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Energy Tomorrow Blog

Making Sense of Demand vs. Supply, Key Factors Affecting Production

oil and natural gas production  supply  demand  investments  economic recovery 

Dean Foreman

Dean Foreman
Posted October 7, 2021

The fundamentals of natural gas demand outpacing supply have driven prices to their highest for the season since 2008, and some analysts expect a natural gas supply crunch with potentially wide impacts this winter – including potential market tightening that could significantly affect household budgets and perhaps could risk physical hardship for some.

In such a context, many Americans may have a hard time figuring out what’s happening and how it affects them: If natural gas prices have soared, why hasn’t production risen more quickly to meet post-pandemic energy demand and moderate the conditions driving up costs? And another one: Why is the U.S. still exporting liquefied natural gas (LNG)? 

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Low Investment and Implications for Global Supply

investments  global energy  oil supply 

Dean Foreman

Dean Foreman
Posted September 17, 2021

Global oil and natural gas investments have fallen to record lows so far in 2021, as we recently discussed here. Yet, demand for both has risen alongside the economic recovery. Consequently, supplies haven’t kept pace with demand, and the mismatch between the two propelled gasoline and natural gas prices this summer to their highest levels since 2014.

 

In fact, global natural gas prices set a record-high for summer months as demand outdistanced supply.  Oil prices eased in August following a 16% run-up over the previous three months for Brent crude oil, but were back above $70 per barrel in mid-September.

 

Although economic and pandemic-related uncertainties and expected OPEC+ output increases have also likely impacted prices, the lack of investment for oil and natural gas production is an ominous sign, given that major conventional global oil and natural gas projects can take years to start producing. We could be in for global oil market tightening in 2022 and further upward pressure on prices, with prices already at their highest level since 2014.

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Ready For Recovery: Four Reasons to Invest in Natural Gas and Oil Infrastructure

infrastructure  investments  pipelines  jobs 

API CEO Mike Sommers

Mike Sommers
Posted January 5, 2021

As we begin the new year, it’s worth recognizing that the challenges facing our lawmakers are immense. But with consensus-driven approaches, we believe the public and private sectors can partner to deliver post-pandemic recovery and long-term economic growth for America.

Of course, rebuilding the nation’s economy will require realistic and workable energy solutions – ones that prioritize resource development and infrastructure expansion. Here’s why investing in modern energy infrastructure can build pathways for economic and environmental progress.

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Oil Market Fundamentals Suggest 2021 May Recoup Much of 2020 Losses

oil markets  economic recovery  investments 

Dean Foreman

Dean Foreman
Posted December 8, 2020

Although many uncertainties remain, oil market fundamentals have recently improved along with economic recovery from the 2020 COVID-19 recession, as we discussed here. If estimates from the U.S. Energy Information Administration (EIA) and others prove to be correct, 2021 could recoup much of the growth, spending, investment and energy demand that was forgone this year. 

While 2020 has been an especially challenging year and business climate, what we’re seeing is that the U.S. natural gas and oil industry has resiliently increased its productivity to record levels, lowered its costs and expanded critical infrastructure to reposition for growth in a potential recovery.

A critical question for the United States — its economic growth, energy security and trade balance – concerns who will supply the market if it recovers as expected.

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Delivering the Second Wave of U.S. LNG Mega-Projects

lng exports  workforce  investments  labor unions 

Dean Foreman

Dean Foreman
Posted August 28, 2019

U.S. exports of liquefied natural gas (LNG) – growing to a record 4.8 billion cubic feet per day (bcf/d) in the third quarter of 2019 – have been a catalyst for new natural gas resource development, U.S. pipeline and natural gas processing investments and the U.S. economy. ...

The U.S. Energy Information Administration (EIA) expects U.S. LNG exports to more than double again by 2025, which holds the potential for even greater domestic economic benefits, plus a central, emerging role for U.S. energy leadership in global markets.

