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Energy Voices: Insights on the future of fuel and power

Monitor staff and guest contributors offer a mix of news, analysis, and commentary on energy and resource issues emerging across the globe.

A man walks under a Nissan logo at the company's showroom in Yokohama, south of Tokyo. The latest car sales figures show that Nissan sold 2,236 Leafs in March 2013, a 286 percent increase over a year ago. (Toru Hanai/Reuters/File)

Nissan Leaf sales soar in record month for plug-in cars

By Correspondent / 04.02.13

Sales of the Nissan Leaf roared to life in March, breaking the record for sales of electric vehicles in a month that may turn out to be the industry's best yet.

"[I]t’s looking like a record-breaking month for plug-in sales," wrote Genevieve Cullen, vice president of the Electric Drive Transportation Association, a Washington-based advocacy group, in an e-mail. "The numbers show a growing, robustly competitive market, in part because of the increasing number of options that manufacturers are offering."

It's a notable jump for electric vehicles, but less significant in the broader automotive market.

Last month, Nissan sold 2,236 Leafs, a 286 percent increase over March 2012. To put that in perspective, analysts estimate total March 2013 car and truck sales reached nearly 1.5 million. 

"To sell a couple thousand in a month, it’s a drop in the bucket," said Cosmin Laslau, an analyst at Lux Research, a Boston-based research and advisory firm. "I don't mean to dismiss it entirely, but the bigger question is: How do you get that number from 2,000 to 200,000?"

One way to do it is to lower prices – a strategy that seems to be working for Nissan. Electric car batteries are expensive and the company has moved manufacturing plants to the US in an effort to make the Leaf cost-competitive. The March sales numbers reflect the first full sales month for the new, lower-priced Nissan Leaf 2013.  ( Continue… )

A member of ExxonMobil's cleanup crew is reflected in water and oil in a drainage ditch in Mayflower, Ark., Monday. The Exxon Mobil spill is likely to stay on the minds of those attending an April 18 meeting in Nebraska on the planned Keystone XL oil pipeline. (Courtney Spradlin/Log Cabin Democrat/AP)

What does the ExxonMobil spill mean for the Keystone XL pipeline?

By Daniel J. GraeberGuest blogger / 04.02.13

Exxon Mobil dispatched more than 100 responders to a community in Arkansas to address a release from its Pegasus pipeline system. So far, the company said it has managed to recover thousands of barrels of heavy Canadian crude oil and water from last week's spill. Though no major waterways were said to be polluted from the spill, the Environmental Protection Agency categorized the incident as a major release. The accident comes roughly two weeks before U.S. State Department officials head to Nebraska to vet public comments on the Keystone XL oil pipeline. Critics of the project, however, got in line early following the Arkansas spill.

In its latest update, Exxon said it had 15 vacuum trucks, 33 storage tanks and 120 employees in Mayflower, Ark., responding to a release from the Pegasus pipeline system. The company said around 12,000 barrels of oil and water were recovered, boom was deployed and a claims hotline was already established. In response to the incident, the company said nearly two dozen homes were evacuated, though no oil has managed to migrate to nearby Lake Conway.

Late last month, U.S. pipeline safety regulators recommended Exxon pay a $1.7 million fine for a 2011 spill from its Silvertip pipeline into the Yellowstone River in Montana. About 1,500 barrels of crude oil spilled from that release, which was said to be tied to river scour. The government said in that case that Exxon (NYSE: XOM) didn’t take seasonal flooding, erosion and river scour into Silvertip safety considerations. No cause was indicated yet for the Arkansas release.  (Relative article: Keystone XL – Why Protestors Should be Focusing on a Much Bigger Issue( Continue… )

A customer takes a photo of an unfinished Tesla Model S during a tour at the Tesla factory in Fremont, Calif. Tesla Motors expected to sell 4,500 Model S cars in the first quarter of 2013 but the company announced it sold 4,750 units. (James Fassinger/Reuters/File)

Tesla Motors expects first profit; Fisker Automotive eyes bankruptcy

By Correspondent / 04.01.13

Tesla Motors announced late Sunday it expects to report a profit for the first time in the electric carmaker's 10-year history. Meanwhile, Fisker Automotive, its main competitor, may be careening toward bankruptcy. 

The contrasting narratives are not unusual in an electric car industry marked by highs and lows. Fisker shut down production of its plug-in hybrid Karma last November after its battery manufacturer declared bankruptcy. It has struggled, and failed, to restart production of the luxury sedan ever since. 

Tesla is no stranger to hiccups either. A calamitous February test drive by a New York Times reporter created a public relations headache. The ensuing spat between Tesla and the Times raised questions over the ability of the Model S battery to perform in cold weather – a sensitive topic for an industry that has worked to assuage public concerns about the battery range of electric cars.

