Tag: "energy electricity coal natural gas petroleum oil renewable"

Upheaval — Natural Gas Growth Could Redefine Decades

Over the past few years, natural gas growth has been an energy investor’s fallback strategy. With a historically positive growth in almost every company’s stock and unperturbed fundamentals — promoted by technological advances — it is highly unlikely that such an industry trend is cyclical.

Some of gas’ most representative stocks (as deemed by the New York Stock Exchange) for companies such as Sempra Energy, Intergys Energy Group Inc. and AGL Resources Inc. were reformatted and indexed by the NCPA:

An unusually warm winter reduced energy demand and put a damper of gas prices, which suppressed growth towards the end of the graph in 2014. However, projections made by the Energy Information Administration (EIA) show that the sector will continue to expand at a stable rate throughout 2015 — supporting the theory that the market growth is due to a structural change.

In the case of the United States, this may be our golden age of natural gas. The U.S. is ready to be a net gas exporter by the end of this year, Market Realist proclaims “Some of the higher production in the Eagle Ford Shale in South Texas will be set to export to meet the growing demand from Mexico’s electric power sector.” On the other side of the Pacific, the same kinds of environmental laws that brought American coal to heel, such as the Clean Air Act (CAA), have come into effect as of January in China. The most prominent of which are the Chinese Air Pollution Prevention and Control Law’s amendments, which were made in response to deteriorating atmospheric quality over the country and the recent environmental initiatives taken between the United States and China. Thus, coal’s rising costs have instigated a shift in demand, one that will start favoring gas — this is a trend that could soon be seen globally.

But where do we stand as gas producers, and why does that matter?

The United States is by no means the owner of the world’s largest natural gas reserves, however from the EIA’s datasets, one can intuitively see that for its reserves, the U.S. has an overwhelmingly dominant production capacity — meaning we have the most resources to extract and process gas. Should private and public players move to ease trade barriers between the countries, this is an advantage that the U.S. is unlikely to lose for years given China and other BRIC countries’ surging energy demands. Specifically, China’s policy changes have provided a niche for emerging American liquefied natural gas (LNG) vendors to seek partnership. We will not have a production advantage over other countries forever, and as the chart Known Natural Gas Reserves Across the World shows, a failure to capitalize on this opportunity would be a serious blow to American leadership and competitiveness on environmental, energy security and economic fronts.

Feb 11, 2015 | Leave a Comment | by Santiago Bello

Evolving Energy Infrastructure — Energy Battles Looming at Home

The electrical utilities industry is one that has always been regarded by economists as unique, with its most defining aspect being competition. There is little to none. However, economists have always argued that this is only a rational byproduct of the infrastructure associated with transporting energy. A perfectly competitive market is saturated with companies, and with hundreds or even thousands of different energy companies, the power lines and facilities required to generate electricity would be astronomically inefficient. For this reason, infrastructure in this field has been widely shielded from the pressures brought by rival businesses and increasingly demanding customers.

The free market could be on the verge of changing these norms. It all begins with introducing an adversarial element to the electrical utilities sector.

Vivek Wadhwa, a fellow at the Rock Center for Corporate Governance at Stanford University and the director of research at Duke’s Center for Entrepreneurship and Research Commercialization begins the topic of evolving energy at its root: Many forms of energy are outdated or considered too dangerous. President Obama’s recent energy accords in India is an example of this, with Wadhwa stating,

This is hardly a victory for the United States or for India. It no longer makes sense for any country to install a technology that can create a catastrophe such as Chernobyl or Fukushima — especially when far better alternatives are available.

Furthermore, Wadhwa points out that nuclear facilities and growth in the nuclear energy sector has been stagnant compared to coal, natural gas and renewables, a claim largely supported by the Energy Information Administration’s statistics on U.S. energy consumption.

The president should not be prescribing medicine [to electrical consumption] that he would not take himself.

In a 2014 report, “Energy 2020: The Revolution Will Not Be Televised as Disruptors Multiply,” Citigroup claims that coal has suffered a serious double threat with the resurgence of natural gas during America’s shale revolution, and most surprisingly the projected ― not current ― falling costs of solar energy.

Indeed, natural gas and renewables such as solar are also the only two major methods of energy production which have consistently expanded at a positive rate for many years. Oil has historically been rarely used by electrical utility companies, and hydroelectric energy ― which does account for significant amounts of energy in the U.S. ― has largely been stagnant in meeting our rising demand for energy.

The growing popularity of renewables such as solar and wind has been a phenomenon that has been observed mainly in Europe. In a separate article, “The Coming Era of Unlimited ― and Free ― Clean Energy,” Wadhwa explains many countries in Europe have reached grid parity, a state in which installing electrical grids powered by wind and photovoltaics have matched energy prices from conventional electrical power plants. Were such a phenomenon to begin in the United States, it would be horrible news for coal, which is already hobbling along, largely due to the higher costs imposed by environmental regulations.

