Paul Midford wrote:

>I would argue that this sends a signal that Japan can
do without
>nuclear power, even in the short-run, and even in the
winter. The
>estimate that Japan can get through the summer without
nuclear power is
>Edano's and METI's, not mine...
>

Get through the summer, but at what cost in lost output and lowered living standards?

About a third of Japan's electricity is consumed by industry (31.5% in
2008 when Japan was already suffering a big drop in manufacturing output). Industrial production is now down 17% from its late 2007 peak.
Just a return to peak production would require about 6% more electricity (17% * 33% = 5.6%), assuming no conservation efforts. Growth would require even more.

Then there is overall GDP, still down 4% from the early
2007 peak.

Electricity consumption in Sept.-Nov. 2011 was down 10-11% from 2007 (down 8% from the same months of 2010, and 2010 as a whole was down 3% from 2007). I would suspect that most of this is not because of conservation but because of the weak economy.
Insufficient, high-priced and uncertain electricity is a factor in this weak economy. What would be the demand required to bring GDP and manufacturing back to where it was, let alone where it would be at full employment and full use of physical capacity?

Uncertainty about the sheer availability and reliability, let alone price, is among the factors in Japan's accelerated "hollowing out." It's not just Japanese companies deciding to go overseas where electricity might be cheaper. It's that customers who were hit by the supply chain disruption from the tsunami are demanding that the excellent Japanese firms from which they'd like to buy vital supplies diversify geographically. "Just in case" has replaced "just in time" as the key buzzword.

Total business investment is down 17% from the peak.
How much of this is because firms are delaying decisions about investment until the energy picture becomes more clear?

Japan's exports of cars pay for the energy imports. But if more and more auto production goes offshore due, in part, to higher energy costs and greater uncertainty, it's tougher to pay for those high-priced imports.

Japan can "get through" without nukes and even without high-priced LNG imports if it cuts GDP and manufacturing enough.

>The Prime Minister would override local governments
and order the
>restart of 2 or 3 nuclear power reactors for the
summer months?
>
Would he? Could he (legally as well as politically)?
Remains to be seen.

Richard Katz
The Oriental Economist Report