Energy Tomorrow Blog
Posted April 8, 2021
When President Biden killed the Keystone XL pipeline in January, it was more than just canceling an important piece of energy infrastructure. It was a setback for the U.S.-Canada energy and trade relationship that has benefited both countries economically and in terms of their security in the world.
A new ICF study assessing U.S.-Canada cross-border petroleum trade finds that there is growing integration of North American energy markets, which in turn leads to lower costs for consumers and increased energy security for both countries. Frank Macchiarola, API senior vice president of Policy, Economics and Regulatory Affairs, talked about the study’s findings during a virtual conference hosted by the Canadian Association of Petroleum Producers.
Posted March 17, 2021
One of the great benefits of increased U.S. oil production over the past decade and a half is strengthened U.S. energy security – decreased reliance on foreign oil suppliers and insulation for American consumers against sudden price increases due to geopolitical events, such as the recent attacks on Persian Gulf oil facilities.
Years ago, an episode like that could’ve caused serious alarm in the United States and globally. Yet, the apparent lack of significant or enduring oil price movement following last weekend’s attack shows the tremendous influence U.S. oil production has had on global markets. The same was true after missile attacks on Saudi facilities in 2019 (see here), which substantially reduced Saudi Arabia’s oil exports for a short period. Both events and their aftermath indicate that U.S. domestic production has largely mitigated the price volatility historically associated with serious geopolitical events.
Still, some cautions are in order. First, U.S. energy security can’t be assumed. It takes long-range planning and investments, safe access to domestic resources, the ability to expand pipeline and export facility infrastructure, and a policy-level approach that anticipates unforeseen events that could affect global energy supply and have dire impacts on U.S. security, economic growth, and consumers.
Posted February 18, 2021
More than 4 million Texas homes and businesses have been without electricity this week as an Arctic air mass left the state coping with temperatures hovering around zero. Electricity and natural gas use spiked and rolling blackouts were ordered as energy systems experienced what the Webber Energy Group’s Joshua Rhodes called a “black swan event” that taxed all parts of those systems at the same time.
I spoke with Dustin Meyer, API vice president of Natural Gas Markets, to find out what happened in Texas, to understand the conditions that left the nation’s No. 1 energy state struggling for power and heat and what resources could help prevent this from happening again.
Bottom line points: Texas’ difficulties represent a failure of the grid across the board, with all generation technologies falling short of expectations; as in California last summer, events in Texas underscore the need for a diverse energy supply and smart planning to support the health of the U.S. power grid; natural gas, unique among energy sources in supplying needed attributes that ensure grid reliability, is and will remain a key in that diverse mix; and natural gas has carried most of the energy load in Texas this week, and without its contributions the energy picture would have been even worse. Expanded infrastructure would help make natural gas systems more resilient.
Posted February 16, 2021
Most people get riled up when energy costs rise, especially prices at the pump. It’s understandable; energy represented 6.5% of household expenditures in 2019, per the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey. Yet, as we’ll see, energy policy choices can affect far more than just what you pay for a gallon of gasoline or your monthly electricity bill.
For example, imagine how you would feel if you learned that U.S. energy policies materially raised the cost of houses and vehicles, in addition to the fuel they require, the costs of which have been on the rise. Those two together plus energy represent more than half of a typical household’s expenditures.
Higher energy costs are a distinct possibility with the Biden administration’s decision to halt new federal natural gas and oil leasing, potentially reducing domestic production, as well as possible moves on the regulatory front and other actions that could limit drilling or hydraulic fracturing. These could put upward pressure on energy costs that then would ripple across various sectors since virtually everything has an energy component.
Posted February 8, 2021
Across America, we want our roadways to be safer, cleaner and more accessible. Electric-vehicle (EV) technologies may appear to offer clear-cut solutions to modern challenges, but government action to limit Americans’ transportation choice could leave everyday drivers high and dry.
What Americans May Not Know: New cars, SUVs and pickup trucks that are powered by internal combustion engines have become much more efficient over the last few decades. This is in large part because the U.S. energy and automobile industries have invested in lightweight innovations to improve vehicle fuel efficiency while keeping passengers safe. Indeed, multiple studies show that, on a lifecycle basis, different automobile powertrains result in similar greenhouse gas emissions.
