Energy Tomorrow Blog
Posted February 3, 2020
So far this year, U.S. natural gas prices at Henry Hub have made for the lowest January record in over 45 years, adjusted for consumer price inflation.
As of Jan. 29, the U.S. natural gas spot price at Henry Hub was $1.94 per million Btu – nearly 35% below the price of one year ago and 76% lower than in 2008.
In fact, we know from the Bureau of Labor Statistics that U.S. households saved an average of more than $120 per year on natural gas in 2018 compared with 2008. That’s $10 per month for more than 127,000,000 households – or $52 billion less spending on home and water heating.
Posted January 10, 2020
API’s new State of American Energy report illustrates how abundant U.S. natural gas and oil is empowering economic growth and opportunity across the country – and the potential harm to these benefits if fracking is banned, as some presidential candidates have promised to do.
The Washington Post’s Dino Grandoni has an analysis taking exception to the latter point, that banning hydraulic fracturing – the technology most responsible for launching the U.S. energy revolution – would seriously damage the U.S. economy, raise energy costs for American consumers and could likely trigger a recession at home and harm the global economy.
As an economist I would argue that an economic study isn’t needed to validate API’s point about a fracking ban. History shows what would happen if natural gas and oil production from the world’s leading producer was undercut by a fracking ban. According to independent studies, a sudden and enduring return to oil with triple-digit prices is the likely risk.
Posted December 19, 2019
In this year-end edition of API’s Industry Outlook and Monthly Statistical Report (MSR) for December 2019, we make a toast to the natural gas and oil industry’s year of achievement and look forward to what appears to matter the most to U.S. energy consumers, producers and markets.
Record U.S. natural gas and oil production, demand and exports – coupled with low prices – and regional economic growth have been supported by new resource and infrastructure developments. Real domestic West Texas Intermediate (WTI) oil prices in 2019 have remained at about half of what they were 2011-2014, but with more than double the amount of home-grown oil production in 2019 compared with 2011. This has been an unabashed win for consumers, and it also has rejuvenated investments in resource development, processing, transportation, manufacturing and petrochemicals, as we discussed here.
Posted December 12, 2019
In case you missed it, the U.S. Energy Information Administration (EIA) recently confirmed (see here and here) what API indicated in its Monthly Statistical Report (MSR) for September: For the first time since the 1950s, the United States is now a net exporter of energy in total.
Achieving this milestone is important for America. It embodies a slew of economic benefits, including lower energy prices – also those due to supply growth – rejuvenated investment in resource development, processing and transportation. It also has helped U.S. refining, petrochemicals and manufacturing, which have weathered the storm of U.S. trade restrictions and a strong U.S. dollar that made exporting U.S. goods more challenging.
Posted October 17, 2019
A major milestone for U.S. energy trade appears imminent. For the first time in more than 60 years, the U.S. may be a net exporter of total energy – based on API’s estimates in our latest Monthly Statistical Report (MSR).
The MSR shows that the U.S. petroleum trade balance decreased to net imports of just 818,000 barrels per day in September – and that at a time when domestic demand was at its highest level ever. With the U.S. Energy Information Administration (EIA) estimating that U.S. net exports of natural gas last month were 5.5 billion cubic feet per day (bcf/d) – more than 900,000 barrels per day in oil-equivalent energy – that would exceed U.S net imports of crude oil and refined products.
Posted October 2, 2019
When it comes to motor fuels, the prices we pay at the pump historically reflect crude oil prices – the No. 1 input cost according to the U.S. Energy Information Administration (EIA) – as well as the relative prices of other products, which collectively motivate refiners to manufacture different fuels.
We’ve seen through the energy revolution – and especially since 2015 – how lower prices for crude oil and natural gas (a key processing fuel and operating expense for refiners) have advantaged the U.S. petroleum refining industry – and ultimately led to lower fuel prices for consumers at home and abroad.
Posted September 19, 2019
At a time of energy uncertainty in the world, the U.S. natural gas and oil industry is producing at levels that have helped cushion domestic markets and American consumers against global supply disruptions that once would have put severe pressure on our economy here at home.
Each final month of the quarter marks the simultaneous release of API’s Monthly Statistical Report (MSR) and quarterly Industry Outlook, and this quarter has offered some remarkable milestones and insights – at a critical time for the world.
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 9, 2019
One of the things I do often on behalf of API is to speak publicly across the United States, emphasizing how the energy revolution has continued to benefit consumers. On the topic of natural gas and electricity generation, a common thread has emerged: Natural gas has generally led to lower energy-related carbon dioxide emissions and lower electricity prices across the nation.
To those who follow the industry, this may be no surprise given that clean natural gas has supplanted coal as the leading energy source for generating electricity in the U.S. Part of this is natural gas’ competitiveness in the marketplace. Thanks in part to the shale revolution, real natural gas prices at Henry Hub decreased 37% between 2010 and 2018 – and as of August 2019 were down by another 15.6% y/y.
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.