US production of oil and natural gas liquids from shale rock formations shows promise, but do not mean an end for American exposure to global oil markets.
“We are going to be a net importer for a long time,” Energy Information Administration deputy administrator Howard Gruenspecht told Breaking Energy on the sidelines of the US Association for Energy Economics Conference (USAEE) in Washington, DC this week. Keep reading →
The energy landscape has changed so fast in the last five years that the national debate has shifted fundamentally, leaving experts struggling to figure where energy is headed.
A few new trends are clear: growing pessimism over the future of nuclear power due to cost and public acceptance after Fukushima, renewables closing in on parity with traditional fuels but still needing technology breakthroughs to become significant players, and cheap natural gas from shales transforming the landscape for everything. But questions about where the transformation is headed has revealed divisions and confusion among a number of the speakers attending the Oct. 10-12 conference of the US Association for Energy Economists in Washington DC. Keep reading →
Switching electric generation from coal to natural gas is the only way the US can meet carbon-reduction goals, says a new Deutsche Bank analysis.
Mark Fulton, managing director and global head of research for Deutsche Bank Climate Change Advisors, told the US Association of Energy Economists conference in Washington DC on October 11 that “renewables alone cannot do the job,” though the study indicates wind and solar will play important roles. The October 2011 report, titled “Natural Gas and Renewables: The Coal to Gas and Renewables Switch is on!” can be downloaded here. Keep reading →
Climate change solutions were battered by the recession and political shifts have pushed the issue to the sidelines of the US energy debate, while international climate talks remain mired in the same arguments that have derailed consensus for years.
That was the message from speakers at the US Association of Energy Economists conference October 11 in Washington, DC. In the US, they say the only climate-related action in the next few years will probably come from the Environmental Protection Agency, while internationally, there’s no sign of any progress for December’s UN Framework Convention on Climate Change meeting in Durban, South Africa. Keep reading →
Just spoke with @ANGAus about the #economic benefits of #natgas at #usaeedc MT @boonepickens US has more natgas than any country @petergardett
USAEE hears China, India taking steps to grow clean energy, but won’t admit it, insist global treaty means West must cut carbon first #usaeedc @energyrider6
This year, Breaking Energy is covering the USAEE conference in full force.
Hosted by the United States Association for Energy Economics, the conference is taking place in Washington DC this year from October 9 – 12. In this video, Breaking Energy Managing Editor Peter Gardett kicks of the conference with a video introduction. Read his in-depth analysis of the conference: Making The Numbers Sing In DC. Keep reading →
“Fair price” pronouncements by OPEC officials are ineffective at influencing crude oil market movements, according to research presented at the US Association of Energy Economics conference in Washington, DC on 10 October.
A study of “fair price” pronouncements by OPEC officials from March 2000 to late November 2010 suggests that they have little impact on nearby crude oil futures prices, according to a study presented by Michel Robe, associate professor at American University’s Kogad School of Business.
The study, co-authored by Robe, International Energy Agency’s Bahattin Buyuksahin, Celso Brunetti from Johns Hopkins University, and Kirsten Soneson from the CFTC, looked at whether statements by OPEC officials regarding a “fair price” for crude oil provided market information not already reflected by crude oil futures prices.
“If fair price pronouncements contain any news for non-Opec oil market participants — signals about physical market conditions…or signals about what a particular country or set of countries wants to do about output — then we should observe an impact on futures prices,” said Robe.
“We find that fair price pronouncements add little to pre-existing information and have little impact on the futures market price of crude oil,” Robe said.
The paper’s findings, if correct, call into question whether news agencies, market commentators and oil analysts should use fair price statements to provide insight into crude oil futures markets or indications of price direction, according to Robe.
He noted that during an oil price increase in 2008, when West Texas Intermediate (WTI) prices shot past $140 per barrel, market commentators attributed disparity between the market price and a lower “fair price” as stated by various Opec member countries to factors other than physical demand and supply.
“Implicit in those views is the idea that Opec-related fair price announcements have some information content that is not already reflected in market prices,” Robe said.
And since there is no definition of a “fair price” for oil, the quoted price is “the price that the Opec member would like to see prevail in the market”, rather than an objective assessment of a price that reflects a market equilibrium, said Robe.
Though the “fair price” study’s results suggest that Opec officials’ public statements regarding a fair oil price do not impact nearby futures prices, they do not indicate that Opec members have no other tools at their disposal. The study does not have any implications for other market signals, such as Opec’s regular public updates on production targets.
Such market signals are essential tools for countries like Saudi Arabia, Opec’s biggest oil producer and the world’s largest oil exporter, which uses them to try to guide oil prices to levels that can sustain both consumer demand and producer profits, according to King Saud University associate professor of economics Nourah AlYousef.
“A dominant supplier has a choice: it can achieve short-run profits by raising price at the expense of losing its dominance in the future, or it can charge a moderate price that supports its market share and generates high competitive profits over time,” according to Yousef’s research.
“If the supplier engages in the latter strategy, then it will try to lead the market by signaling the price it strives to maintain,” it said.
Saudi Arabia’s economy relies heavily on income from its oil sector, which accounted for 85% of the country’s revenues in 2009, she said. While a sharp rise in oil prices might boost revenues in the short term, a sustained elevated price can make alternatives to petroleum more competitive, and do longer-term damage to overall oil demand.
“To preserve the importance of oil in the global energy mix, Saudi Arabia has tried to moderate the price of oil and thereby continue the growth of demand,” said Yousef.
Photo Caption: (Left-Right) Nigeria’s head of delgation and OPEC Chairman Goni Musa Sheikh, Iran’s head of delegation OPEC President Mohammad Aliabadi and Secretary General of OPEC, Abdullah El-Badri from Libya open the 159th meeting of OPEC Conference in OPEC headquarters in Vienna on June 8, 2011.
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Increasing numbers of nuclear reactors are being kept off-line in Japan as local governments respond to public fears about safety in the wake of the Fukushima meltdowns.
Poten and Partners told a conference session of the US Association of Energy Economists October 10 that all but 10 of Japan’s 54 nuclear reactors are now off-line. Only 16 of those were affected by the March earthquake and tsunami, he said. Keep reading →
Room for bipartisan agreement on energy issues has narrowed drastically since the new Congress took office in January, but there are still a few areas where progress might be made, according to Robert Simon, majority staff director of the Senate Energy & Natural Resources Committee.
Bipartisan energy bills have been held “hostage,” he said – in 2009-10 by cap and trade advocates and now by budget hawks. And it’s not just energy – Simon noted the current Congress has passed just 69 bills since January, a fifth of the output of what President Harry Truman in 1947 dubbed “the do-nothing Congress.” Keep reading →
