China has edged out the US as the world's biggest oil importer.
The shift reaffirms China's ballooning growth and middle-class demand for cars and other amenities. Meanwhile, the US has slogged through five years of post-recession economic malaise. Americans are driving and buying less than before.
That's only half the story. The other half is one of American innovation in domestic energy conservation and resource extraction. A shale oil and gas boom has driven production to levels not seen in decades and efficiency standards have slashed household and vehicular consumption. The deployment of renewables and alternative fuels have contributed to a supply-demand balance that works very much in consumers' favor.
Suddenly, the US won't have to rely on foreign oil as much as it used to, and China will. That gives the US an economic and perhaps geopolitical advantage while China deepens its dependence on volatile, oil-rich countries in the Middle East. ( Continue… )
Clean energy advocates are almost universally guilty of a certain level of reverence for Germany—myself included. Often heard are declarations such as, “Of course we can transition to renewable energy in the U.S.—just look at the Germans!” or “Did you know solar energy costs half as much in Germany as it does in the U.S.?”
Well, I’m going to talk about Germany again, but this time the tagline is quite different: Germany is only expected to install 3.9 gigawatts of solar in 2013, down from 7.5 last year. That means we Americans might finally install more solar in a single year than the Germans.
This decrease is largely attributable to a fundamental shift in the value proposition of solar in Germany. Understanding this dynamic is important, as it provides perspective on perhaps the most contentious renewable energy topic in the U.S. today: net energy metering (NEM). Grist writer David Roberts’ explains the issue simply: net metering is a policy in place in just over 40 states where electric utilities provide credit to customers with solar PV systems for the full retail value of the electricity. If customers produce as much electricity as they consume, their bills “net out” to zero (or to the minimum monthly customer charges, where these apply). That means the customers aren’t paying for electricity, but it also means that they aren’t paying anything towards their utility’s fixed costs (such as existing generating assets that produce electricity when the sun isn’t shining, distribution lines, etc.). As more customers zero out or dramatically reduce their bills with net energy metering, these fixed costs are covered by fewer customers, raising rates. To most utilities, this doesn’t make much sense since solar customers still rely on the grid for much of their electricity demand.
THE GERMAN SOLAR MARKET: FIT FOR A CHANGE
To understand the connection between net energy metering and what’s going on right now in Germany, a little bit of history helps. In 2000, the German government launched a massive ratepayer-subsidized campaign to expand solar energy deployment—the solar feed-in tariff (FiT) program. FiTs subsidize generation from renewable energy technologies, making them affordable in the near term and enabling industry-wide growth. Since solar equipment costs were very high relative to retail electricity prices as recently as three years ago, the Germans set FiT levels well above the retail price of electricity in order for solar systems to make economic sense. This led to a flood of new investment, an unprecedented multi-year explosion in solar installations, and by consequence, large-scale reductions in PV equipment costs. ( Continue… )
Big Oil’s American Petroleum Institute (API) is taking on the ethanol mandate with a lawsuit challenging quota’s that the group says is not only bad policy but unrealistic.
In August, the Environmental Protection Agency (EPA) established the volume requirements and associated percentage standards that apply in calendar year 2013 for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel. These targets are set to steadily increase to an overall level of 36 billion gallons in 2022. (Related article: Corn Residue for Biofuels, Everyone’s On Board)
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The deadline to comply was extended to June 30, 2014, because the EPA was almost eight months late issuing the final volume requirements for 2013. ( Continue… )
Having exhausted carryover funds that kept it open during the government shutdown, the federal agency responsible for regulating the nation’s 100 commercial nuclear reactors began furloughing more than 90 percent of its staff Thursday.
There's no short-term threat to public safety, officials at the Nuclear Regulatory Commission and other analysts said. On-site inspectors will remain on the job and employees will be called out of furlough in the case of an emergency.
But non-emergency reactor licensing, emergency preparedness exercises, and inspection of nuclear materials are among the day-to-day operations put on hold amid the lapse in appropriations. The cutback significantly crimps the agency's ability to lend oversight and planning for a nuclear industry already troubled by cheap energy competitors and waning electricity demand.
