Author Archive

Increased Energy Use Raises Standard of Living in Developing Nations

Global production of oil and natural gas has increased in recent years, and prices have been falling.  This is not only good news for consumers in developed countries, but also for the poor in developing countries around the world.  Increased energy use is essential in developing countries if they are to raise the living standards of the poor and grow the middle class.  Even rapidly growing economies use much less energy than developed countries.  For instance, India uses one-tenth as much energy per person as the United States and, despite decades of rapid economic growth, China still uses only one-third as much energy per capita.  [See the figure.]

jaiwin fossil fuel

 

Special contribution by NCPA research associate Jiawen Chen. 

Aug 24, 2015 | Leave a Comment | by

Lifting Crude Oil Export Ban Benefits U.S. Economy

The Government Accountability Office (GAO) suggests that removing crude oil export restrictions could both reduce consumer fuel prices and increase the price of U.S. crude oil from ~$2 to ~$8 per barrel.

Regulations implemented 40 years ago are being reviewed as technological advances in the extraction of crude oil from shale formations, commonly known as hydraulic fracturing or “fracking”, have contributed to increased U.S. oil production. In recent years U.S. crude oil prices have been lower than international prices but removing export restrictions could generate more revenue for oil companies and cause international crude oil prices to decrease.

If, as estimated, international crude oil prices do decrease, consumers could see anywhere from 1.5 to 13 cents per gallon drop for refined oil products such as gasoline and diesel. However, experts cautioned that estimates of the price implications of removing export restrictions are subject to uncertainties and there could be important regional differences.

Additionally, removing crude oil export restrictions could benefit in the following areas:

  • Economy: Removing export restrictions would lead to increased investment in crude oil production and increases in employment. This could result in additional positive effects for employment and government revenue.
  • Industry: Increased domestic production of crude oil will result from eliminating current export restrictions. Estimates range from an additional 130,000 to 3.3 million barrels on average per day until 2035.

After decades of generally calling U.S. crude oil production, from 2008 through 2014 production increased by about 74%. Perhaps, lifting the restrictions on crude oil could help both the economy of the U.S. and the average consumer.

Aug 12, 2015 | Leave a Comment | by

NCPA Nationwide Survey of Anti-Fracking Activism – the “Frac Map”

3038

The NCPA completed a nationwide survey of successful anti-fracking activism that we presented to state legislators, energy associations and think tanks. This map demonstrates the threat of misguided activism to oil and gas production, the key to continuing our economic recovery, addressing the national debt, lowering the trade deficit and preserving U.S. superpower status into the future.

The NCPA “Frac Map” was also featured at the Washington Post.

 

 

Aug 10, 2015 | Leave a Comment | by

The Changing Price of Oil Relative to Gold

It is true that a shift in supply or demand will change prices in any market; however, not all market-price movements are necessarily due to a change in market supply or demand — especially in the case of prices for commodities as highly political as crude oil. Longer term trends in the price of oil also reflect cumulative changes in the purchasing power of the dollar. Looking at oil prices relative to gold prices instead of U.S. dollars takes account of the long-term decline in the value of the dollar and allows us to recognize more clearly the effect of supply, demand and public-policy factors that influence the price of petroleum.

The long historical tendency for the price of crude oil to parallel the price of gold and other precious metals is well known. As a whole, the trend is toward an average annual increase in the oil-gold price ratio through 2014 of 1.1 percent. The long-term increase is attributable to:

  • The slowly increasing scarcity of crude oil.
  • The fact that the cost of exploiting crude oil reserves has risen faster than the cost of exploiting gold reserves.
  • The growth of market forces that also govern the relative flow of capital into the oil and goldmining industries.

If it takes two years to half-close the gap in current oil prices compared to the equilibrium price suggested by the table, it would be reasonable to expect the price of crude to rise at an annual rate of about eight dollars a barrel over the next 12 months.

Source: R. David Ranson, “The Changing Price of Oil Relative to Gold,” National Center for Policy Analysis, July 27, 2015.

Aug 05, 2015 | Leave a Comment | by

Natural Gas Production by State

From the American Legislative Exchange Council (ALEC):

One of the greatest achievements of the American 21st Century has been the advances made in hydraulic fracturing and horizontal drilling technologies. These innovative well stimulation and extraction techniques have made enormous quantities of hydrocarbons that have been locked away in shale rock accessible now for the first time.

Between 2000 and today, domestic natural gas withdrawals have increased by roughly 25 percent, leading to an abundant supply of inexpensive fuel that can be used to generate electricity and provide space heat. A decade ago, policymakers were discussing the need to import liquefied natural gas (LNG) in order to meet American energy demands. Today, LNG export terminals are under construction in Maryland, Louisiana and Texas.

2015-05-07-Map-Energy-Production-Natural-Gas-2

The map above shows total natural gas production by state in 2013, the most recent year for which data is available. Unsurprisingly, the difference between Pennsylvania and New York — both of which lie on top of the gas-rich Marcellus shale play — is stark. Pennsylvania, having embraced hydraulic fracturing currently produces roughly 140 times more natural gas compared to New York, which has implemented a statewide ban on the well stimulation technique.

Jul 29, 2015 | 1 comment | by

Senate Energy Policy Leaves Out Oil and Highway Funding

The focus of the Energy Policy Modernization Act of 2015 includes energy efficiency and conservation, protecting the electric grid and speeding up the application process for liquid natural gas refineries. The bill includes:

  • The secretary of the Energy Department to issue a final decision on applications to export liquefied natural gas within 45 days after projects have won approval from the Federal Energy Regulatory Commission.
  • The Strategic Petroleum Reserve, a stockpile of nearly 700 million barrels of oil, should be used only in emergencies — while there are legislative efforts to sell off some of that oil to help pay for surface transportation funding.

