perspective of a White House intent on manipulating the U.S. economy to achieve ideological goals.
The climate change agenda is a larger picture scheme all about power and control. Downstream mechanisms of government, and institutions in the private and financial sector, collaboratively created by people in power, want to take advantage of the fraudulent dynamic for increased influence and affluence.
The love of money is always at the root of evil enterprise. The Build Back Better / Green New Deal is ultimately about controlling people and assembling more wealth amid a small tier of self-described elites. Inflation that crushes the working class around the world is an outcome of this larger dynamic of manipulating energy.
“The Great Reset” is designed to the benefit of the few.
…”I think they may have wanted a sword dance, lol”…
This is a library of News Events not reported by the Main Stream Media documenting & connecting the dots on How the Obama Marxist Liberal agenda is destroying America
Centinel2012 