Energy and Environment News

Energy and Environment News

January 22, 2015

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Climate Change.  The Senate voted yesterday on three nonbinding amendments addressing the scientific consensus of climate change, and rejected the most politically contentious amendment stating that climate change is real and that human activity significantly contributes to it.  While the amendments have no chance of becoming law in light of a veto threat from President Obama, the votes nevertheless contributed to a strategy by Democrats to put Republicans on record about an issue that divides the party.  WSJ

Oil.  Anna Mikulska and Jim Krane warn against making long-term energy-related decisions based on recent falling oil prices, which are likely a short-term phenomenon.  They cite three specific examples where consumers and policymakers appear to be reacting to low oil prices: (1) recent spikes in low fuel-economy, large-model car sales (2) proposed legislation involving a hike in gasoline prices; and (3) popular sentiments that Keystone XL pipeline is no longer necessary.  Forbes

Climate Change.  Given that the Obama administration is expected to make its final emissions-cutting targets for the power industry this summer, two charitable groups – the Bloomberg Philanthropies and the Heising-Simons Foundation – are donating $48 million over the next three years to help states reduce emissions from electricity production.  The money will likely provide technical assistance, including economic forecasting and legal analysis, to roughly twelve states that have demonstrated interest in ambitious clean-energy plans.  NY Times

Energy and Environment News

Energy and Environment News

January 21, 2015

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Energy Outlook.   Maria Van Der Hoeven, executive director of the International Energy Agency (IEA), warned that low oil prices may deter investment in all types of energy projects and lead to supply shortages in the next decade.  The IEA’s latest analysis indicates that in 2015, oil investments will fall by 15 percent – or $100 billion –  from 2014 levels.  Bloomberg

Keystone XL.  The Senate approved an amendment to the Keystone XL pipeline bill aimed at improving energy efficiency in buildings with a 91 to 5 vote yesterday.  The amendment aims to make it easier for consumers to buy “smart-metered” water heaters and reduce the production costs for energy-efficient cooling and heating systems.  While these amendment measures have broad bipartisan support and are backed by President Obama, he will most likely still veto the bill.  NY Times

Energy Outlook.  Eduardo Porter of the New York Times asserts that U.S. industrial policies from nearly four decades ago are largely responsible for the supply glut at the root of the current plunge in world oil prices.  Porter argues that this serves as a valuable lesson for legislators looking to craft policies to reduce carbon emissions and mitigate the effects of climate change — specifically, that collaboration between government and business coupled with public investments in technology innovation have a strong record of success in the energy industry.  NY Times

Oil.  Global demand for oil remains subdued despite depressed prices largely due to tepid growth, the removal of government subsidies in countries such as India, and a stronger U.S. dollar.  Additionally, analysts note that structural shifts such as lifestyle changes and fuel efficiency standards have reduced consumption patterns for the longer-term, suggesting that the current oil-market slump is unlikely to be “fixed” by demand growth.  FT

Energy and Environment News

Energy and Environment News

January 20, 2015

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Oil.  Major international oil firms have shown interest in the initial phase of a bidding round for exploratory oil and gas blocks in the shallow waters of the Gulf of Mexico that are likely to be assigned mid-year by the Mexican government.  This shallow-water phase of the bidding round has not been affected by the recent plunge in oil prices because the production costs are modest.  WSJ

Oil.  While falling oil prices may negatively impact energy producers, the steep declines of recent weeks have delivered substantial benefits to American working-class families and retirees.  The federal Energy Information Administration estimated last week that the typical American household would save $750 because of lower gasoline prices this year, and families that depend on home heating oil and propane should enjoy an additional $750 in savings this winter.  NY Times

Energy Policy.  Given building pressure to make a conclusive decision about the Keystone XL pipeline, the Financial Times lists “Energy and environment” as one of the top issues to watch for tonight in President Obama’s State of the Union Address.  Although the President has been increasingly vocal in his skepticism about its merits in recent weeks, FT predicts that he will focus more on defending other measures he has taken to address climate change during his time in office, including a plan to curb emissions from coal-fired power stations, a landmark accord with China, and, more recently, proposals to control methane emissions from fracking sites.  FT

Energy and Environment News

Energy and Environment News

January 16, 2015

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Oil.  Oil prices posted a rare rally today amid their six-month collapse, as the U.S. benchmark rose 76 cents, or 1.8%, to $47.01 a barrel.  In a sign that OPEC’s strategy to defend its market share may be working, the International Energy Agency (IEA) also reduced its forecast for the increase in non-OPEC oil supply this year by 350,000 barrels a day.  WSJ

Energy Policy.  Lobbyists have pressured Congress and the Obama administration for years to lift the decades-old ban on oil exports; however, now that a bill is finally being debated, industry officials are urging lawmakers to wait instead.  The issue is arising because the Keystone XL pipeline is also under debate in the Senate, and many oil companies would rather capitalize on this rare opportunity with Republican majorities in Congress, leaving the export ban for a later date.  WSJ

Climate Change.  The average global temperature in 2014 was the warmest recorded on a global temperature record dating back to 1880, scientists reported today.  Notably, the 2014 record was the first incidence of a new heat record without an El Niño weather pattern, suggesting that average global temperatures are likely to be much higher than this record the next time a strong El Niño occurs.  NY Times

Oil.  Ruchir Sharma, an emerging markets investment manager at Morgan Stanley, argues that a $50 barrel of oil is “normal” according to its inflation-adjusted 100-year trend. Sharma notes that commodity prices tend to move in “supercycles” where prices surge and then normalize along their long-term historical trend, and explains the current situation as a rebalancing of supply and demand after the latest oil-price surge when China emerged as an industrialized economy in the middle of the 1990s.  Bloomberg

Energy and Environment News

Energy and Environment News

January 15, 2015

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Oil.  OPEC issued its January monthly market report today, which both downgraded demand for its crude oil for 2015 and predicted slower oil-production growth in the United States.  The cartel’s economists say that demand for OPEC crude will be about 28.8 million barrels a day this year, 100,000 barrels a day less than they forecasted in December’s report.  NYT
 
Energy Policy.  
The Wall Street Journal argues for the abolition of the U.S. federal tax on gasoline, a major source of revenue for the Highway Trust Fund (HTF).  The Journal asserts that the federal government’s role in the Fund should be reduced and states allowed to decide how to fund transportation, particularly given that three-quarters of highway spending is already supplied by state and local governments, states can build highways and interstates more cheaply, the HTF has been historically misallocated, and federal HTF spending has far outpaced the gas-tax revenues generated to support it.  WSJ
 
Energy Outlook.
  Ed Crooks and Gregory Meyer examine the U.S. oil demand-response in light of the recent plunge in oil prices. The authors argue that while data from the last ten years indicates that long-term structural changes are working to reduce U.S. oil consumption, sustained low oil prices will increase the likelihood of higher demand moving forward.  FT