Oil

Breaking Down the US Energy Independence Discussion

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Few topics have received as much attention over the past year as the concept of an energy independent United States. In fact, energy independence featured prominently in the run-up to the US presidential election. But what does energy independence really mean?

In the US, energy can be broken down mainly into electrical power – which accounts for 63% of total US primary energy consumption – and liquid transportation fuels – which account for the remaining 37%. As reported earlier this year in Breaking Energy, the US is already effectively energy independent when it comes to power generation, so it is worth instead focusing on the transportation side of the equation, where the issue of importing energy is more relevant. Keep reading →

 /  Published December 14, 2012 at 12:15 PM

Drilling for Export Dollars

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It is an urban myth that if the oil industry drilled more, gasoline prices would decrease. The myth relies on the premise that as more oil supplies are introduced, market forces would take over and domestic prices would fall. But it turns out that increasing domestic production has virtually no effect on gasoline prices.

The US already increased production. According to the Energy Information Administration (EIA), US oil production reached 310,403,000 barrels per month in October 1970 that became the historic peak. Ever since that time, production changed course and it has been in a steady decline. By 2005, production sank more than 50 percent to approximately 150,000,000 barrels per month. The bottom was reached in September 2008 when production sank to 119,477,000 barrels per month. Since then, for the first time since the 1980’s, monthly production changed direction and it has been trending upward. Last July, the US touched a new record of 196,405,000 barrels per month, a production level the US has not witnessed for over a decade. Keep reading →

 /  Published December 14, 2012 at 8:30 AM

US Oil Prices Could Sink to $50

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US oil prices could sink to $50 a barrel at some point over the next two years, according to analysts at Bank of America Merrill Lynch.

But don’t expect a corresponding drop in gas prices.

Merrill analysts expect US oil prices to still average about $90 a barrel over the same time period. Global oil prices meanwhile, which more closely dictate the price of gasoline in the United States, are expected to remain high as growth in global oil supplies lags population growth and economic output.

Keep reading →

 /  Published December 12, 2012 at 2:40 PM

Military Leaders See Energy Diversity Protecting US National Security

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EA-6B Prowler from the Salty Dogs of Air Test and Evaluation Squadron 23 flies September 16, 2011 over Southern Maryland. The plane uses a biofuel blend of JP-5 aviation fuel and camelina oil.

Growing demand in huge emerging economies like China and India will drive up world oil prices no matter what the US does, so it’s crucial for the US to develop energy alternatives that will keep it from being hurt by those nations’ successes, says Adm. (Ret.) Dennis Blair, former director of national intelligence. Keep reading →

 /  Published December 11, 2012 at 8:30 AM

Oil Market Dynamics: Moving the Bakken Barrel

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The refineries along the US East Coast sit close to some of the globe’s largest energy demand centers, but face such high prices for the crude they process that many have struggled to make money. Many import crude oil from Africa and the Middle East, and have been cut off from cheaper supply recently surging out of the middle and west of North America by limits on transportation infrastructure.

Companies like Enbridge, which presented recently at the US Association for Energy Economics, are seeking solutions to a bottleneck that is preventing lower-priced crude from competing on global or even national markets. Much oil currently travels by rail, as we’ve noted on Breaking Energy before, and may increasingly go multi-modal, from pipelines into rail cars and vice versa as it wends its way to energy-hungry Eastern US and Eastern Canadian markets. Keep reading →

 /  Published December 10, 2012 at 10:30 AM

Supply Shift Prompts Energy Forecast Revisions

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For several years the focus of the energy sector has been on the supply side. A lingering economic recession has kept demand pressures from building across much of the sector – crude oil being an exception at times – and the notable surge in supply of natural gas and even domestically produced oil has turned analysis and forecasting to focus on the impacts of more supply.

That trend was in evidence at the US Association for Energy Economics summit in November in Austin, Texas, where panelists from companies including Williams, Enbridge and Ranger Midstream discussed the impact supply side revisions have had on their businesses. The significant opportunity to displace imported oil is highlighted by speakers here, noting the trend days before the release of an International Energy Agency report that forecast the US could become the single largest oil producer in the world. Keep reading →

 /  Published December 6, 2012 at 11:30 AM

One Fiscal Cliff Fix: Raise the Gas Tax

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As lawmakers race to negotiate a deal to avoid the fiscal cliff, some experts say one tax increase should be on the table: a gas tax hike. Currently at 18.4 cents a gallon, the federal gas tax is used primarily to build and repair roads, bridges and other transportation infrastructure. The tax raises about $32 billion a year. But that’s not enough. The government hands out about $50 billion a year to states and towns to help with road costs. The difference comes out of general funds or has to be borrowed. Meanwhile, the gas tax hasn’t been raised since 1993. “Establishing a sustainable resource base for transportation needs to be part of any grand bargain,” said Emil Frankel, a former transportation expert in the George W. Bush administration and now director of transportation policy at the Bipartisan Policy Center. “In the short run, raising the gas tax is the best way to do that.”

 /  Published November 29, 2012 at 9:15 AM

White House Urged to Form Cabinet-Level Energy Council

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Government agencies tasked with US energy policy are “like an orchestra without a conductor,” says former North Dakota Senator Bryan Dorgan, now part of a panel of experts urging the second Obama administration to change the way it approaches energy.

Dorgan, a Democrat, is part of a Bipartisan Policy Center (BPC) energy project that’s hammering out policy recommendations for the second Obama administration and the incoming Congress. The recommendations are due to be finished right after the inauguration. Keep reading →

 /  Published November 29, 2012 at 9:00 AM

Is it Time to Consider Exporting Crude Oil from the US?

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Exporting crude oil from the US has been a politically divisive issue given given the country’s significant level of import dependence, which has dramatically declined in recent years with the shale gas and tight oil production boom.

This domestic liquids production increase – which is primarily light and sweet – fetches higher prices on the international market than the lower quality grades many refineries along the Gulf Coast have been configured to process. This has led some industry watchers and analysts to suggest that it would make economic sense to export surplus crude and liquids while purchasing cheaper heavy oil from global markets that can be efficiently refined into gasoline and other finished products here in the US. Keep reading →

 /  Published November 28, 2012 at 9:00 AM

Natural Gas Research ‘Space Race’ Is On

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It has taken a couple of years for the energy industry to acknowledge a new reality: Natural gas availability is soaring in contravention of forecasting models that have been in use for decades, and the fuel is set to transform everything from power generation and transport to chemicals and even the trade deficit.

As old operating realities have been thrown out the window, as major oil players increasingly become natural gas companies, as billions of dollars of investment in proposed export terminals is argued over inside the sector and out, the strategic arm of this most strategic of industries is racing to catch up. Keep reading →

 /  Published November 20, 2012 at 11:45 AM
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