But Tesla rolled with the punches and has suffered fewer blows than its rival. It expected to sell 4,500 Model S cars in the first quarter of 2013, but the company announced late Sunday it sold 4,750 units. Shares of Tesla stock shot up 16 percent in trading Monday. The success is a departure from the last three months of 2012 when the company reported a $75 million loss.  ( Continue… )

The French oil giant Total SA headquarters is seen at La Defense business district, west of Paris. Total's divestiture from an oil sands project raises questions about the long-term viability of Canadian oil sands investments, Alic writes. (Jacques Brinon/AP/File)

Oil supermajor drops out of Canadian tar sands project

By Jen AlicGuest blogger / 04.01.13

France’s Total SA (NYSE: TOT) will sell its 49% stake in its Canadian oil sands project to Suncor Energy Inc. for $500 million, netting the French oil giant a $1.65 billion loss on the beleaguered project.

Total would have had to spend another $5 billion (at least) on the Alberta oil sands Voyageur Upgrader project over the next five years—an investment that cannot be justified according to its executives.

The project is beleaguered by increasing labor costs, a shortage of labor and the falling prices of Canadian heavy crude against rising US oil production. Profit margins have narrowed to the extent that the project is no longer economically feasible.

The sale to Canada’s Suncor (NYSE: SU)—from which Total purchased the project in 2010--and the resulting loss hasn’t affected Total shares to any significant extent as of the time of writing. These net losses won’t be reflected until Total releases its first quarter 2013 results.  ( Continue… )

The Pioneer oil refinery is silhouetted against the setting sun in El Dorado, Kan. The loss of a subsidy from cheap fossil fuels is a significant part of what moves us toward financial collapse, Tverberg writes. (Charlie Riedel/AP/File)

How high oil prices lead to financial collapse

By Gail TverbergGuest blogger / 03.30.13

Resource limits are invisible, so most people don’t realize that we could possibility be approaching them. In fact, my analysis indicates resource limits are really financial limits, and in fact, we seem to be approaching those limits right now.

Many analysts discussing resource limits are talking about a very different concern than I am talking about. Many from the “peak oil” community say that what we should worry about is a decline in world oil supply. In my view, the danger is quite different: The real danger is financial collapse, coming much earlier than a decline in oil supply. This collapse is related to high oil price, and also to higher costs for other resources as we approach limits (for example, desalination of water where water supply is a problem, and higher natural gas prices in much of the world).

The financial collapse is related to Energy Return on Energy Invested (EROEI) that is already too low. I don’t see any particular EROEI target as being a threshold–the calculations for individual energy sources are not on a system-wide basis, so are not always helpful. The issue is not precisely low EROEI. Instead, the issue is the loss of  cheap fossil fuel energy to subsidize the rest of society.

If an energy source, such as oil back when the cost was $20 or $30 barrel, can produce a large amount of energy in the form it is needed with low inputs, it is likely to be a very profitable endeavor. Governments can tax it heavily (with severance taxes, royalties, rental for drilling rights, and other fees that are not necessarily called taxes). In many oil exporting countries, these oil-based revenues provide a large share of government revenues. The availability of cheap energy also allows inexpensive roads, bridges, pipelines, and schools to be built.  ( Continue… )

A drilling rig is set up near a barn in Springville, Pa., to tap gas from the giant Marcellus Shale gas field. It’s up to us as engaged citizens to ensure that the powers-that-be fully hold accountable those who participate in fracking activities, Stuebi writes. (Alex Brandon/AP/File)

Where do you stand on fracking?

By Richard T. StuebiGuest blogger / 03.29.13

In the energy sector, there are few topics that generate more debate today than the relative merits/demerits of fracking.  To see just how strongly-held yet evenly-divided opinion is, check out this online debate moderated by The Economist and sponsored by Statoil (NYSE: STO).

The question is framed simply:  “Do the benefits derived from shale gas outweigh the drawbacks of fracking?”  Writing in defense of the “pro” position was Amy Myers Jaffe, the Executive Director for Energy and Sustainability at the Graduate School of Management at the University of California Davis.  Writing in opposition was Michael Brune, the Executive Director of the Sierra Club.

The final tally of the debate:  51% voted “No”, while 49% voted “Yes”.

Honestly, I lean more towards the “Yes” side of the ledger.  While fracking raises significant concerns, I believe that they can be managed — though it’s up to us as engaged citizens to ensure that the powers-that-be fully hold accountable those who participate in fracking activities to the highest standards.  ( Continue… )

Gasoline drips off a nozzle during refueling at a gas station in Altadena, Calif. A new rule from the EPA would reduce the amount of sulfur allowed in gasoline from 30 parts per million to 10 parts per million in 2017. (Mario Anzuoni/Reuters/File)

EPA further limits sulfur. Will higher gas prices follow?

By Correspondent / 03.29.13

The federal government proposed new standards Friday that further limit the amount of sulfur in gasoline. Compared with previous reductions, Friday's proposal is slight. But many say it's enough to increase the price Americans pay at the pump.

"New requirements, new regulations are going to drive prices up," said Patrick DeHaan, senior petroleum analyst at GasBuddy.com, a gas price analysis website. "This isn’t the biggest change but it will cost motorists." 

