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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.

This March 2012 file photo shows President Barack Obama arriving at the TransCanada Stillwater Pipe Yard in Cushing, Okla. With the official decision on the proposed Keystone XL pipeline still up in the air, those with an interest in the planet’s well being are being sure to make their voices heard, according to Consumer Energy Report. (Pablo Martinez Monsivais/AP/File)

Pressure on Obama grows for Keystone XL decision

By CER News DeskGuest blogger / 12.03.12

With the 2012 presidential election behind him, President Barack Obama is under increasing pressure to make an official call on the Keystone XL project once and for all, even as protests around the country opposing the pipeline increase in their fervor.

Obama is facing pressure from all sides concerning the fate of the project, one that would see a pipeline stretch from Canada through the Midwestern United States in order to easily transport crude from Alberta’s oil sands to refineries in Texas.

On one side, politicians and other activists are pushing for approval of the $7 billion project, one that would ease domestic oil concerns while providing thousands of new jobs in an economy that is sorely lacking them. On the other side are environmentalists who are concerned about the damages caused by the extraction processes in the Canadian oil sands, making for a finished product that is called “dirty fuel” by those opposing the pipeline.

“The broader climate movement is absolutely looking at this administration’s Keystone XL decision as a really significant decision to signal that dirty fuels are not acceptable in the U.S.,” said Danielle Droitsch, a senior attorney with the Natural Resources Defense Council, a group that lobbies for ecological awareness in natural resource development.  ( Continue… )

A mixture of oil, diesel fuel, water and mud sprays as roughnecks wrestle pipe on a True Company oil drilling rig outside Watford, N.D., in this October 2012 file photo. If oil production remains relatively flat, Tverberg writes, additional tax increases will likely be needed later, as higher oil prices lead to more layoffs, and more need for government spending. (Jim Urquhart/Reuters/File)

Oil and the 'fiscal cliff'

By Gail TverbergGuest blogger / 12.01.12

The United States’ fiscal cliff is very much related to several changes we have been going through recently, and will likely continue to experience:

  1. High oil prices (more than triple their level ten years ago). High oil prices cause people to cut back on discretionary spending, leading to layoffs in discretionary industries and debt defaults. Governments get less revenue in taxes at the same time they need to increase spending for unemployment benefits, bailing out banks, and stimulus funds. Result: financial problems for governments of oil importing countries, including many Eurozone countries and the United States.
  2. More free trade with Asian countries starting about 2001, when China joined the World Trade Organization. This change sent many jobs to Asia, and also holds down wages in US industries that compete with companies using overseas labor.
  3. Lots of baby boomers becoming eligible for Medicare and Social Security, starting about 2011. This is a problem because taxes, in practice, need to cover the cost of  benefits on a cash flow basis, which is the way US handles its financial accounting. As a practical matter, this is the way the world economy works as well–the goods and services used today are created by today’s workers, with resources pulled out of the ground today. Carryovers in terms of goods are very limited–mostly a little grain.
  4. A health care industry that is able to charge fees that are increasingly out of line with the wages of common workers.

None of these issues looks likely to improve in the near future, suggesting that we are encountering a long-term problem that is only likely to get worse.

In this post, I provide charts showing that if the US funding problem is fixed through higher taxes on individuals (including proprietors), the needed fix would require additional taxes averaging approximately 15% of each person’s wages. If oil production remains relatively flat, as it has since 2005, additional tax increases even above this level will likely be needed later, as higher oil prices lead to more layoffs, and more need for government spending.  ( Continue… )

Fatih Birol, chief economist of the International Energy Agency, speaks to the press in Baghdad in this October file photo. In an interview with The Christian Science Monitor Wednesday, Dr. Birol said international energy efficiency policymaking has been an epic failure, despite recent accomplishments. (Hadi Mizban/AP/File)

Hidden factor behind brighter US energy outlook

By Correspondent / 11.30.12

The International Energy Agency made headlines in November when it published a report predicting the US would become the world's leading oil producer by 2020 and almost self-sufficient in energy by 2035. But there's a key part that's been largely overlooked, says Fatih Birol, chief economist at the IEA, in an interview with The Christian Science Monitor. Almost half of the US improvement will come through energy efficiency. Here are edited excerpts from the interview:

Question: The term “energy independence” is used frequently by policymakers, notably during the most recent US presidential campaign. How do you define the term?

