Energy and Environment News

Energy and Environment News

June 12, 2015

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Energy Policy.   The Wall Street Journal reports on the unintended speculative market for EPA credits under the renewable fuel program, a federal policy that awards credits to refiners and importers for mixing ethanol into gasoline.  Refineries that don’t blend ethanol are required to buy credits in order to meet quotas specified under the regulation — and many claim that the speculative market has made them “captive buyers in an artificial commodities market.”  WSJ

Oil.  Oil market data providers have acknowledged that the physical market for oil may be better balanced than data suggest, as production is likely lower than initially reported while demand is likely stronger.  New developments in drilling technology and behavior have made the market more adaptable to low prices, while statistical techniques tend to assume producers behave in more of a “business as usual” manner.  WSJ

Energy Policy.  Jude Clemente of Forbes asserts that New York’s statewide ban on hydraulic fracturing is unsustainable given that the state has a natural gas-dominant economy and tremendous untapped oil and gas resources.  Clemente argues that this is a national concern given that demand for natural gas is growing faster than all other major fuels — and New York uses 15% of the U.S. supply but accounts for just 1% of total population.  Forbes

Energy Outlook.  Industry analysts report that there has been a “perceptible shift” from stable term contracts for oil to spot purchases, or short-term deals, particularly among Asian refiners.   Specifically, refiners — who now have little concern that prices will suddenly surge — are seeking to boost profits by purchasing more in the spot market than under long-term contracts where prices are generally higher.  Bloomberg

Energy and Environment News

Energy and Environment News

June 10, 2015

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Climate Change.  The EPA took its first step today toward regulating carbon emissions from airlines as part of the Obama administration’s larger effort to tackle climate change.  In a draft scientific finding, the EPA concluded that carbon emission from airlines do in fact contribute to climate change, thereby laying the foundation for the agency to use rules currently being drafted by the United Nations as a template for domestic carbon regulations.  WSJ

Energy Policy.  China has announced a plan to undertake trial national park projects in nine of its provinces over the next three years — utilizing its natural spaces much as the United States did during its own industrial boom.  A Chinese national park system could benefit China in many of the same ways it has benefited the U.S. — protecting and managing the country’s ecologically rich areas, while simultaneously encouraging a sense of national pride and environmental education.  NY Times

Climate Change.  In the latest development regarding a wave of legal challenges to EPA climate change rules, a federal court dismissed a lawsuit yesterday from a coalition of the largest U.S. coal companies and 14 coal-producing states.  The lawsuit challenged the Environmental Protection Agency’s proposed rule to reduce greenhouse gas emissions from power plants; the plaintiffs charged that, if enacted, the rule could shut hundreds of plants, freeze construction of future plants, and slow coal production in the United States.  NY Times

Keybridge’s Wescott Explains OPEC Oil Price Dynamics

Keybridge’s Wescott Explains OPEC Oil Price Dynamics

In a presentation for SAFE — Securing America’s Future Energy — Dr. Robert F. Wescott presents an analytical framework for understanding OPEC’s oil pricing strategy.  For more information on Keybridge’s latest economic insights, please contact us at info@keybridgedc.com.

Related Documents: “Dr. Wescott Explains Oil Price Dynamics”

 

Energy and Environment News

Energy and Environment News

June 9, 2015

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Energy Outlook.  The Financial Times reports that the collapse in oil prices and subsequent austerity measures taken by oil producers could lead to an “industry shakeout,” as small- and medium-sized companies sitting on lower-cost oil and gas output in the U.S.  become targets for larger companies with lower leverage but relatively high-cost oil and gas output.  As many as one-third of independent producers could combine their assets to maximize access to unconventional oil sources; while some predict the development of “supermajors” similar to those emerging in the late 1990’s, the FT notes there are very few plausible mega-merger combinations in today’s market.  FT

Climate Change.  The Wall Street Journal reports on several climate-policy actions planned to be announced by the Obama administration in coming weeks, including separate regulations to cut carbon emissions from big trucks, airlines, oil and natural gas operations, and power plants.   The near-term timing of these rules will allow the Administration to oversee as much of the regulations’ implementation as possible before President Obama steps down from office, while also allowing for key progress on U.S. climate policy initiatives prior to the United Nations summit this December.  WSJ

Energy Outlook.  The crude oil price collapse is expected to reduce Canada’s long-term oil output growth by more than one million barrels per day, due mostly to major capital spending cuts among Canadian energy companies.  This production downgrade illustrates key differences between the Canadian and U.S. oil industries; while U.S. shale drillers are able to relatively quickly halt and ramp up production as prices move, Canadian production stems from oil sands projects that require substantial upfront investment and then run at full capacity for decades.  FT

Oil.  Oil prices rose today following EIA forecasts that U.S. shale-oil production will decline this summer.  Specifically, the EIA’s Drilling Productivity Report calls for oil production to fall by 91,000 barrels per day to 5.5 million barrels in July in the top seven shale regions, which accounted for 95% of domestic oil production growth and all domestic natural gas growth from 2011 – 2013.  EIAWSJ

Energy and Environment News

Energy and Environment News

June 8, 2015

Top Stories

Climate Change.  Leaders from the Group of Seven (G7) industrial powers set a new and ambitious target to phase out fossil fuel emissions within the twenty-first century, beginning with a reduction in greenhouse gas emissions of 40 – 70 percent of 2010 levels by 2050.  Although it remains unclear how the G7 leaders will meet these emission reduction goals, this target is the most precise and long-term pledge that has been made to date.  FT

Oil.  Heinz-Peter Bader of Reuters argues that OPEC’s decision not to cut production on Friday was “entirely predictable and the only practical option open to its members”.  Bader asserts that because both the shale revolution and permanent loss of global demand act as lasting supply-side shocks to the market, OPEC’s only sustainable approach moving forward is to continue pumping oil and allow the market to adjust on its own.  Reuters

Energy Policy.  In a testimony before Congress on the regional implications of a nuclear deal with Iran, Brookings Executive Vice President Martin Indyk asserts that possible negative repercussions are not sufficient to justify opposing the deal altogether. Specifically, Indyk argues that the deal is not likely to trigger a nuclear arms race, but will rather remove a primary source of tension in the region and give the United States a ten-to-fifteen year window to develop a more robust strategy to promote regional security.  Brookings

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