Solar and wind’s capacity for powering microgrids — grids which operate in the local vicinity in which their consumers reside — could also put pressure on the entire infrastructure that American energy needs have relied on for years. America’s energy infrastructure is also vastly outdated — with the best example of such being the Northeast’s chronically faltering electrical grid. The lack of innovation and improvement is mainly due to the lack of competition in the sector. Though solar and wind energy is still years away from being able to match domestic prices, advances in microgrid popularity which would be enabled by Citi’s projected foreign investment in the two energies could introduce choice to the energy sector, effectively lowering prices and helping America in its quest to be energy independent.

Feb 04, 2015 | 2 comments | by Santiago Bello

Super Bowl is Good for the Environment?

The Super Bowl is the most watched television broadcast in the United States with an estimated 111 million people watching each year. The amount of electricity consumed during the broadcast exceeds 11 million kilowatt-hours or equivalent to the amount of electricity generated by a medium-sized power plant.

However, right before and during game time, electricity consumption drops 5 to 7 percent on an average Sunday afternoon in winter. Research conducted by Opower suggests that there are several reasons for this drop in electricity consumption:

People gather at public places to watch the event and leave their homes with most everything turned off.
Most appliances around the house are turned off during the Super Bowl.

Hardly anyone would have guessed that the Super Bowl is good for the environment and conserves electricity.

Feb 02, 2015 | 2 comments | by Lloyd Bentsen

The Oil Price War Could Be Bringing About Imminent Change

OPEC has declared open season on U.S. shale oil companies through its decision to leave oil production unrestricted. On separate accounts, Matt Phillips and Steve LeVine insist that “the fallout could create a crisis” in the American banking market as well as the energy industry, while Bloomberg notes how China has capitalized on this escalating feud.

American shale’s rise to power is largely credited to advancements in hydraulic fracturing, a method used by companies attempting to extract the resource from underground, as well as additional funding from junk bond investors who have been attracted by the high returns and low interest rates. Consequently, drilling companies both large and small have had an ample supply of credit and financing, such that 17 percent of the $1.3 trillion market is now financed exclusively by such contributions. With the abundance of equity, falling gas prices were to be expected as a simple byproduct of increased production.

In an unexpected response, OPEC signaled its unwillingness to reduce market share and kept production ― and hence future prices ― constant. Phillips and Levine warn that maintaining competitive prices has forced U.S. companies to dig into their profit margin. Normally this would not be a problem were it not for the prevalence of creditors and private owners bloating market value through their contributions. The desire to be on the energy-boom bandwagon has thus indirectly created a host of unfunded liabilities and nurtured an environment for assets such as receivables to fester and become toxic to the global banking system. Jan Stuart, the Director of Credit Suisse’s investment banking division issued a statement insisting “investors remain hungry for yield” and will remain so, deepening the divide between listed externally acquired funds and suffering shale oil companies’ ability to perform up to par.

While America stares down the looming double-threat, China has quietly begun increasing crude oil stockpiles by as much as seven-hundred thousand barrels per day amidst a fading “golden time window.” Bloomberg notes the steady progress taken by the creeping giant, even despite comparatively lackluster current and future growth of 7 percent as projected by fifty-six independent economists. At the current rate, the opportunist state hopes to stockpile 570 million barrels of crude by 2020, reserves equal to about 100 days of their domestic demand.

American lenders and shareholders must necessarily become more stringent with their credit and their capital when assessing companies. Phillips and Levine warn that there are negative “implications for everyone” from hydraulic fracking fields to Wall Street if financing dries up or if OPEC succeeds in destabilizing American shale, but in a time when the rising industry could be facing one of its greatest global triumphs or defeats, this is clearly an understatement.

Santiago Bello is a research associate at the National Center for Policy Analysis.

Dec 08, 2014 | 2 comments | by Lloyd Bentsen

Oil Prices Drop from U.S. Output, Despite Global Gitters

Price per barrel of oil has dropped $25 a barrel or 23 percent in three months to about $85 a barrel.

Lowest average gas prices:

The state of Missouri has the slowest gas price at $2.88 a gallon at the pump.
The city of St. Louis, Missouri has the lowest gas price at $2.82 a gallon at the pump.
Other states with low gas prices include: South Carolina, Oklahoma, Tennessee and Mississippi.

Lowest price per barrel since 2010, implications in the news:

Airlines should have higher valuations at the new fuel prices but the Ebola saga has kept them grounded.
U.S. disposable income increased $50 billion from the reduction in gasoline prices, less money spent at the pump signals higher retail growth heading into holidays and more money for the economy.
Prices are trending even lower with the tremendous output from the United States.

