Energy Tomorrow Blog
Posted March 26, 2020
Supply networks for refined products – including gasoline, diesel and jet fuel – appear to be responding properly and flexibly to sudden and sharp declines for transportation fuel stemming from the coronavirus (COVID-19) and global efforts to slow its spread.
Market conditions can shift, yet API’s view at this point is that most refined products markets have continued to function well in keeping about a month’s worth of storage.
We gauge this in part by comparing recent inventory levels for gasoline, diesel and jet fuel with their ranges over the past five years. Although some products appear to have more available storage capacity than others, if needed, it also is apparent that the pace at which refiners produce fuels can provide additional adjustments which will affect demand for storage.
Posted March 20, 2020
As the world copes with a mounting health and economic crisis, America’s natural gas and oil industry remains focused on preserving the health and safety of its workers and delivering critical energy supplies to communities across the country. As an industry, we are committed to operating safely and reliably despite the unpredictable circumstances, implementing contingency plans that ensure the continuity of fuels to market.
These were points of emphasis by emergency preparedness experts at leading energy trade associations during a joint press conference this week that detailed industry readiness and response during the novel coronavirus (COVID-19) pandemic (listen here).
Posted March 12, 2020
Global oil markets have shifted dramatically in recent days and weeks, and the stakes are high for the United States energy revolution, retirement savings and the broader economy.
Let’s start with crude oil prices. Per Bloomberg, the per-barrel price of West Texas Intermediate (WTI) on March 9 was about half of what it was on Dec. 31, falling to $31.13 from $61.06.
Posted September 16, 2019
An attack on a Saudi Arabian oil processing facility over the weekend has knocked out a significant part of Saudi production, at least temporarily, shaking oil markets. The precise amount and duration of the outage remains uncertain, and there are still unknowns about the attack that caused it, which in turn has inflated the risk premium on oil prices due to market fears about what may happen next within the region.
The market’s initial direction is clear, with Brent crude oil up more than $8 per barrel as of 3 p.m. Monday, per Bloomberg. Let’s break down what’s happened in context, recognizing that the U.S. energy revolution has fundamentally added to U.S. and global near-term deliverability of oil, natural gas and natural gas liquids, generally helping stabilize the global market against supply disruptions.
Posted September 3, 2019
The story of the federal Renewable Fuel Standard (RFS) is long and unfortunate – a program that is now largely obsolete thanks to surging domestic energy, whose mandates continue to loom over American consumers without many of the benefits it was supposed to provide. It lives on, protected by ethanol producers and corn state/presidential politics.
That’s the context for RFS policy tweaks expected soon from the White House – more fiddling with a flawed program that will attempt to force higher content of ethanol-blended fuel into the U.S. supply, potentially impacting consumers, while creating an uneven playing field in the refining sector.
Posted June 11, 2019
We’ve warned before (see here, here and here) that the broken Renewable Fuel Standard (RFS) and its mandates for ever-increasing ethanol use put consumers at risk. And that the administration’s recent decision to allow summer sales of E15 fuel – a blend containing 50 percent more ethanol than the E10 gasoline that’s widespread across the country – is an ineffective approach to addressing concerns with the RFS that will only serve to make things worse. Now, we can add another report to the long list of evidence that the RFS needs to be sunset – this time coming from the non-partisan U.S. Government Accountability Office (GAO).The GAO recently reviewed the effects of the RFS and found that requiring the use of corn-based ethanol and biodiesel in gasoline supplies hasn’t lowered pump prices or significantly reduced greenhouse gas emissions – two of the main goals of the flawed RFS program. In fact, the review finds that gas prices outside of the corn-rich Midwest likely increased because of the program. To make matters worse, the review also found that there has been little, if any, reduction in greenhouse gas emissions – a main selling point used by proponents to justify the program.
Posted June 3, 2019
The administration’s decision to allow summer sales of E15 fuel – a blend containing 50 percent more ethanol than the E10 gasoline that’s widespread across the country – is a disappointing and ineffective approach to addressing concerns with the broken Renewable Fuel Standard (RFS).
EPA’s rulemaking that extends the RVP waiver, effectively lifting a ban on summertime E15 sales, only worsens risks for U.S. consumers – given repeated warnings that pushing more E15 into the fuel supply could harm the vast majority of vehicles on the road that aren’t designed to use it, as well as engines in motorcycles, boats and lawn equipment for which E15 is incompatible. All to help farmers struggling under the weight of the administration’s own harmful trade tariffs.
It may seem obvious, but apparently it needs stating: EPA should be most concerned about the interests of U.S. consumers as it forms policy, not cleaning up messes caused by the administration’s flawed trade policy.
Posted April 25, 2019
To be clear, the oil and natural gas industry is not opposed to ethanol. We are opposed to incentivizing the use of E15 through extending the waiver as the majority of vehicles and refueling infrastructure are not designed for it. By pursuing this policy and pushing more E15 into the market, the EPA is putting consumers’ vehicles at risk for undue damage, potentially forcing them to pay for expensive car repair bills. In addition to being bad for consumers, this proposal goes beyond EPA’s statutory authority. This proposal conflicts with the clear language of the Clean Air Act. Furthermore it is inconsistent with nearly three decades of EPA statutory interpretation of its authority as well as congressional intent. If this rule is finalized, API will challenge this rule in court.
Posted February 27, 2019
EPA’s proposal to reform a key component of the Renewable Fuel Standard (RFS) would only worsen the already broken RFS, a new study finds. The analysis by Covington & Burling for API affirms that the administration’s proposal to reform the market for Renewable Identification Numbers (RINs) under the RFS misdiagnoses the problem with the RINs market and provides misguided and counterproductive changes.
Posted December 11, 2018
As debates continue over the Renewable Fuel Standard (RFS) and its ethanol mandates, let’s remember that when the RFS was enacted more than a decade ago it was supposed to jumpstart a commercially viable cellulosic ethanol industry – ethanol made from the leaves, stems and other fibrous parts of a plant.
This has not happened. Far from it. Despite increased mandates under the RFS for cellulosic ethanol, those mandates have dwarfed actual production. The result is a costly proposition for American consumers and an object lesson on what can happen when government tries to use policy to favor a certain technology. Let’s explore the issue.