"We are mindful of the impact the shutdown will have on the public, our licensees, our staff and contractors and others who count on us," NRC Chairman Allison Macfarlane wrote in a post announcing the furloughs on the agency's website Wednesday. ( Continue… )
Petronas, the state-owned Malaysian energy giant, is planning to invest $35 billion in the Canadian liquefied natural gas (LNG) industry. This figure—which includes the $5.5 billion acquisition of Calgary-based Progress Energy Resources last year—covers $11 billion for an LNG export plant in British Columbia (B.C.), $5 billion for a proposed TransCanada pipeline to transport natural gas from northeastern B.C. to the coast, and natural gas extraction and processing costs expected over the life of the project.
Malaysian Prime Minister Mohd Najib made the announcement Sunday during a joint press conference with Canadian Prime Minister Stephen Harper, saying “I'm pleased to confirm that Petronas will set up a plant with all facilities including a pipeline to the plant”; “I’m told that this is the largest direct foreign investment in Canada by any country.” Harper said that he views “Petronas investments very positively” and that “the Government of Canada is very excited by that possibility as are all those I’ve talked to in the energy sector.” (Related article: EIA Predicts U.S to be 2013’s Largest Petroleum Producer)
B.C. currently produces 1.1 trillion cubic feet (Tcf) of natural gas annually, with over fifty percent of that coming from unconventional resources. The provincial government wants to triple that, hoping to reach an annual production capacity of 3 Tcf by 2020; key to this development is the construction of LNG export terminals that can open up key Asian gas markets. A Canadian National Energy Board report found that the Horn River Basin, a shale deposit in northeastern British Columbia, holds unconventional natural gas reserves of 78 trillion cubic feet (just under one third of the estimated size of the Marcellus play), and was optimistic that continued exploration would reveal further reserves. ( Continue… )
The US is slowly chipping away at its trade deficit, which should create more jobs, more economic growth, less unemployment, and a smaller federal deficit.
And the boom in domestic energy production is a key factor behind that narrowing trade deficit
Over the past decade, oil and gas production has surged at vast shale formations in Texas, North Dakota, Pennsylvania, and elsewhere across the US. That has led to a rise in exports of petroleum products and a reduction in the amount of oil and gas the US imports from abroad.
It's one benefit of the domestic hydraulic fracturing and horizontal drilling revolution that has stirred passion on all sides of the debate over America's energy future. The costs are damage to local environments, critics say, and a continued reliance on a fuel that – albeit cleaner than coal – still emits significant quantities of heat-trapping gases into the atmosphere. Those are economic costs that don't necessarily show up in the short term, critics say, but are apparent in a changing climate's threat to resources and infrastructure.
If the boom continues, analysts believe it will continue to bolster the US economic outlook at home, as well as its geopolitical stance abroad. ( Continue… )
Instability in Libya and other parts of North Africa may be giving international investors the jitters. In August, U.S. energy explorer Apache Corp. said it had enough of the political upheaval in Egypt and sold a portion of its assets there to its Chinese counterpart, Sinopec. In neighboring Libya, Exxon and Royal Dutch Shell said they'd had enough of the unrest, though Italy's Eni and Spain's Repsol weren’t so squeamish. To the west, in Algeria, while BP and Statoil remained resilient, BG Group and ConocoPhillips said they'd take their business elsewhere. With much of the region in a static state of upheaval, Iran could be the unlikely winner of the post-Arab Spring energy prize.
Apache Corp. in August said it was handing over some of its oil and gas business in Egypt to Sinopec. One revolution and two years of political instability later and the U.S. energy explorer said it was focusing its efforts on North America, where business is booming. Though oil production is on the road to recovery in Libya, that may be too little too late for Exxon and Royal Dutch Shell, who said the national security situation in the post-revolutionary climate made it tough to justify the effort. Meanwhile, Norwegian major Statoil said it was resolved to continue work in Algeria despite the January attacks on the Ain Amenas natural facility. That attack was attributed to militants who spilled over from Libya, giving some of Statoil's European counterparts cause for concern.
Few of the companies, however, have given up hope. Apache said its gross production was about 213,000 barrels of oil and 900 million cubic feet per day in Egypt. Most of its operations there are in remote areas, meaning it's shielded from much of the political violence. Libya's oil minister said last week production should recover soon to its peak of 1.6 million bpd. In Algeria, the scenario is no different. Energy Minister Youcef Yousfi said oil and natural gas production should double within the next decade. (Related article: Iranian Crude may be Vital as Global Producers Fail to Meet Targets) ( Continue… )
Asian countries continue to line up for Canadian energy to which the United States is unable to commit. This week Japan's prime minister Shinzo Abe met with his Canadian counterpart Stephen Harper to discuss the potential for shipping liquefied natural gas (LNG) across the Pacific Ocean to Japan. Although no firm agreement was announced, Japanese newspapers speculated that the first Canadian exports might reach Japan as early as 2018 and no later than 2020.