Relatedly, National Highway Traffic Safety Administration studies have concluded that plastics and composite materials – which are primarily manufactured using petroleum feedstocks – can considerably reduce the weight of vehicles while meeting performance and safety requirements. And don’t forget today’s cars are about 99% cleaner for most tailpipe pollutants compared to vehicles in 1970.
To be clear, there is room on our roads for every type of powertrain – including EVs. But we should be careful to avoid government interventions that disrupt the marketplace, limit consumer choice and produce unintended results.
Posted February 2, 2021
Tucked in one of the Biden administration’s executive orders on climate is a directive to use the federal government’s procurement powers to achieve or facilitate “clean and zero-emission vehicles for Federal, State, local, and Tribal government fleets, including vehicles of the United States Postal Service.” The order also requires that fleet electrification fit with the administration’s support for union jobs and conforms to its “Made in America” principles.
Read below for a look at the facts on challenges linked to the size and scope of the directive, as well as concern that U.S. consumers and taxpayers should have over issues including the ownership costs of zero-emission vehicles (ZEV), battery disposal, infrastructure costs and the potential for increased reliance on automotive components made by non-U.S. based workers.
First, we’ll focus on a fundamental concern, which is the government, in a market-based economy, taking policy actions to push the market and consumers toward a specific policy outcome. Basically, it’s the government picking winners and losers for consumers.
Posted January 11, 2021
Making energy more affordable for Americans is one of the biggest benefits of the U.S. natural gas and oil revolution. Over the past decade or so, abundant domestic reserves, unlocked by modern hydraulic fracturing and horizontal drilling, lowered consumer energy costs – even as household expenses for health care, education and food increased.
The challenge for everyone is not to take affordable, reliable energy for granted. Not too long ago the country was beset with rising annual costs for gasoline, ever-growing oil imports and dwindling domestic natural gas supplies. The natural gas situation was so alarming, lots of smart people believed the U.S. would need to build natural gas import facilities to help meet domestic demand.
Again, the shale energy revolution changed that storyline. We have plentiful supplies of natural gas here at home and increased energy security. The U.S. has become a leading natural gas exporter and was on track in 2020 to be a net exporter of petroleum and total energy on an annual basis for the first time in 60 years. That’s what energy security looks like.
This leads back to consumer benefits – reflected in a new U.S. Energy Information Administration (EIA) report showing that last year natural gas prices were at their lowest levels in decades.
Posted December 30, 2020
What a year. Thinking of those who lost their lives or were seriously ill and the continuing hardships from the pandemic, such as lost jobs and financial setbacks, 2020 can’t end soon enough.
Like other industries, ours faced steep challenges as it played an important role in helping the country battle the virus and supported economic recovery. There was added meaning to the word “resilience,” and our country is better off because our industry proved its staying power.
Think of it this way: Imagine the country in the middle of a global pandemic, trying to regain its footing, but without sufficient domestic natural gas and oil – or a modern, technologically advanced industry to develop that energy for consumers, businesses and manufacturers.
Posted December 1, 2020
The year has brought extreme and at times contradictory information about the economy and our industry, making it increasingly difficult to determine whether the economic recovery has gained firm footing and ultimately traction, in which natural gas and oil will play a key role.
Importantly, we currently see well-grounded pillars for expected U.S. and global economic growth over the next two years – personal consumption expenditures and investment that generally represent the majority of GDP. These could kickstart new economic growth and prosperity that will not only require but fundamentally be enabled by oil and natural gas.
Posted October 15, 2020
While objective interpretation of economic and energy data always is challenging, it’s especially difficult in this pandemic-impacted year to determine whether current data signal good news for consumers, the broader economy, and the natural gas and oil industry that is a key driver in the U.S. economy.
That said, API’s new Monthly Statistical Report (MSR) shows progress. Here’s what we see in the latest petroleum data from September, and it says a lot about resilience amid stressful circumstances.
API’s primary data on U.S. petroleum markets for September suggested that crude oil supply and exports rose, while demand – which since 1945 has dropped on average by 4.3% each September following the peak summer driving season – fell by much less than normal. In other words, 2020 didn’t exhibit typical seasonality, since there was less discretionary travel through the COVID-19 pandemic and relatively more driving out of necessity. Thus, it’s not surprising that petroleum consumption held up better than average in September.