Realizing these benefits is critically dependent on the United States’ ability to build and deliver an unprecedented number of multi-billion-dollar U.S. mega-projects over the next several years. When ”demographics are destiny” and the average age of a welder in the U.S. already is over 57 years, we should remain optimistic about the potential to build these projects but also pragmatic about the policies and business environment needed to achieve the goals.

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Make U.S. Gulf Leasing More Competitive

gulf of mexico  leasing  investments  us energy security 

Mark Green

Mark Green
Posted May 10, 2019

Headlines announcing big oil discoveries in the U.S. Gulf of Mexico (GOM) – such as the Blacktip deepwater find last month – are something we’ve come to expect. Gulf production long has been strategically important to the United States, accounting for 17 percent of total U.S. crude oil production, and it’s easy to take for granted that the basin will just keep producing and producing.

Yet, two recent analyses, IHS Markit’s report for the U.S. Bureau of Ocean Energy Management and a Crystol Energy report, caution that the Central and Western Gulf, currently open to oil and natural gas development, are maturing, having been developed for several decades, and production could begin to decline before long. GOM development must compete globally with other offshore and onshore prospects or face declining interest in exploration, falling investment and decommissioning of critical infrastructure.

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Energy Infrastructure and Opportunity for Bipartisan Progress

infrastructure  pipelines  congress  energy investments 

Jessica  Lutz

Jessica Lutz
Posted November 16, 2018

With the midterms behind us, we can anticipate the spate of political analysis bemoaning the onset “divided government” with this observation: Expanding and upgrading U.S. energy infrastructure offers a terrific opportunity for substantive, bipartisan action that will benefit the American people.

First, consider that America’s energy resurgence – spurred by technologies and innovations tapping vast natural gas and oil reserves in shale and other tight-rock formations – is growing the economy, strengthening U.S. security and providing consumer benefits. Abundant energy helps everyone – hence the chance for the new Congress to find common ground in bolstering the infrastructure that delivers it.

API President Mike Sommers and Sean McGarvey, president of North America’s Building Trades Unions (NABTU), built on these themes earlier this week in an op-ed in The Hill.

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Correlation Grows Between Financial Markets, Oil Prices

crude markets  crude oil prices  consumers  investments  finance 

Dean Foreman

Dean Foreman
Posted November 15, 2018

Earlier this year we pointed out that a roller coaster of emerging economic factors could affect oil markets and, ultimately, consumers – and we were correct.

Rising interest rates, trade and tariff disputes, near decade-high U.S. dollar appreciation and potential financial market uncertainties have become pronounced over the past few months, affecting global crude oil markets and producing the strongest correlation between financial markets and oil prices in years

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Study: Industry is a Leader in Making Our Air Cleaner

emission reductions  renewables  technology  investments 

Mark Green

Mark Green
Posted May 15, 2018

A new study by T2 and Associates quantifies natural gas and oil’s leadership in reducing greenhouse gas emissions – through its investments in renewables and other low-carbon technologies and cutting its own emissions – resulting in cleaner air for the country. In all, industry directly invested more than $108 billion in zero- and low-carbon technologies between 2000 and 2016. This is on top of the carbon emissions-reducing benefits of from increased use of abundant domestic natural gas from shale. API’s Kyle Isakower, vice president for regulatory and economic policy, briefed reporters on the study during a conference call.

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Ending NAFTA Investor Protections Will Harm U.S. Energy Security

trade  investments  canada  mexico 

Mark Green

Mark Green
Posted May 8, 2018

There’s no denying that North American Free Trade Agreement (NAFTA) has been very good for U.S. energy over the years. Yet, whether we will be able to say the same about NAFTA 2.0 years down the road is an open question.

That’s because the Trump administration has signaled a key NAFTA provision safeguarding U.S. energy investments in Canada and Mexico shouldn’t be included in a revised agreement. It’s an outcome that would be a significant setback for our energy and security interests.


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