Energy Tomorrow Blog
Posted November 18, 2015
Interesting analysis on energy independence in the Wall Street Journal by Columbia University’s Jason Bordoff, a former energy adviser to President Obama. It’s a good thing the United States isn’t energy independent, Bordoff writes. That’ll get your attention, right?
As Bordoff explains, “energy independence” is a dusty concept from the 1970s and 80s, after policymakers made it a goal to end U.S. reliance on global crude suppliers after the 1973 oil embargo. It didn’t happen. To the contrary, U.S. imports steadily climbed in the 1990s and 2000s before the significant increases in domestic production, thanks to abundant American shale energy reserves and advanced hydraulic fracturing.
Now, with U.S. energy output surging, the inclination among some is to keep that energy here at home by maintaining the 1970s-era ban on crude oil exports, believing that it lessens others’ ability to disrupt our oil supplies. But Bordoff writes that an “isolationist” approach on energy misunderstands the reality that today’s global energy market is highly integrated and that the interconnectedness of the market has helped the U.S. compensate for supply disruptions here at home and overseas. “Free trade in a highly integrated global energy market made us more secure,” he writes.
Posted October 15, 2015
Reuters reports that Lithuania is in talks with U.S. liquefied natural gas company Cheniere Energy, seeking to reduce its dependence on Russia for LNG supplies. Lithuania opened an LNG import terminal last year, and its gas supply contract with Russian state-owned supplier Gazprom is scheduled to expire at the end of the year. Rokas Masiulis, Lithuania’s energy minister:
“We would love to have U.S. cargo in our region to have competition with Gazprom. … I believe negotiations with Gazprom now will be on competitive, reasonable terms and that will be just business and nothing else. … After we have built an LNG terminal, there is no possibility of blackmail. Since we think there is no possibility of blackmail, discussion will be rational and economical rather than political. This is a big step.”
The minister speaks diplomatically, so let’s read between the lines a bit. We suspect that Lithuania is trying to secure the diversification of its energy supply. The country wants options, additional sources of LNG so that it is beyond leveraging by Russia on natural gas. Russia did this with oil in 2006, Reuters reports.
At the same time, Masiulis told Reuters that Lithuania also would be open to buying U.S. crude oil if the United States repeals its current ban on the export of domestic crude.
Posted July 31, 2015
Our series highlighting the economic and jobs impact of energy in each of the 50 states continues today with Washington. Yesterday we looked at Alaska. All information covered in this series can be found online here, arranged on an interactive map of the United States. State-specific information across the country will be populated on this map as the series continues.
As we can see with Washington, the energy impacts of the states individually combine to form energy’s national economic and jobs picture: 9.8 million jobs supported and $1.2 trillion in value added.
Posted July 29, 2015
Our series highlighting the economic and jobs impact of energy in each of the 50 states continues today with Minnesota. We started this week with North Dakota and Illinois. All information covered in this series can be found online here, arranged on an interactive map of the United States. State-specific information across the country will be populated on this map as the series continues.
As we can see with Minnesota, the energy impacts of the states individually combine to form energy’s national economic and jobs picture: 9.8 million jobs supported and $1.2 trillion in value added.
Posted June 22, 2015
Wall Street Journal (Hamm) -- Amid news of a pending nuclear deal with Iran, some OPEC countries have struck agreements with refineries in Asia to avoid losing market share when Iranian oil comes back on the market. If U.S. policy will allow Iran to export oil, shouldn’t it allow America to do the same? Clearly, our allies would rather get their oil from America than Iran if given the choice. But without the ability to export, the U.S. is not even in the game.
Congress must lift the ban on U.S. crude oil exports. The ban is a terrible relic of the Nixon era that harms the American economy. As Sen. Lisa Murkowski (R., Alaska) has pointed out, restrictions on oil trade effectively amount to domestic sanctions. Combined with a mismatch in refining capacity, the ban on oil exports is creating a significant discount for U.S. light oil at no benefit to anyone except refiners and their foreign ownership. It has cost U.S. states, producers and royalty owners $125 billion in lost revenue in four years, according to industry estimates.
