Energy Tomorrow Blog
Posted December 11, 2020
Despite the 2020 COVID-19 recession, the U.S. has reached milestones for energy security and trade, including its lowest imports of crude oil and reliance on OPEC in nearly three decades.
Achieving the milestones this year has enabled the U.S. to be on track to become a net exporter of petroleum and total energy on an annual basis for the first time in more than 60 years. At the same time, U.S. refiners have increasingly leveraged domestically-produced energy, ultimately benefiting households through lower spending on energy.
In short, record productivity has enabled abundant domestic oil and natural gas supplies, amped-up U.S. energy exports and displaced foreign energy imports to the benefit of American consumers. This is the backdrop for the imminent change of U.S. administration, as well as a heightened focus on U.S. energy security – see here and here – even though petroleum products and natural gas have remained abundant and at historically low prices.
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.
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 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.
Posted September 17, 2020
Sometimes, through the headlines, it can be hard to see that the economy and oil markets recently have made noteworthy progress toward rebalancing and normalizing – which is encouraging news for the industry, the country and consumers.
While petroleum demand remains below where it was this time a year ago and is likely to stay below 2019 levels until the latter half of 2019, according to the U.S. Energy Information Administration (EIA), signs are visible of a recovery from lows earlier this year.
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 August 21, 2020
We’re seeing cautious optimism in the news about oil markets, with crude’s comeback broadly continuing for a third consecutive month in July with the gradual re-opening of state economies. API’s Monthly Statistical Report (MSR) for August presents the latest details.
U.S. petroleum demand has clearly rebounded, albeit at a slowing growth rate. We see this as good news for staying on a positive track and reflective of progress made to overcome continued challenges with COVID-19.
Posted July 29, 2020
A metric that bears watching as we gauge energy markets, trade, manufacturing and supply chains – all of which contribute to global economic growth and prosperity – is FDI, foreign direct investment, especially for energy projects in the U.S. and other nations.
Recent data indicate that FDI has dropped by half since its peak in 2015, and experts believe that various factors, including the pandemic and escalated trade tensions, could continue or accelerate this decrease. This is potentially significant for the construction of new infrastructure, plants, processing facilities and other projects that have a direct bearing on better serving U.S. consumers and harnessing American energy.
Indeed, recent FDI trends signal a potential turning point.