Answer: When we look at the future, oil and gas import dependency is set to increase everywhere in the world except for one country, which is the United States. We expect that the US will be a net natural gas exporter very soon and oil import dependency will go down substantially. For example, the US was, until recently, importing a significant chunk of its oil from the Middle East, and we expect that very soon the US may not need to import any from the Middle East.

The giant steps the United States made in terms of self-sufficiency, or energy independence, is not only the result of the substantial growth in oil production, but also as a result of the recently introduced fuel-efficiency standards [for cars and light trucks]. And when we look at our numbers, we think about 55 percent of the success goes to the production growth and 45 percent on the consumption side, pushing demand down. So therefore, for reducing import dependency, you need to push to increase production as the US did, but government policies are also crucial.

Q: Is it plausible for a nation to aspire to be completely self-sufficient in energy? ( Continue… )

In this August 2011 file photo, Texas State Park police officer Thomas Bigham walks across the cracked lake bed of O.C. Fisher Lake in San Angelo, Texas. In an interview with Consumer Energy Report, the former president of Shell Oil says the issue of global warming should be approached as a waste management issue. (Tony Gutierrez/AP/File )

Former Shell Oil president: Global warming debate is over

By Robert RapierGuest blogger / 11.30.12

I, along with my editor Sam Avro, recently conducted a broad-ranging interview with John Hofmeister, former President of Shell Oil and currently the head of Citizens for Affordable Energy, a non-profit group whose aim is to promote sound U.S. energy security solutions for the nation. Previous interview with Mr. Hofmeister were:

A Difficult Decade Ahead For Oil Prices and Supplies

An Energy Plan for America

Surging Demand and Flat Production Equals High Oil Prices

In the current installment, he outlines his ideas for what would constitute a sound plan of attack on climate change.

Global Warming Debate is Settled — With a Twist

I began by asking Mr. Hofmeister whether he agreed that the debate on global warming is over. He responded that he is not a scientist or climatologist, but said that once a critical mass of public officials has determined that something is a problem, then the debate is effectively settled. He also agrees that humans create significant waste, and that if this waste is cleaned up, that would address the climate change issue:  ( Continue… )

Los Angeles Angels Mike Trout, right, prepares for his at-bat as a thermometer nears 120 degrees in this July 2012 file photo. A provisional statement by a UN agency warns Doha Climate Change Conference attendees that 2012 will be one of the hottest years on record. (LM Otero/AP/File)

UN: 2012 was one of the hottest years ever

By Correspondent / 11.29.12

2012 has earned a spot on a very uncool top ten list.

The year the Mayans predicted would be the world's last will go down in history as at least one of the hottest, according to a provisional statement released Wednesday by the UN's World Meteorological Organization.

"Climate change is taking place before our eyes and will continue to do so as a result of the concentrations of greenhouse gases in the atmosphere, which have risen constantly and again reached new records,” said WMO Secretary-General Michel Jarraud in the statement.

The year started out with lower-than-normal temperatures, thanks to La Niña's cooling affect, the WMO reported. When the meteorological phenomenon faded in April, rising sea surface temperatures swept across the tropical Pacific Ocean, allowing for the neutral-to-warm conditions that have persisted since. 

The warming waters have led to unprecedented melting of polar ice sheets. On Sept. 16, the Arctic ice level measured 3.41 million square kilometers – its lowest since the start of satellite records, according to the WMO. 

"The alarming rate of its melt this year highlighted the far-reaching changes taking place on Earth’s oceans and biosphere," Mr. Jarraud noted.

The WMO's statement was prepared as a resource for policymakers, scientists and activists meeting this week at the United Nations Climate Change Conference in Doha, Qatar.

It's at least the second ominous climate change report attendees have stomached in the conference's opening week. On Tuesday the UN's Environment Programme warned melting permafrost could spew gigatonnes of additional carbon dioxide into the Earth's atmosphere.

