Energy Tomorrow Blog
Posted September 20, 2018
In API’s latest Industry Outlook and Monthly Statistical Report, we have shifted from recognizing risks on the horizon to having a line of sight on some of them. The effects of trade disputes in particular have become tangible.
Most notably, at the same time as the U.S. celebrated another new record for crude oil production of 10.8 million barrels per day (mb/d), U.S. petroleum exports decreased by 1.3 mb/d over the past two months.
Posted August 23, 2018
Domestic natural gas abundance – safely developed with modern hydraulic fracturing and high-tech horizontal drilling – has benefitted consumers and the economy while reducing greenhouse gas emissions and helping make our air cleaner.
Sustaining and growing those benefits largely depends on market growth for natural gas – to add production that production must have new and/or growing markets to supply. Policy can affect the potential for that market growth. The U.S. Energy Department’s (DOE) continued push to bail out failing coal and nuclear plants is a prime example.
Posted August 16, 2018
As we head into what historically is the heart of the annual hurricane season, America’s refiners have never been in a stronger position to deliver the fuels we all need – which is good news for consumers.
According to API’s Monthly Statistical Report (MSR), the refining industry in June eclipsed 18 million barrels per day (b/d) of liquid fuels processed in distillation units and has remained on track for its strongest year on record.
Indeed, the U.S. Energy Information Administration forecasts that refinery runs will average 16.9 million b/d this year and 17 million b/d in 2019 – both of which would be records, surpassing the 2017 annual average of 16.6 million b/d.
Posted August 7, 2018
Recently, we discussed how natural gas and oil production and energy exports were major contributors to robust second-quarter growth by the U.S. economy – by themselves generating nearly half of the increase in U.S. real exports in Q2.Yet, there’s concern that escalating U.S. trade restrictions and looming disputes could threaten global trade and economic growth. We’ve talked about tariffs and quotas directly impacting the natural gas and oil industry – China last week announced a 25 percent tariff on U.S. liquefied natural gas – but the potential effect is broader than just our industry, as indicated in last week’s post on possible food price impacts.
Posted July 27, 2018
The U.S. gross domestic product (GDP) increased 4.1 percent in the second quarter at a seasonally-adjusted annualized rate, its best pace since 2014, driven by strong consumer and business spending as well as a surge in exports ahead of retaliatory tariffs from China. As the energy renaissance has continued to raise U.S. natural gas and oil production and exports to record levels, these abundant and affordable fuels and feedstocks contribute to the economy and — by themselves — generated nearly half of the growth in U.S. real exports in Q2.
Posted July 6, 2018
Earlier this week we looked at the summer variation in gasoline prices, due mainly to increased driving as well as fuel specifications that have added to the cost of gasoline. As the 2018 summer driving season approaches its midpoint, let’s check the data on gasoline prices and, separately, take a deeper look at why prices in any one state have tended to be higher (or lower) than the national average.
According to the American Automobile Association, the nationwide average price for regular gasoline was $2.85 per gallon on June 28, a decrease of 12 cents per gallon since May 28.
Remember, gasoline and diesel fuel prices tend to track the price of crude oil, because crude oil currently makes up more than half of the cost to make the fuels. The U.S. Energy Information Administration (EIA) reported that crude oil made up 56 percent of the price of gasoline in May, the agency’s most recent analysis.
Posted June 21, 2018
The API Industry Outlook for the second quarter of 2018 is one of the things that’s new at API. If you follow energy markets, you’ll appreciate an incisive view of the economy at home and abroad as well as markets for crude oil, natural gas and petrochemicals.
Beyond nice-to-know “macro factors,” here are things to know and understand about trade barriers that could affect economic activity and prices where you work and live.
Posted June 14, 2018
With Wall Street Journal headlines such as “Trans-Atlantic Oil-Price Spread Soars as Supply Glut Disappears,” it might be hard to remember that the United States’ domestic oil production stood at a record 10.5 million barrels per day (mb/d) in April, and the nation’s petroleum trade balance is in its best position in 50 years. This has reinforced U.S. energy security, lowered the trade deficit and boosted economic growth.
That said, given our country’s much improved energy outlook, some may question why we’re still importing crude oil and refined products. And, while we’re still importing oil, why do we export domestic crude – especially when prices have risen at the pump? Why don’t we just keep American oil at home? ...
Answers are found in an understanding of basic market realities.
Posted May 22, 2018
Washington is known for partisan political skirmishing, so it’s not surprising that a group of Senate Democrats is trying to score political points against this year’s tax reform legislation by suggesting that lowering the corporate income tax rate has been linked to the recent rise in gasoline prices.
Let’s straighten them out on a couple of important things about gasoline prices, which have nothing to do with tax reform.
First, per-barrel costs for crude oil – the No. 1 factor in the cost of producing gasoline and diesel – have risen due to a tighter global oil supply/demand balance and lower inventories compared to last year. Second, with a strong economy, U.S. petroleum demand has run at its highest levels since 2007 and was up by more than 750,000 barrels per day in April, compared with one year ago. Next, as they do every year around Memorial Day, the start of the summer driving season, Americans are traveling more, which could raise demand further. Finally, although gasoline prices have increased recently, they’re still lower than where they were four years ago, largely because of increased domestic oil production.
Posted May 10, 2018
The facts that crude oil prices are up 9 percent since the end of March and that crude oil currently accounts for 57 percent of the consumer’s price for gasolinemean that consumers have felt the impact at the pump of relatively large and sudden changes. As domestic crude oil prices recently increased above $70 per barrel for the first time since November 2014, let’s revisit current oil market fundamentals and other factors that have elevated prices.
By understanding the drivers of prices, American consumers may be more aware of how U.S. policy outcomes – such as more domestic natural gas and oil production, a strong U.S. dollar, low price inflation, avoidance of tariffs, quotas and other protectionist measures that undermine free trade, and peaceful international relations – could help put downward pressure on crude prices that ultimately benefits consumers.