Energy Tomorrow Blog
Posted December 29, 2014
The Week: One of the biggest stories of 2014 has been the astonishing drop in global oil prices. The price of the benchmark Brent crude went from over $100 per barrel at the beginning of the year to the $60 range as of this writing.
It's worth noting how massive and completely unexpected this price drop has been.
And it's worth noting how good it is for the U.S. economy. The price of oil is one of the biggest drags on consumer demand, the largest driver of the economy.
And to what do we owe this miraculous event?
In a word: fracking.
Posted December 24, 2014
The gift that is American energy is seen in some key numbers: domestic crude oil production reaching more than 9 million barrels per day last month, the highest level in more than two decades, according to the U.S. Energy Information Administration (EIA); total U.S. net imports of energy as a share of energy consumption falling to their lowest level in nearly 30 years during the first six months of this year; gasoline prices dropping to an average of $2.47 per gallon last week, their lowest point since May 2009, according to the Lundberg Survey Inc.
The first two numbers might not fully register with a lot of Americans. We’ll come back to them. The last one, gasoline prices, does so loudly.
Retail gasoline prices fell after crude oil prices dropped for the fourth straight week – a product of weaker-than-expected global demand and increasing production, which EIA says will save American households $550 next year, Bloomberg News reports. Trilby Lundberg, president of Lundberg Survey to Bloomberg:
“It is a dramatic boon to fuel consumers. (Gasoline) is a modest portion of our giant gross domestic product and yet it does have a pervasive and festive benefit to motorists.”
During this season of gift-giving and receiving, Americans should give thanks for the gifts of plentiful domestic oil and natural gas, modern technologies to harness them and an industry robust and innovative enough to bring the two together, resulting in surging, home-grown production. Indeed, the dramatic increase in U.S. oil production is the key addition to global supply that’s putting downward pressure on the cost of crude, the No. 1 factor in pump prices.
Posted December 16, 2014
Chicago Mayor Rahm Emanuel and his allies on the city council deserve credit for putting a stop – for now at least – to an ill-conceived proposal that would mandate the sale of higher ethanol blend E15 fuel at city service stations.
We say ill-conceived because, as argued here and here earlier this year, the E15 requirement could be full of risk for consumers and small business owners – while mainly benefiting ethanol producers. Recently, AAA urged Chicago lawmakers to vote against the ordinance.
Posted December 12, 2014
Posted November 27, 2014
Happy Thanksgiving everybody.
When it comes to energy there’s much for which Americans can give thanks.
We have plentiful and accessible reserves of oil and natural gas that fuel healthy, mobile, modern lifestyles.
We enjoy safe and secure crude oil imports from Canada, our neighbor and ally and No. 1 source of imported oil.
Our country is served by a vibrant, modern industry – one that’s second to none in the use of safe, hydraulic fracturing and horizontal drilling, offshore development and environmental awareness.
America keeps running thanks to a vast pipeline network and the world’s biggest, most-efficient refineries. And there’s more.
Posted November 24, 2014
For months we’ve been pointing out the brokenness of the Renewable Fuel Standard (RFS), the federal law requiring ever-increasing use of ethanol in the nation’s fuel supply.
We’ve written about the impending “blend wall,” the point where the RFS would require blending more ethanol into gasoline than could be safely used as E10, potentially putting motorists at risk for damage to vehicles while also potentially risking small-engine equipment and marine engines. We’ve written about RFS-mandated use of “phantom” liquid cellulosic biofuels – a fuel that hasn’t been commercially available despite the recent inclusion by EPA of landfill bio gas in that category (more about that in a future post). And we’ve written about how the 2014 requirements for ethanol use were months and months late from EPA, caught up in election-year politics.
The RFS is indeed broken. Late last week EPA basically agreed, announcing it’s waving the white flag on trying to issue ethanol-use requirements for 2014, which has just a little over one month to go. Instead, the agency said it will complete the 2014 targets in 2015 “prior to or in conjunction with action on the 2015 standards rule.”
Posted November 17, 2014
Saw a tweet last week from Jalopnik, a website “obsessed with the cult of cars and everything that moves you,” and it reminded me of an important point in the Renewable Fuel Standard (RFS) debate.
First, Jalopnik doesn’t actually do a car-of-the-year award because it considers them to be so much media hype. The tweet was a little jab at car awards. Still, Matt Hardigree, the site’s editor-in-chief, says the ’94 Miata really is a great, classic car.
Which leads to our point about the RFS: If you’re a lucky owner of a vintage Miata, don’t let E15 anywhere near its fuel tank.
Posted October 28, 2014
Real Clear Politics: Few policy objectives over the last half-century have proven as tantalizing for presidents as the call to achieve energy independence.
In 1973 -- as a gasoline shortage consumed the nation -- President Richard Nixon outlined Project Independence 1980, “a series of plans and goals set to insure that by the end of this decade, Americans will not have to rely on any source of energy beyond our own.” Gerald Ford, in his 1975 State of the Union address, called for “a massive program” to ease demand and increase supply “to achieve the independence we want by 1985.” Jimmy Carter, more modestly, aimed for the United States to cut its dependence on foreign oil by half by the end of the 1980s.
Ronald Reagan, George H.W. Bush, Bill Clinton, George W. Bush, and Barack Obama all set similar goals at different points in their presidential campaigns or presidencies. Typically, their political opponents did too. Little serious progress toward those goals was achieved during most of their terms in office.
Posted October 23, 2014
On Jan. 1, California is scheduled to include gasoline, diesel and propane in its three-year-old, first-in-the-nation program that requires companies to buy carbon permits to cover their emissions of greenhouse gases. Yet a new report warns that design flaws in the cap-and-trade program could negatively impact markets that serve consumers.
Authored by Jean-Philippe Brisson, a carbon markets expert with the Latham and Watkins law firm in New York, the report commissioned by the Western States Petroleum Association (WSPA) cautions that design flaws “can result – and have resulted – in catastrophic implications for environmental markets around the globe.”
Posted October 20, 2014
The Obama administration is trying to balance its support for renewable fuels with awareness of infrastructure constraints at gas stations as it finalizes targets for 2014 biofuel use, agency officials said on Tuesday. But with only 11 weeks left in the year, the administration also needs to weigh oil refiners' ability to comply with the long-delayed requirements, one official told the Reuters Global Climate Change Summit.
The article goes on to quote Janet McCabe, who leads EPA’s division overseeing the biofuels program:
(McCabe) acknowledged that delays in setting the targets, formally called the Renewable Fuel Standard (RFS), should be taken into account. "We need to be mindful of where we are in the year," McCabe said …
Reuters reports that EPA had proposed lowering ethanol mandates for 2014 because the U.S. was on a collision course with the 10 percent blend wall – the point where RFS mandates will require ethanol to be blended into gasoline at levels higher than the 10 percent fuel (E10) for which most of today’s vehicles were designed.