Whether or not the reports of rising temperatures will light a fire under negotiators' remains to be seen. Past global climate change conferences have been criticized for accomplishing little in terms of meaningful policy commitments, and many are skeptical that this year's meeting will be any different.

"Any progress this year will likely be decidedly small," wrote Kate Sheppard in Mother Jones on Thursday, "but that's okay, too, since setting the hurdles low might mean negotiators can actually clear them."

The logo of Mexican petroleum company Pemex is seen on a tank gas at gas station in Mexico City in this November 2012 file photo. The company recently announced the largest solid-ground crude oil discovery made in the country in the past 10 years, according to Consumer Energy Report. (Edgard Garrido/Reuters/File)

New source of Mexican oil could hold 1 billion barrels

By CER News DeskGuest blogger / 11.28.12

Petroleos Mexicanos (PEMEX), the fourth-largest oil producer in the world, has announced that it has discovered a crude oil deposit that could provide as much as 1 billion barrels by the time exploration and extraction is complete.

More than 500 million barrels are estimated to lie beneath the original well site, dubbed Navegante 1, at a depth of nearly 4 miles, with another 500 million barrels expected to lie in surrounding areas. PEMEX, a state-run oil firm, has already spent more than $10 billion in exploration efforts, culminating in this, the largest solid-ground crude discovery made in the country in the past 10 years. (Read More: How Much Oil is Left in the World?)

That same $10 billion has also gone towards offshore exploration, leading to two other major reserve discoveries in the Gulf of Mexico over the past few months; combined, these three new reserves promise to add nearly 30 billion barrels to world reserves. The offshore discoveries, made via PEMEX ultra-deep wells Trion-1 and Supremus-1, ended a drought for the firm that saw them come up short in the drilling of their last 22 wells, and the company’s perseverance was praised by Mexican president Felipe Calderon.

“PEMEX has steered itself toward investments in exploration, and it’s showing results,” said Calderon in an official statement.  ( Continue… )

In this November photo, items are seen in the rubble the morning after a natural gas explosion in Springfield, Mass. Such incidents are dramatic examples of spills, fires, explosions, and other pipeline incidents that usually do far less damage but happen with alarming frequency in the United States. (Dave Roback/The Republican/AP)

Unnatural disasters: What can be done about natural gas pipeline explosions?

By Correspondent / 11.27.12

A natural gas explosion in Springfield, Mass., injured more than 20 people and damaged 42 buildings.

The blast late last Friday blew out windows, scattered bricks for blocks, ripped through walls, and flattened some buildings altogether. Officials are still searching for the exact cause. But the debris-scattered, head-scratching aftermath of a natural gas explosion is not an unfamiliar scene.

An intentional gas leak is a prime suspect in a massive explosion that killed two and ruined homes in an Indianapolis neighborhood earlier this month. In October, a natural gas explosion destroyed a home in Castle Rock, Colo., and sent a family of five to the hospital.

These are dramatic examples of what the pipeline industry calls "significant pipeline incidents," which are usually lower-level accidents that nevertheless happen with alarming frequency. Every four days, the United States experiences three such incidents.  ( Continue… )

A man wearing a T-shirt bearing a flag of the Emirate of Cyrenaica (C) attends a protest demanding federal governance and a branch of the National Oil Corporation to be set up in the country's second-largest city, in Benghazi Monday. A variety of factors are combining to keep investors away from Libyan oil, according to Consumer Energy Report. (Esam Al-Fetori/Reuters)

Libya’s political unrest stifles oil investment

By CER News DeskGuest blogger / 11.27.12

Talks this week involving Libyan leaders and oil refining corporations that will see contracts worth about $50 billion given out in order to grow that country’s fossil fuel sector are set to begin with a whimper, as interest in Libya’s oil continues to decline among wary investors.

More than a year following the ouster of Muammar Gaddafi as leader of Libya, oil production has returned to pre-civil war levels, but a variety of factors are combining to keep investors away from the OPEC nation, a fact that is only contributing to the continued unrest of the country’s people.