The jump could be as high as 9 cents in some places, according to the American Petroleum Institute (API), a trade association for the oil and gas industry. 

"Consumers care about the price of fuel, and our government should not be adding unnecessary regulations that raise manufacturing costs, especially when there are no proven environmental benefits," Bob Greco, director of API's downstream group, said in a statement Friday. "We should not pile on new regulations when existing regulations are working.”   ( Continue… )

A sign marks the location of an oil pipeline in Irasburg, Vt. Expanding oil production from North America may be too much for pipelines to handle and suppliers will need to look to more-expensive rail to get their oil to markets, Graeber writes. (Toby Talbot/AP/File)

Pipelines can't keep up with North American oil boom

By Daniel J. GraeberGuest blogger / 03.29.13

The production of oil from Western Canada is expanding to the point that existing pipeline capacity is overwhelmed. Canadian pipeline company Enbridge aims to get its Northern Gateway project built for exports from Canada's west coast. TransCanada, meanwhile, anticipates crude oil deliveries will expand from Canada to southern U.S. refineries by way of the Keystone XL pipeline. Expanding oil production from North America, however, may be too much for pipelines to handle and suppliers will need to look to more-expensive rail to get their oil to markets.

New York-based brokerage company ITG estimates that Western Canadian oil production should by 2025 reach 5.7 million barrels per day. The Bakken formation in North Dakota, meanwhile, is producing record-levels of oil, hitting the 770,000 bpd mark on average for December. Production there has doubled between 2010 and 2012 and the state is behind only Texas in terms of oil. ITG says that Canadian oil developments alone should double by the middle half of the next decade and oil sands should about for the bulk of the overall growth. (Related article: Go to the Source - How to profit from Gazprom’s Crumbling Hegemony)

The Association of American Railroads states that nearly a quarter of a million carloads of crude oil traveled on the U.S. rail system in 2012. For the week ending March 16, AAR said deliveries by rail of petroleum products in the United States was up 58.3 percent when compared to the same week in 2012. That’s because, in the United States, there's not enough pipeline capacity to get oil to refineries. In part to accommodate the boom, the state just recently broke ground on a new 20,000 bpd refinery, which should take less than two years to complete. (Related article: Why the High Oil Prices if Supplies Really are Abundant?)

A U.S. State Department draft review of the planned Keystone XL found that rail deliveries should be able to "transport all incremental Western Canadian and Bakken crude oil production to markets if there were no additional pipeline projects approved." AAR, for its part, said it expects crude oil deliveries to pass 600,000 bpd yet this year. While historically rail transport is more expensive, it takes a train about 90 hours round trip from Bakken to the southern U.S. coast versus 40 days by pipeline.  ( Continue… )

A chimney in an industrial area of Sydney emits vapor. Eliminating energy subsidies would ease budgetary pressures on cash-strapped governments and slow global carbon emissions, according to a new report from the IMF. (Tim Wimborne/Reuters/File)

IMF: End energy subsidies

By Correspondent / 03.28.13

The world spent $1.9 trillion in energy subsidies in 2011. It was not money well spent, according to the International Monetary Fund (IMF).

The subsidies reinforce inequality by disproportionately benefiting the wealthiest, largest consumers of energy, according to a report released Wednesday by the global economic organization. Eliminating them would ease budgetary pressures on cash-strapped governments and slow global carbon emissions, the report finds.

"Subsidies cause overconsumption of petroleum products, coal, and natural gas, and reduce incentives for investment in energy efficiency and renewable energy," the report reads. "This over-consumption in turn aggravates global warming and worsens local pollution."

Eliminating energy tax subsidies worldwide would reduce carbon dioxide emissions by 4-1/2 billion tons – a 13 percent reduction, the IMF study found. ( Continue… )

A sun-bleached road leads into Florida's vast sugar cane country. Scientists are trying to tap into the large amounts of heat soaked up by roads. (Patrik Jonsson/Staff)

Roads soak up the sun. Could we use that energy?

By Joao PeixeGuest blogger / 03.27.13

Roads soak up a lot of heat energy from the sun. During the summer it can often be unbearable to walk along the road in sunny areas as the heat radiating upwards can lend a stifling quality to the atmosphere.

Scientists at the Worcester Polytechnic Institute in Massachusetts have decided to develop a system that can put this heat energy to good use. By using special piping technology they can turn effectively turn the streets into giant solar energy collectors.

The idea is quite similar really. Water is pumped through pipes that are buried a few centimetres below the surface of the road. The heat absorbed by the asphalt then warms the water, which can then be used further up along the pipe to generate electricity. The transfer of the heat energy from the road to the water also helps to cool the road surface and prolong the lifespan of the asphalt. (Related article: Study Finds Libya has More Solar Resources than Oil)

Rajib Mallick, the associate professor leading the team of researchers, said that their “preliminary results provide a promising proof of concept for what could be a very important future source of renewable energy.”  ( Continue… )

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