Foreign producers are using their heavy oil—and the U.S. ban on exports—as a weapon against America. Over the past three decades countries such as Venezuela, Mexico, Saudi Arabia and Canada have overtaken U.S. refining capacity to run their heavy crude in American refineries and capture a large portion of the U.S. market. Without firing a shot, they have disadvantaged American oil and interests.
Posted June 17, 2015
The Hill – A new Republican bill introduced Tuesday would completely repeal the federal mandate to blend ethanol into the nation’s gasoline supply.
Sen. Bill Cassidy’s (R-La.) legislation would completely do away with the renewable fuel standard, which first took effect in 2005 and now requires increasing levels of ethanol and biodiesel to be put into traditional fossil fuels.
The mandate invites frequent criticism from Republicans, the oil industry and sectors that complain the demand it creates for corn ethanol increases agricultural prices.
“Workers, refiners, producers, farmers and ranchers across the country are affected by the renewable fuel standard,” Cassidy said in a statement. “More mandates mean less jobs. It means families are paying more for gas and groceries.”
Posted June 3, 2015
The question posed to Dominion Energy President Diane Leopold was about “Keystonization” – referring to the tactical use of protests, process and procedural delays and legal challenges to block safe energy development and key infrastructure projects.
Leopold knows the terrain well. Despite a small but vocal group of opponents, Dominion Energy recently won federal approval to expand its Cove Point, Md., natural gas terminal to allow the export of liquefied natural gas (LNG).
At an event hosted by America’s Natural Gas Alliance (ANGA) last month, Leopold cautioned that delay of the Keystone XL pipeline for more than six years has generally helped embolden opponents of energy infrastructure (see here, here and here) – making it more important than ever for energy companies to effectively communicate their plans and the benefits of their projects while exceling in community engagement.
Posted June 1, 2015
Pittsburgh Post-Gazette op-ed (Eberhart): ... Since 2000, global LNG demand has grown an estimated 7.6 percent per year. And that rate is expected to increase: Ernst & Young predicts that by 2030 global demand will reach 500 million metric tons, doubling 2012 levels.
At the same time, because of the surge of natural gas from American shale, the United States is awash in the stuff, with domestic natural gas production increasing 41 percent in the past decade alone.
Ten years ago we were an LNG importer. Today we’re the world’s largest natural gas producer.
And with the amount of technically recoverable natural gas in the United States 100 times greater than our current consumption, we have a boon to the economy that is expected to contribute up to 665,000 net jobs and $115 billion to GDP by 2035. We are expected to have enough gas to meet our own needs while also helping to satisfy staggering demand in places like Japan, Korea, India, China and Taiwan.
Clearly, this is an opportunity we don’t want to miss. But a protracted, redundant and expensive approval process could put it just out of reach.
Posted May 21, 2015
Fort Worth Star-Telegram (Weinstein): Thanks to what’s sometimes called the “shale revolution,” America has re-emerged as an energy superpower.
Even with prices 40 percent lower than a year ago, we remain the world’s No. 1 producer of crude oil and other liquid hydrocarbons. Imports of oil have dropped from 60 percent of consumption to about 35 percent just in the past five years. We’re also the world’s largest producer of natural gas.
Both our oil and natural gas output would be even higher if not for regulatory and infrastructure constraints.
Posted May 14, 2015
Wall Street Journal: After slashing production for months, U.S. shale-oil companies say they are ready to bring rigs back into service, setting up the first big test of their ability to quickly react to rising crude prices.
Last week, EOG Resources Inc. EOG, -0.08% said it would ramp up output if U.S. prices hold at recent levels, while Occidental Petroleum Corp. OXY, +0.93% boosted planned production for the year. Other drillers said they would open the taps if U.S. benchmark West Texas Intermediate CLM5, -0.88% reaches $70 a barrel. WTI settled at $60.50 Wednesday, while global benchmark Brent LCOM5, -0.13% settled at $66.81.
An increase in U.S. production, coupled with rising output by suppliers such as Russia and Brazil, could put a cap on the 40% rally in crude prices since March and even push them lower later in the year, some analysts say.
“U.S. supply could quickly rebound in response to the recent recovery in prices,” said Tom Pugh, a commodities economist at Capital Economics. “Based on the historical relationship with prices, the fall in the number of drilling rigs already looks overdone, and activity is likely to rebound over the next few months.”