Exemplified by the many protests and strikes that plague oil extraction and refineries around the region, the military air that remains in Libya can be found in the attitudes of many of its people, most of whom are still recovering from their own personal losses during the country’s civil war in 2011. (Read More: How National Security Planners Should View America’s Energy Boom)

All of that unrest has translated into investors who are very reluctant to bet their funds on the nation’s chances at sustaining and growing its oil production market, leaving the future of Libya’s oil up in the air.  ( Continue… )

A KIA Ray EV electric car is charged during the media preview of the 10th China International Automobile Exhibition in Guangzhou in this November 2012 file photo. Electric is just a better platform for vehicles, once the technology is perfected, Dikeman writes. (Tyrone Siu/Reuters/File)

Electric cars: niche technology or the auto industry's future?

By Neal DikemanGuest blogger / 11.26.12

Are electric cars a Niche?  Or just coming into their own?  I’ve been asked that question twice now in the last week in various forms, so thought I’d blog my answer.

Electric Drive Transportation Association has the total number of US sales at just under 400,000 this year, or 3.3% market share including hybrids.  Hybrids they have up 33% YTD compared to the whole of last year’s sales, and EVs/PHEVs up 375%.  But the EVs still make up only 10% of that total number.

In June The Street did a great article on EV sales forecasting line by line an estimate of 62,000 for the year, already at 18,000 at that point.

And while sales have been sluggish, they have been creeping up, with more and more and cheaper and better versions coming out in 2013 and 2014.

The price gap, somewhere between $8K and $25K, is closing.

Nissan just announced a cheaper and longer range Leaf version in Japan (yes it can be done, why didn’t you have the guts to do this last year Nissan?), Tesla’s 160-300 mi range Model S just started shipping and garnered the 2013 Motor Trend Car of the Year Award.  ( Continue… )

In this July 2011 file photo, Ben Shaw hangs from an oil derrick outside of Williston, N.D. Simple logic and prudent risk management suggests that we should already be making a rapid transition to renewable energy, Cobb writes. (Gregory Bull/AP/File)

How the myth of oil abundance impedes progress on climate change

By Kurt CobbGuest blogger / 11.26.12

The great fear among those working to address climate change is that the seemingly vast resources of fossil fuels waiting to be burned will send the world hurtling toward certain catastrophe. By invoking fossil fuel abundance, climate activists believe that their argument for a rapid transition to alternative energy is made more persuasive. But, it is poor strategy to reinforce the myth of fossil fuel abundance when doing so actually makes many people less open to such an argument. And, as it turns out, the abundance argument is also contrary to the available data, logic and prudent risk management principles.

Here is what I mean. First, despite all the hype about marginal gains in U.S. oil productionworld oil production has been on a plateau since 2005. Small gains in U.S. production have been offset by declining production in the rest of the world. The news for coal production is only slightly less discouraging as one study suggests that the rate of coal production worldwide could peak as early as 2025. In the United States, while coal tonnage has remained essentially flat from 1998 through 2011, energy content has actually declined. Has the available energy from U.S. coal production already peaked? We can't be sure. But the trend suggests caution. One recent study even concluded that world coal production from existing fields may have peaked last year. But, even if the authors are 10 years early, the prospects for creating a coal economy to follow the oil one are poor at best.

And finally, natural gas--much touted as a less polluting "bridge fuel" to a renewable energy future--may not be so plentiful as we are led to believe. Natural gas derived from deep shale deposits was first portrayed as so abundant that wells could simply be drilled anywhere in the vast shale basins of North America. But the record of drilling to date suggests that such deposits will yield far less than anticipated and be far more costly to develop.

Simple logic and prudent risk management suggests that we should already be making a rapid transition to renewable energy. No one--not the fossil fuel industry, not government, not private forecasters--can know for certain what our future supplies of fossil fuels will be. If those supplies are constrained as current trends and data suggest, then we will be forced to make an energy transition whether we want to or not. If fossil fuels turn out to be more abundant than current trends portend and we make a rapid transition to renewable energy starting now, the worst that can happen is that we will have completed that transition a little earlier than was absolutely necessary. But, if fossil fuel supplies begin to decline in the near future and we've made little additional progress on deploying new energy sources, we will surely be in for considerable economic and social pain, pain that might so severe as to challenge the very stability of our global system. That's how central fossil fuel energy is to our society.  ( Continue… )

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