This reflects, among other things, the greater difficulty that Canada has had in developing LNG export terminals. Low prices for gas from western Canada is another problem, and although there is reason to believe in a secular rise towards higher prices, U.S. producers are less affected by the current levels. On the other hand, as prices rise, there are fears in Canada of a typical bust-to-boom scenario; and for this, there is fear that Canada's gas producers are and will continue to be ill-prepared, not even able to take advantage of the anticipated boom. (Related article: Despite Shale, OPEC Still Matters)
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Nevertheless, India is also getting in line for Canadian oil as well as gas. India's High Commissioner Nirmal Verma was also in Ottawa this week to sign a nuclear cooperation agreement allowing uranium from Canada to be sold to India as reactor fuel. India seeks to triple in electricity production in the next decade, in part by building as many as a dozen new reactors. ( Continue… )
As tropical storm Karen barrels toward the Gulf coast Friday, oil and gas companies are evacuating nonessential personnel and scaling back production in a region that accounts for nearly a quarter of total US oil production.
Fear not, markets and motorists. Tropical storm Karen's relative small size combined with an increase in onshore production means any impact on US energy is likely to be minimal. The government shutdown's downward pressure on oil and gas prices will further temper any spikes we see from tropical storm Karen.
"Most tropical systems, when they make landfall, they destroy demand," says Tom Kloza, chief oil analyst for GasBuddy.com, a website that tracks retail gasoline prices, in a telephone interview. "You might have a run up if there’s a large system but ultimately over the next three to five days they create lower demand because it’s miserable, it's raining, and people move around less."
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US oil prices rose above $104 a barrel early Friday before settling to $103.80 late Friday morning. Prices had been falling over the week on concerns that a government shutdown would slow the economic recovery and reduce demand for gasoline and other petroleum products. Retail prices averaged $3.36 a gallon for regular unleaded gasoline in the US Friday, down six cents from a week ago, according to AAA, the national auto club based in Heathrow, Fla. ( Continue… )
The chief economist at the International Energy Agency said the Middle East will remain central to the international oil markets despite gains from North American shale. A slump in production from key North African producer Libya rattled the markets earlier this year, though OPEC's market report next week should reflect a modest recovery. Lawmakers in the United States, meanwhile, reviewed prospects for further oil gains by considering transboundary resources in the Gulf of Mexico. Though North American markets are pulling away from foreign market, the IEA said OPEC producers should still hold a key stake in a changing oil game.
U.S. lawmakers heard testimony this week from advocates and policymakers alike on an agreement that would facilitate oil and natural gas exploration along the maritime border in the Gulf of Mexico between the United States and Mexico. Sen. Lisa Murkowski, R-Alaska, ranking member of the Senate's energy committee, said the United States and Canada are "joined at the well" and the same relationship should exist with Mexico in order to guarantee North American energy security. Mexico, however, is struggling to realize its full potential because some of its fields are in decline. Nevertheless, the U.S. State Department's international energy chief, Carlos Pascual, said with billions of barrels of proven reserves at stake, a better relationship with Mexico would be a "win-win" situation. (Related article: Record Oil Outputs in Saudi Arabia Fail to Ease Shortage Anxiety)
The U.S. Energy Information Administration said domestic oil production should reach 8.4 million barrels per day by next year, which puts the United States in the same conversation as Saudi Arabia. OPEC, feeling the squeeze from a U.S. market demanding less and less of its oil, said it would examine North American prospects in its global assessment, due in November. For now, OPEC Secretary-General Abdalla el-Badri said he didn't think the 12-member cartel was in trouble. Libyan oil production is recovering and demand centers are shifting away from North America. Apart from a growing appetite from Asian economies, OPEC in its last monthly report said it expected Middle East oil demand would increase nearly 3.9 percent next year, the most of any other region. Demand from the Americas for next year increases by 0.4 percent by comparison. ( Continue… )