Oct 15, 2014 | 3 comments | by Lloyd Bentsen

Keystone XL Meet Energy East

President Obama’s reluctance to approve the Keystone XL pipeline from Canada to the Gulf Coast, is forcing one of the largest energy rich countries to look at alternative ways to export its crude. The proposed TransCanada Energy East pipeline would be an all-Canada pipeline transporting the vast reserves of Alberta’s oil sands to the city of Saint John. The crude reserves could then have supertanker access to the Gulf Coast refineries that the Keystone XL planned to deliver.

Canada’s Alberta oil sands contain the third largest reserves in the world at 168 billion proven barrels.
The 2,858 mile Energy East pipeline will cost $10.7 billion and completed by 2018.
Energy East pipeline would transport 1.1 million barrels per day.

If a reality, the Energy East pipeline would be more than twice as long and carry a third more crude than the Keystone XL pipeline. The growing European demand for crude from other sources than Russia increases the need for large pipeline projects. Opponents to large energy pipelines are already lining up to halt any start to such a project. TransCanada Corp will find one way or another to start exporting Canada’s vast energy and natural resources. Time is running out for Keystone XL and the subsequent economic boost to the United States.

Oct 08, 2014 | 1 comment | by Lloyd Bentsen

Rate of Global Warming is Slowing and Nobody Knows Why

Despite hype to the contrary, the world has seen a slowdown in the rate of warming over the past few years. The change is causing many scientific organizations to adjust their climate change projections. Late last year the Intergovernmental Panel on Climate Change reduced its projected warming from a range of 0.4 to 1.0 degrees Celsius to 0.3 to 0.7 degrees Celsius between 2016 and 2035. More importantly, nobody seems to know why the warming has slowed.

The leading theory is that the increased heat has been partially absorbed by the ocean. A group at the Scripps Institute suggested the extra heat is being absorbed by the surface waters of the Pacific Ocean. Other scientists suggest that the deeper, colder parts of the ocean are absorbing the heat. Another theory is that active volcanoes are suppressing global warming by spewing ash and gas that reflect the sun’s heat back into space. Some have suggested particulate matter from coal power plants in developing countries spewed into the atmosphere may be reflecting sunlight thereby reducing heat. Others think that an exceptionally active solar cycle may be influencing temperatures.

The scientific method has always been a five-step process involving a question, a research hypothesis, experimentation and data analysis. While most scientists now believe humans play a significant role in global warming, the exact level is up for debate. And past projections have been off sometimes significantly. In one of the first predictions, Dr. James Hansen told Congress in 1988 that the world would warm 1.0 degree Celsius every 20 years until 2050. We now know that figure was 2-3 times too high.

Where does this leave policy makers and citizens? Policy makers should continue to develop free-market oriented solutions to global warming. Some folks favored a carbon tax, but its lack of success in Europe has pushed many towards carbon capture instead. Other potential solutions are worthy of consideration.

At the same time, scientists should emphasize that all predictions are estimates. The earth and its atmosphere are complicated places; we still have a lot to learn on climate change. Everybody should remember that science is not religion; actual facts are needed before a conclusion can be made. There is one thing that we can be certain of today: nobody can predict with 100% accuracy what any aspect of earth, including its climate, will be like in 2050.

Sep 15, 2014 | 4 comments | by Baruch Feigenbaum

Former Top Aid to Obama Calls for Exporting Oil

In addition to the most recent Brookings report that shows some of the benefits of lifting the United States ban on crude oil exports, Larry Summers is also calling for an end to the ban.

Summers, the former top economic advisor to President Obama, also agreed with Brookings that lifting the ban would lower domestic gasoline prices, create jobs and increase economic growth.While he is unsure if the president will lift the ban, he says the ban, which was put in place in 1975, can only be removed if the president finds that it is in the nation’s best interest.

Larry Summers also added that the only losers of lifting the ban would be the refineries that are currently benefiting from cheaper global crude prices.

Sep 10, 2014 | Leave a Comment | by Lloyd Bentsen

The Challenging Process of Becoming a Green Nation (Part 1)

People often feel a little pious when they actively support regulatory efforts that subsidize the use of alternative energy sources. And why not? When politicians and environmentalists claim such regulations help alleviate our nation’s dependence on fossil fuels, reduce our air pollution emissions and decrease our contribution to global warming, what could possibly be wrong with supporting greater government control over the energy resources of our national economy?

Well, there is much to consider in the process of creating public policy. Let’s explore how environmental or energy policy would be crafted in any nation that is a representative democracy.

We’ll start with the most important question concerning energy sustainability and global warming: Who decides if the current rate of fossil fuel consumption is too reckless for a morally responsible generation to enjoy? Who decides the optimal level of carbon dioxide production for us all to tolerate when producing the energy and goods that the citizens of a prosperous nation require?