The most recent senate energy bill failed to address some of the most important energy issues currently facing the nation. The bill avoided such issues as:

  • The ban on exporting crude oil.
  • Keystone XL pipeline.
  • Federal gas tax reform.
  • The failure to fund our highway system.
  • Renewable Fuel Standard reform.

U.S. energy policy that includes natural gas, but leaves out oil, is not real energy policy. Protecting the electric grid and leaving out critical funding for the highway system, addresses half of our most pressing infrastructure needs.

Jul 27, 2015 | Leave a Comment | by

The Global Solar Flight that Will Take Over a Year

Apparently, the Solar Impulse 2 has been grounded till next year due to battery problems. The plane’s batteries, which provide power for night flying, overheated during its recent five-day flight from Japan to Hawaii. The Solar Impulse 2 flight started in March of this year plans to resume by April of 2016. The Solar Impulse 2 has also made numerous stops on its global flight.

Solar Impulse 2:

  • Made of carbon fiber.
  • Has 17,248 solar cells with four motors.
  • Flies between 30 and 40 mph.
  • Seats one person as pilot.

Solar Impulse Chairman Bertrand Piccard sees the high-tech plane as proving the potential of renewable energy and clean technology, he also believes that the solar plane could spark increased interest in technologies such as LED lights and electric cars, as well as lightweight vehicles.

This was my vision when I created that project — it was to have an airplane that can fly with no fuel. This is fantastic, to prove that clean technology can achieve [the] impossible.

However, since WWII, planes have been making non-stop global flights in under 4 days, compared to this current flight that has numerous stops and will take over a year to complete.

Jul 20, 2015 | 1 comment | by

Mexico Opens to Big Energy

For the past 55 years, Mexico has prohibited private companies from owning any of its oil and natural gas production. The national oil and gas company PEMEX, once a major international energy player, has been reduced to an irrelevant player due to the government’s ever increasing and frequent siphoning of funds from PEMEX. The demise of PEMEX and the rise of the reform minded President Enrique Pena Nieto opens the door to changes to the Mexican constitution now allowing big energy companies to purchase oil and natural gas land.

Mexico’s break-even costs are low:

  • Deep water production is $50/bbl or lower.
  • Energy output from Mexico’s deep water could be transported to the U.S. by existing infrastructure.
  • Mexico is far more stable than the Middle East.

Mexico is currently 10th in oil production and opening the country up to big energy will greatly benefit Mexico and the world energy market.

Jul 13, 2015 | Leave a Comment | by

Economic Repercussions of the Renewable Fuel Standard

American Petroleum Institute’s Renewable Fuel Standard Facts:

The Energy Independence and Security Act of 2007 included an expanded Renewable Fuel Standard (RFS), which the EPA used to develop a final rule effective July 1, 2010. To comply with the Standard, biofuel producers and importers must blend increasing amounts of biofuels into gasoline and diesel.

However, there have been problems with the government’s original predictions regarding the supply and demand of gasoline; U.S. gasoline demand has dropped while supply has increased due to the shale and natural gas revolution in North America. Also, cellulosic technologies have not developed as quickly as expected and there are no commercial plants to date. The EPA rushed through approval of an up to 15 percent ethanol blend (E15) without adequate testing, leading to compatibility problems with E15, poor consumer acceptance and significant infrastructure and cost challenges. EPA proposed to address the problem, but has been incapable of finalizing its rule.

A study by NERA Economic Consulting (NERA) buttresses the argument that the RFS is irretrievably broken saying that, RFS ethanol mandates could:

  • Lead to fuel supply disruptions that ripple adversely through the economy.
  • Cause the cost of diesel to rise 300 percent and the cost of gasoline to rise 30 percent.
  • Decrease U.S. GDP by $770 billion.
  • Reduce worker pay $580 billion.
Jul 08, 2015 | Leave a Comment | by

Study’s Conclusion Does Not Make New York Hydraulic Fracturing Ban Permanent

A conclusion of a seven year long review of hydraulic fracturing in the state of New York does not mean that a state wide hydraulic fracturing ban is permanent. The findings of the study might be the only thing that is official from Department of Environmental Conservation other than a speech made by the governor.

Joe Martens, head of the Department of Environmental Conservation:

After years of exhaustive research and examination of the science and facts, prohibiting high-volume hydraulic fracturing is the only reasonable alternative. High-volume hydraulic fracturing poses significant adverse impacts to land, air, water, natural resources and potential significant public health impacts that cannot be adequately mitigated.

New York governor Andrew M. Cuomo announced on December 17, 2014 that he would ban hydraulic fracturing in New York State by executive proclamation because of concerns over health risks, ending years of debate over a method of extracting natural gas. He was formally declaring a “ban” after his predecessor, Patterson, implemented a “moratorium” on hydraulic fracturing. The question of whether to allow hydraulic fracturing is occurring in many states and has been one of the most divisive public policy debates in New York in years. Environmental advocates, alarmed by the growth of the practice, pointed to New York’s decision as the first ban by a state with significant natural-gas resources.

There is no actual law in place that bans hydraulic fracturing in New York. Whereas there are laws in Texas and Oklahoma that ban local hydraulic fracturing bans in those two states. So, for now, hydraulic fracturing could be on hold in New York, but only temporarily.

 

Jul 01, 2015 | 4 comments | by
« Previous Page — Next Page »