Energy Tomorrow Blog
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 November 19, 2020
While the International Energy Agency and OPEC recently lowered their expectations for global oil demand for this year and the next, the United States has continued to make measured progress, according to API’s latest primary data.
In October, U.S. petroleum markets reflected a U.S. economic recovery in progress. Demand increased broadly among fuels – diesel, jet fuel, other oils and gasoline among urban areas.
While these offer solid indications of domestic activity, international trade – particularly the pull for U.S. refined products – picked up in October. Moreover, the U.S. Energy Information Administration (EIA) projects record high U.S. exports of liquefied natural gas (LNG) in November.
Posted September 11, 2020
While oil markets remain concerned over the outlook for petroleum demand – see John Kemp’s piece arguing there’s lost momentum – a number of important indicators of transportation and industrial activity corroborate API’s primary data suggesting a more nuanced landscape while also supporting the view that genuine progress has recently been achieved.
Since petroleum demand has remained a solid indicator of economic activity, the information has broad applicability to everyone who is concerned with what’s happening now. And for those of us in the industry, accurate and timely data are essential to the flow of real activities and investment dollars.
From here it looks like oil markets have been relatively impatient, having anticipated a continued tightening as demand has recovered and supply declined. The challenge is managing expectations for the rate of recovery.
Posted August 26, 2020
The 2020 global economic recession, triggered by the COVID-19 pandemic and government responses to it, is the deepest since World War II. Yet the World Bank, along with the Bloomberg consensus, expect global GDP growth to rebound in 2021.
It appears $15 trillion of global stimulus is likely to have a positive impact on economic growth – and, with enabling infrastructure, markets and policies, could become a source of optimism for global oil markets.
Historically, global GDP growth and increased oil demand have gone together – once there’s impetus for growth there must be energy to fuel that growth.
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.
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.
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.
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.
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.
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.