Energy and Environment News

Energy and Environment News

January 6, 2015

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Energy Outlook. Bloomberg reports that while oil prices dropped steeply last year, U.S. investments in pipelines and storage tanks have fared very well. Investment analysts project increasing demand for investments tied to the transporting or processing of energy commodities, even amid concerns that U.S. production will taper due to lower oil prices. Bloomberg

Oil. Tensions are escalating between Canadian and Saudi Arabian producers of heavy crude oil over refining capacity in the Gulf Coast — threatening to drive oil prices even lower. While new oil pipelines from the North are pumping record volumes of Canadian crude to Gulf Coast refineries, Saudi Arabia has been discounting its crude prices in an “attempt defend its remaining share of the important regional market”. Reuters

Energy Policy.  Lawmakers will discuss legislation to approve the Keystone XL pipeline as early as this week — opening up a broader Congressional debate about U.S. energy policy for the first time in eight years.  While additional broadly popular energy measures such as expediting federal reviews of natural gas exports and energy efficiency measures are likely to be added to the bill, the White House today reported that “if this bill passes this Congress, the President wouldn’t sign it”. WSJ, WP

Energy and Environment News

Energy and Environment News

January 5, 2015

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Oil.  Many industry analysts and economists are questioning the impact of the recent energy-price downturn on the Texas economy — particularly in light of Texas’ deep recession after the 1980s oil bust and banking crisis. Some industry analysts assert that Texas will weather the energy price slump due to a well-rounded economy and more prudent banking sector, while others argue that history is likely to repeat itself because the oil-and-gas industry accounts for roughly the same share of Texas’ economic output today as it did during the 1980s.  WSJ

Energy Outlook.  The Energy Information Administration reports that energy commodity prices remained relatively stable for the first eight months of 2014 but fell dramatically during the last four months. While price movements in major commodity groups often move together due to strong underlying trends in global economic growth, the energy component of the Goldman Sachs Commodity Index fell 43% in 2014 while grains, industrial metals, and precious metals fell 8%, 8%, and 6%, respectively.  EIA

Energy Policy. Proposals to increase the gasoline tax amid recent price drops are not faring well among anti-tax policymakers in Washington. Many argue that a gas tax is needed to finance the highway trust fund — which is estimated to have a $160 billion deficit over the next 10 years — while others are looking towards solutions such as more state responsibility for transportation infrastructure, more private-public partnerships, or even a carbon tax. NY Times

Natural Gas. Nick Butler of the Financial Times argues that U.S. natural gas prices are likely to continue falling for some time because gas supply contracts will continue to be tied to oil prices for the foreseeable future and Japan appears ready to accept the gradual reintroduction of nuclear power. Butler furthermore asserts that the duration of the present downward trend will be mostly dependent on the pace of demand growth in China and India. FT

Energy and Environment News

Energy and Environment News

January 2, 2015

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Oil.  Analysts and investors predict that an oil price recovery will not come until the second half of 2015, as producers cannot quickly cut back on drilling and consumers are unlikely to change their buying habits right away.  In fact, prices could fall even further as wintertime heating-oil demand recedes in the second quarter.  WSJ

Climate Change.  According to a Harvard political scientist, people who worry about human-caused climate change are willing to pay only up to 5 percent higher energy bills to stop it, i.e. about $5 extra on the average American energy bill.  His conclusion, based on a comprehensive survey of attitudes toward energy and climate conducted over the last 12 years, implies that policy makers do not have political support for measures that would incur higher costs, at least when climate change is offered as the benefit.  Forbes

Oil.  The reason U.S. oil prices feel especially affordable is that they are following the highest gas prices consumers have paid in three decades.  The national annual average for a gallon of regular unleaded gas hit a high of $3.77/gal in 2012 – the last time the average was so high was in the early 1980s.  WSJ

Energy and Environment News

Energy and Environment News

December 31, 2014

Top Stories

Oil.  Major oil companies — many U.S.-based — are cutting up to 15% of the pay of thousands of self-employed oil and gas workers contracted on projects in regions like the UK North Sea.  While falling oil prices could prove a significant boon for the global economy, they present toughening market conditions for these companies, forcing them to respond by reexamining their investment plans and looking for ways to reduce costs.  FT

Oil.  According to Citigroup Inc., the Obama administration’s recent decision to allow exports of ultralight crude oil without government approval may encourage shale drilling and thwart Saudi Arabia’s strategy to curb U.S. output.  According to the bank, current U.S. export capacity is at about 200,000 barrels a day and could be expanded to 500,000 a day by the middle of 2015, further weakening crude oil markets.  Bloomberg

Natural Gas.  Natural gas prices slipped ahead of weekly inventory data today, which would typically indicate that demand for this heating fuel has been lackluster.  Natural gas is known for being a volatile market, and is set to close the year as one of the worst-performing commodities.  WSJ

Energy and Environment News

Energy and Environment News

December 30, 2014

Top Stories

Energy Policy. The Obama administration’s Bureau of Industry and Security released guidance today regarding the types of petroleum that are allowed to be shipped under the current oil-export ban. By clarifying the specific processing methods required for the light-oil called condensate, the agency eliminated much uncertainty about the kind of petroleum that can be legally exported. Reuters

Energy Policy.  Long-term U.S. energy policies based on the assumption of high gas prices are proving less effective in persuading Americans to find alternatives amid the recent slump in the gasoline prices. Policies such as mandates for fuel-economy improvements and incentives for electric cars and hybrids have been most impacted by consumers’ recently weakened “appetite for alternatives”. WSJ

LNG. Reuters reports that construction on a planned liquefied natural gas (LNG) export terminal has been put on hold due to the recent slump in oil prices. The Texas project — which hoped to take advantage of soaring Asian demand for LNG amid high oil prices — was determined uncompetitive due to the Asian market-price linkage between oil and natural gas. Reuters

Oil.  Amrita Sen of the Financial Times argues that OPEC’s decision not to cut its oil production does not indicate that the oil giant has lost control of the market, but rather that it is choosing to let market forces “shake out” high-cost producers. Sen asserts that because more than one-third of global oil production is uneconomic at today’s prices, OPEC has taught the oil market to be more careful with high-cost projects based on the illusion of stable prices.  FT

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