We must remember that making a democratic government the arbiter over these important questions doesn’t remove the inherent struggle that exists between the many competing visions of how our nation’s energy resources should be used. Handing the over the reins to the government merely changes the process by which these important decisions are made.

Observation #1: Our energy resources have multiple, competing uses — even across future generation. Such competition will always exist, whether decisions over using these resources are made in the public or the private sectors.

The presumption justifying greater regulation is that citizens in the private marketplace pursue only their self-interest when allocating their income dollars across competing energy resource uses. If the voluntary actions between buyers and sellers in the private energy marketplace fail to reflect the “better angels of our nature,” what’s wrong with electing politicians to hire expert bureaucrats to regulate our scarce energy resources more effectively?

Well, we must be consistent in our assumptions about human nature. These same citizens will also pursue their self-interest when they cast their ballots in the public sphere. When choosing between candidates for office with competing platforms, voters will not suddenly grow the halo and wings of angels when closing the curtain behind them in the polling booth. They will vote their own self-interest.

Observation #2: Self-interest guides citizen choices in both public and private decision making processes.

But isn’t citizen influence over resource allocation decisions made in the public sector more equitably distributed than in the private sector? Wouldn’t the “one-person, one-vote” characteristic of a democracy help us more equitably select the right legislators, who will in turn appoint the right bureaucrat experts, who will then create policies that are more likely to reflect the public interest?

In short, the answer is no. While people and organizations with higher incomes will always have more sway over what all is produced and how it is all distributed in the private sector, they will also have more sway over how public policy is created, and how its benefits (and costs) are distributed. Why? Much political influence resides beyond each citizen’s allocation of one vote. Let’s take a look.

Political action groups (PACs) seek soft money donations to promote political party platforms. Beltway lobbyists seek to influence legislators and bureaucrats on behalf of well-funded for-profit and non-profit organizations. Highly organized and informed special interest groups seek public policy with localized benefits that are to be paid for by uninformed and unorganized taxpayers.

Indeed, OpenSecrets.org tracks lobbying expenses and PAC donations in the U.S. each year. In the Presidential election year of 2012, over 12,000 lobbyists helped their organizations spend $3.3 billion trying to influence legislators and bureaucrats in their design of public policy. Further, PACs raised over $1.4 billion that same year, with Democrats raising a slightly larger share of all funds than Republicans.

Observation #3: Power and influence are unequally distributed in both the public and private sectors of a democratic nation.

The reality is this: If self-interest dominates citizen voter choices over competing energy policies, and if their influence over the legislative process is unequally distributed across society, then it does NOT automatically follow that public policy will be more economically efficient or environmentally effective than the aggregation of all the independent, voluntary activities between consumers and producers in the private sector.

This implies that the process of both private and public sector decision making in resource allocation must be clearly understood and directly compared before we can determine which process for allocating our energy resources would be in the best interests of our nation. In my next article, we will explore the challenges of efficiently and effectively implementing public policy over our energy resources.

Aug 06, 2014 | Leave a Comment | by Michael Stroup

President Obama Keeps Energy Costs High

While Obama has not yet been able to stop the fracking technology that is producing an American oil and natural gas boom on private and state owned lands, he has sharply constricted exploration and development on the extensive federally-owned lands and offshore. That is why gasoline prices have doubled since he became President.

The Heritage Foundation explains that under Obama’s policies, the EPA’s:

Proposed limits for carbon dioxide emissions essentially would prohibit the construction of new coal-fired power plants, and force existing ones into early retirement, driving up the cost of energy on American families and businesses.

Then there is Obama’s indefinite hold up of the Keystone XL pipeline, which would simply transport, at no cost to taxpayers, abundant, low cost Canadian oil and natural gas to American Gulf Coast refineries, assuring American access to low cost, reliable oil and gas supplies. But if Canada cannot sell to America through the Keystone pipeline, then they will sell the oil and gas to our emerging rival in China, through pipelines on the Canadian west coast. These policies would deprive America of 50,000 high paying jobs not only for construction of the extensive pipeline networks, but also for the budding boom and rebirth of American manufacturing and associated higher paying blue collar jobs, which the revival of low cost, reliable American energy supplies is producing.

The Heritage Foundation further explains that “higher energy prices shrink production and consumption, resulting in less income for families, more people in the unemployment line and less economic growth.” All of this means that Obama is on track for increasing electricity and other energy costs that are the inevitable result of a constricted supply of low cost, reliable, American energy.

Jul 28, 2014 | 1 comment | by Lloyd Bentsen

Tag: "energy electricity coal natural gas petroleum oil renewable"

Categories

Tags