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Energy Tomorrow Blog

Energy's Inextricable Link to Renewal

economic recovery  oil and natural gas  demand 

Mark Green

Mark Green
Posted June 19, 2020

We’ve discussed the historic link between economic growth and energy – chiefly, natural gas and oil, America’s and the world’s leading energy sources. When the economy grows it boosts demand for energy. And when that energy is supplied, growth is enabled or powered. See this blog by API Chief Economist Dean Foreman, in which he describes data behind our confidence that natural gas and oil will be big participants in the nation’s economic recovery.

Indeed, the indicators of this linkage are visible in API’s June Monthly Statistical Report. Based on May data, the MSR records an increase in U.S. petroleum demand of 2.0 million barrels per day, with motor gasoline leading the way. It’s the largest such increase in nearly 45 years.

Americans are getting back to work, and as they do, they need fuel. Likewise, rising fuel demand reflects increased demand for transportation and delivery of goods and services. As our industry meets this demand, growth is enabled.

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Early Signs of Recovery for American Energy and Economy

economic growth  energy demand  travel  driving 

Sam Winstel

Sam Winstel
Posted June 9, 2020

As businesses reopen across the country, the U.S. economy is beginning to emerge from the widespread shutdowns caused by the ongoing coronavirus pandemic. America’s energy operators are poised to safely and responsibly power our economic recovery, and the latest market data shows that the initial phases are well underway.

While the short-term outlook remains unclear, energy analysts have consistently backed the strength of this industry’s fundamentals, and long-term forecasts signal demand growth for natural gas and oil through the next several decades.

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The Oil Futures Rebound

crude markets  crude oil  demand 

Dean Foreman

Dean Foreman
Posted May 21, 2020

After crude oil futures prices plunged into negative territory for a day last month, there was a good deal of speculation that the same thing could happen this month. Some even pointed to the April futures meltdown as a “doomsday” scenario for U.S. natural gas and oil.

Well, a number of things happened on the way to oil’s “doomsday.”

At the outset, let’s note that what happened with futures in April didn’t repeat this month. Oil futures prices for June delivery of West Texas Intermediate crude, whose contracts expired Tuesday, closed at $32.50 per barrel – about 300% higher than they did for those contracts a month ago. Let’s explore why.

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U.S. Natural Gas Generation Powers Ahead

natural gas  electricity  demand 

Dustin Meyer

Dustin Meyer
Posted May 19, 2020

Natural gas’ economic competitiveness continues, even amid the highly unexpected market conditions associated with the coronavirus pandemic – outcompeting coal, the No. 2 fuel for power generation.

While consumer electricity use patterns are changing as power demand throughout the country has declined during the coronavirus crisis, natural gas is playing a growing role in meeting that demand.

This shift towards greater reliance on natural gas – along with a corresponding decline in coal-fired generation – has been a key feature of the U.S. power sector for most of the past decade, and the current environment appears to be accelerating this trend. In fact, the coal-to-gas transition is starker during this historic season as lower electricity demand, coupled with low natural gas prices, is providing added incentive for power suppliers.  

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API MSR: Glimmer of Light for Oil Markets?

monthly-stats-report  economy and energy  demand  fuels 

Dean Foreman

Dean Foreman
Posted May 14, 2020

API’s latest Monthly Statistical Report (MSR) has positive news; it just takes a close look to find it.

One example: Weekly petroleum demand data (MSR and U.S. Energy Information Administration), as measured by total domestic petroleum deliveries, indicates that the worst impacts on our industry from COVID-19 and measures to contain it may be behind us, occurring in mid-April.

We won’t know for sure until we see data for May in next month’s MSR. But EIA’s Weekly Petroleum Status Report (WPSR), shows that demand rebounded by 3.0 million barrels per day (mb/d) as of May 8, from the low point in the week of April 10 (lowest demand for April since 1970). With more than 30 states in various stages of re-opening, demand could be expected to increase along with rising economic activity. 


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Energy Operators Will Weather the Coronavirus

oil markets  energy demand  oil and natural gas production 

Lem Smith

Lem Smith
Posted April 23, 2020

While the current decline in crude oil demand and market uncertainty present significant challenges, America’s natural gas and oil producers – especially those using hydraulic fracturing and horizontal drilling – are resilient and remain financially viable, supported by the world’s need for energy.

Contrary to some narratives, our industry is poised to fuel renewed growth once the U.S. and other nations get past the COVID-19 crisis. Natural gas and oil have and will again power modern economic expansion.

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Buying American (Energy), Storage and Recovery

china  trade  exports  demand  supply 

Mark Green

Mark Green
Posted April 23, 2020

While the natural gas and oil industry focuses on challenges from the historic drop in oil demand due to the impacts of COVID-19, keep an eye on proposals that offer the best support for this industry and, in turn, the U.S. economy and American consumers.

One idea among many – including addressing storage issues and ensuring access to capital – is to look to China as a potential buyer of U.S. energy. Makes sense: In an oversupplied global market, China appears to be a buyer. What’s more, in the “Phase 1” trade deal announced in January, China agreed to buy U.S. crude and liquefied natural gas (LNG), among other energy products.

Today, API sent a letter to the U.S. Commerce and Energy departments and the U.S. Trade Representative to suggest that some good might come from following up with China to buy U.S. energy. The letter notes that U.S. energy exports to targeted markets are essential to help with oversupply and storage issues here at home.


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Oil Futures and Fundamental Oil Demand

oil markets  demand  oil and natural gas production 

Mark Green

Mark Green
Posted April 21, 2020

Experienced industry hands say they’ve never seen anything like Monday’s trading on May futures contracts for West Texas Intermediate crude oil (WTI), which closed in negative territory.

While the natural gas and oil industry certainly isn’t alone in weathering the COVID-19 crisis, our impacts probably are more visible than most other sectors, underscored by Monday’s negative trading on oil futures. Three things to know ...

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Black Gold. Texas Tea. TxOPEC?

oil production  texas  demand  supply 

Dean Foreman

Dean Foreman
Posted April 16, 2020

Amid talk in Texas of production quotas (“proration”) and other extreme policies that have been suggested to address the oil demand downturn, API’s Monthly Statistical Report (MSR) shows that supply is responding in real time and that U.S. crude and refined storage capacities have some flexibility to adjust to the COVID-19 driven demand decrease – helping to alleviate the need for blanket policies or government interventions.

Notably, recent federal actions may help provide additional flexibility to the entire energy value chain. For example, the U.S. Department of Energy’s opening of crude oil storage capacity within the Strategic Petroleum Reserve (SPR) to individual companies provides much-needed flexibility. Separately, Federal Reserve measures to either purchase corporate bonds or provide loans may perform additional triage for the energy industry and across the broader economy.

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The Perils of a Proposal to Prorate Texas Production

texas  oil production  demand  price of oil 

Mark Green

Mark Green
Posted April 13, 2020

We understand the oil demand-side circumstances that have led to calls for artificial market interventions such as tariffs and quotas – including a proposal before natural gas and oil regulators in Texas to mandate oil production cuts in the United States’ No. 1 oil-producing state.

Tough market conditions are no reason to implement bad remedies, such as the Texas proposal, which is problematic at best.

That’s not just an API view. Economics and history argue strongly against veering from the principle of markets dictating production levels, which is a core principle of our industry.


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