Energy and Environment News

Energy and Environment News

June 22, 2015

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Energy Outlook.  The International Energy Agency reports that worldwide consumer demand for energy has risen in 2015, largely due to low oil prices and economic growth.  The report forecasts that world demand for oil will increase 1.4 million barrels per day this year — an upward adjustment of 300,000 barrels compared with previous forecasts — but does not predict that the increased demand will yield a boost to prices.  WSJ

Energy Policy.  A recent report from the Obama administration finds that reductions to U.S. carbon emissions would give a boost to labor productivity, lower electricity demand, and help avoid damages from coastal storms and wildfires in coming decades.  The report uses federal data to lay out a trajectory of health and economic payoffs that the administration expects from its proposals to curb greenhouse gas emissions from trucks, power plants, landfills, and oil wells.  Bloomberg

Electricity.  John Kemp of Reuters writes that power grids throughout North America set new records for reliability last year despite concerns regarding extreme cold temperatures and physical and cyber attacks. Kemp explains that increased investment and attention to operational standards over the last decade are largely responsible for reliability improvements, while demand-side management improvements have also helped to reduce stress on the grid during critical times.  Reuters

Energy Policy.  U.S. officials are increasingly concerned about political fallout that may occur if Greece declares bankruptcy, particularly as this may allow Russia to gain influence over Greece and sow new divisions among America’s European allies.  Concerns were amplified following Greek Prime Minister Alexis Tsipras’ visit to St. Petersburg late last week to discuss energy diplomacy, which affirmed Greece’s willingness to look to Moscow as disputes with its international creditors intensify.  FT

Energy and Environment News

Energy and Environment News

June 19, 2015

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Energy Policy.   The Obama Administration proposed new carbon emissions standards for the trucking industry today which will require significant fuel efficiency improvements for new fleets of trucks built beginning in 2018.  The EPA estimates that the trucking industry will be able to recoup the costs that the standard will impose in two to six years, largely through fuel savings. WSJ

Oil.  The U.S. Energy Information Administration reports that energy production companies were able to reduce their costs for both drilling activities and support activities in response to the plunge in oil prices over the past year.  Specifically, the producer price index — which tracks the rates that oil and natural gas service firms receive for goods and services used in producing oil and natural gas — declined by 19.6% for drilling activities and 1.4% for support activities.  EIA

Energy Policy.  The European Commission stated today that existing gas pipelines from Russia already more than meet the EU’s existing and future needs — a critical response to Russia’s recent negotiations with several Western energy companies to double the capacity of a pipeline to Germany.  Russia has claimed that the project would allow it to ship an extra 55 billion cubic meters of gas to Europe every year and reduce its dependence on Ukraine as a transit country; however, the Commission is skeptical given that existing pipeline routes from Russia are only running at 57% capacity.  WSJ

Climate Change.  Nick Butler of the Financial Times notes that although the recently leaked papal encyclical on the environment attributes greenhouse gas emissions to human activity, the document also includes text that undermines the credibility of science.  Butler asserts that the Pope’s call for a change in behavior is undoubtedly important, but would be more effective if it embraced the ability of science and technology to offer a solution to climate change moving forward.  FT

Energy and Environment News

Energy and Environment News

June 18, 2015

Top Stories

Climate Change.  Pope Francis has aligned himself with mainstream scientific thought regarding climate change, warning about the dangers of “the ecological crisis” and calling for action to address global warming in the new papal encyclical on the environment.  Experts from the Pennsylvania State University note that the scientific evidence cited by the Church is correct for the most part —  at least to the degree possible in a religious document meant for such a broad audience.  NY Times

Energy Policy.  According to officials, Greece is expected to sign a preliminary agreement tomorrow that will allow Russia to extend a gas pipeline through its territory.  According to a chief executive from Russian state-controlled oil producer Gazprom, this creation of additional transport infrastructure will connect gas fields in northern Russia and markets in Europe, facilitating increased security and reliability of deliveries.  WSJ

EPA.  EPA defended its controversial renewable fuels program at a Senate subcommittee hearing today, addressing criticisms related to years-long delays of quotas and allegations that the agency recently set “unattainable targets” for the amount of corn-based ethanol and other biofuels that must be blended in the nation’s motor fuel supply over the next two years.  EPA acknowledged that quota delays created uncertainty within the ethanol market, but argued that the new standards are necessary to ensure the future growth of the renewable fuels industry.  Reuters

Energy and Environment News

Energy and Environment News

June 17, 2015

Top Stories

Energy Outlook.  Market observers note that there has been strong demand growth for refined fuels such as gasoline and diesel, which is helping to rebalance the global market for oil.   Reuters analyst John Kemp argues that this has largely been driven by economic expansion and employment gains — and that the sharp drop in prices has accelerated the trend for gasoline consumption, but not diesel consumption, which is more tied to general business activity.  Reuters

Oil Outlook.  Reuters reports that today’s rally in U.S. crude prices to $65 could trigger a wave of selling from Canadian oil producers eager to protect themselves against a second price slump.  Canadian producers have so far been reluctant to adopt the strategy — commonly known as “hedging” — due to fears of missing out on profits in the event that prices suddenly recover to higher levels.  Reuters

Oil.  Groups once profiting from private-equity funds in North American shale are now looking for assets elsewhere, primarily in regions hurt by the year-long plummet in oil prices, such as the North Sea. These groups’ previous success in North America has stoked demand from investors, such as pension funds, endowments, and insurance companies — accordingly, private equity-backed deals in oil and gas outside North America more than doubled in value in 2014 to $11.4 billion.  WSJ

Energy Policy.  Benjamin Zycher asserts in The Hill that the intellectual and policy justifications for the ban on exports of U.S. crude oil are just as flawed now as they were when the ban was enacted in 1975.  He argues that a repeal of the ban would have a number of positive impacts: (1) it would modestly increase domestic prices; (2) it would strengthen the U.S. dollar; and (3) it would put downward pressure on product (i.e., gasoline and diesel fuel) prices.  The Hill

Energy and Environment News

Energy and Environment News

June 16, 2015

Top Stories

Natural Gas.  Recent government and private-sector forecasts suggest that monthly natural gas production will flatten and possibly begin to decline in 2015.  While industry analysts expect that the downshift in natural gas production will be more widespread and long-lasting than in previous slumps, others point to factors such as cheaper contracts with service providers that could keep output growing despite lower prices.  WSJ

Climate Policy.   The Bloomberg View Editorial Board reviews a recently introduced Carbon Tax bill sponsored by Senators Sheldon Whitehouse (D – RI) and Brian Schatz (D – HI) that would impose a $45 tax on almost every ton of carbon emitted in the U.S. The Board argues that while the bill is unlikely to succeed, it presents an important and effective alternative to the Obama Administration’s regulatory approach to cutting carbon emissions.  Bloomberg View

Oil Outlook.  As OPEC continues to produce oil well above its quota and U.S. production estimates continue to rise, industry analysts are pushing back predictions for when the global market for crude oil will come into balance. Analysts estimate that the global oversupply of crude oil is rising at a rate of nearly two million barrels per day despite signs of elevated demand and industry cutbacks on infrastructure tied to crude oil production. WSJ

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