Tags: Energy

Lower Oil and King Dollar Are Unambiguously Good


We all know that the American energy revolution, led by the new technologies of hydraulic fracturing and horizontal drilling, has created a flood of new shale-oil and natural-gas production that has overwhelmed world markets and driven prices down by roughly 40 percent. End-of-week crude oil closed near $57 a barrel, and the national average gasoline price finished at $2.60.

No matter what the naysayers are trying to sell, the new energy reality is unambiguously good for the U.S. and global economies. There may be some dislocations among countries, sectors, or companies, but the overwhelming impact is positive.

But there is another important angle to this story: Looming behind the falling price of oil is the return of King Dollar.

Read my full column here.

Tags: Energy , U.S. Dollar

Lower Oil Prices Are a Free-Market Victory


Seldom has so much good news been portrayed so negatively. Oil prices continue to fall in the U.S. and around the world, but near everyone in the media is grumpy about it. The headlines today are among the silliest I’ve seen: Energy-company stocks are declining, oil deflation is an economic threat, the Fed might raise rates much later than expected, OPEC is dissolving, shale companies are going bankrupt, Russia is going bankrupt(!), and on and on.

Well, most of this is just humbug. Lower oil prices are unambiguously positive.

Read my full column here.

Tags: The Economy , Energy

Lower Oil Prices Are Unambiguously Good


Steep stock market corrections often create shrouds of pessimism that do bad things to people’s brainpower. And one of the absolutely stupidest things I have heard in recent weeks is that the recent drop in oil prices is bad. You heard me right. Serious people on financial television are saying lower oil prices are a signal of worldwide economic collapse. Here at home that translates to recession, deflation, a profits collapse, and rising unemployment.

I’ve been around for a while, and I’ve seldom heard such gibberish. 

Read my full column here.

Tags: The Economy , Energy

Fracking Cuts Ohio Heat Costs


Ohioans are cranking up the heat this month as frigid weather sets in. On January 7, for example, Cleveland broke a cold-weather record that had stood since 1884. But natural gas is mitigating the high energy costs as the freeze continues, and residents are enjoying significant savings.

Columbia Gas of Ohio says that were it not for the fracking boom, Ohio residents would have had to pay up to 129 percent more for their heating this month, the Toledo Blade reports this weekend:

Columbia Gas of Ohio said this January’s average residential heating bill will be $142.19 to $146.19 for the 1.4 million households it serves, many of them in northwest Ohio. . . .

But what if the modern era of hydraulic fracturing — fracking — to drill for natural gas as we know it hadn’t occurred?

“They’d be paying more, and that’s obvious,” said Tom Stewart, executive vice president of the Ohio Oil and Gas Association.

Based on current usage patterns, applied to Columbia’s January, 2005, and 2006 rates for natural gas, this month’s average residential bills would likely have been somewhere between $234.15 and $324.95.

That’s 65 to 129 percent more.

Columbia’s price for natural gas is among the lowest it’s been in years, which industry experts attribute to a regional abundance of natural gas generated by the modern era of fracking.

Stewart also notes that because Ohio produces its own natural gas, prices have remained relatively steady despite the unseasonably cold weather.

While other states have been reluctant to embrace natural gas, Ohio has encouraged the industry’s development in recent years, the Columbus Dispatch reported yesterday:

State officials say they are committed to working with energy companies to increase shale drilling in Ohio. Gov. John Kasich predicted in 2010 that drilling would be a “godsend” for the state’s economy.

Shale drilling added the Buckeye State to a national energy revolution in which companies are tapping domestic sources of oil and gas. It also involved the public in an ongoing debate focused largely on the environmental and health effects of fracking and the waste that comes out of shale wells.

Since 2010, more than 660 wells have been drilled in Ohio, paving the way for pipelines, disposal wells for fracking waste and refineries.

— Jillian Kay Melchior is a Thomas L. Rhodes Fellow for the Franklin Center for Government and Public Integrity. She also writes about energy and environmental policy as a senior fellow for the Independent Women’s Forum.

Tags: Fracking , Energy

Canada Not Waiting For Obama’s Decision on Keystone XL


They’re just going to ship their oil from Alberta to the United States on trains instead. Via the New York Times:

Over the past two years, environmentalists have chained themselves to the White House fence and otherwise coalesced around stopping the Keystone XL pipeline as their top priority in the fight against global warming.

But even if President Obama rejects the pipeline, it might not matter much. Oil companies are already building rail terminals to deliver oil from western Canada to the United States, and even to Asia.

Since July, plans have been announced for three large loading terminals in western Canada with the combined capacity of 350,000 barrels a day — equivalent to roughly 40 percent of the capacity of the proposed Keystone XL pipeline that is designed to bring oil from western Alberta to refineries along the Gulf Coast.

Over all, Canada is poised to quadruple its rail-loading capacity over the next few years to as much as 900,000 barrels a day, up from 180,000 today.

The acceleration has come despite a derailment in the lakeside Quebec town of Lac-Megantic in July, in which a runaway oil train bound for a refinery in eastern Canada exploded, killing dozens of people and bankrupting the railway company. That accident and others more recently have renewed concerns about the safety of transporting oil by rail, and given an added argument to some who favor the Keystone XL pipeline.

“They don’t give up,” Jesse Prentice-Dunn, a Sierra Club policy analyst, said of the oil industry.

If all the new terminals are built, Canada will potentially increase its exports to the United States by more than 20 percent — even if Keystone XL is never built.

Shipping by rail can cost an additional $5 or more per barrel, but oil companies have decided that they cannot afford to wait.

“The indecision on Keystone XL really spawned innovation and mobilized alternatives, and rail is a clear part of the options available to our industry,” said Paul Reimer, senior vice president in charge of transport and marketing at Cenovus Energy, a Canadian oil company that is planning to increase rail shipments from 7,000 barrels a day to as many as 30,000 barrels a day by the end of 2014.

Good news: Now building Keystone XL will reduce carbon emissions by cutting down on train traffic.

The rest here.

Tags: Energy

Under Obama, Electricity Rates Are ‘Necessarily’ Skyrocketing


The Energy Information Administration has updated its numbers for the average retail price for electricity to ultimate customers.

For January 2012, the most recent month available, the average residential price was 11.43 cents per kilowatt hour, the average commercial price was 9.88 cents per kilowatt hour, and the average industrial price was 6.5 cents per kilowatt hour. The EIA noted that unseasonably warm weather reduced sales of electricity in many states.

The 2011 average price was 11.8 cents per hour for residential use, 10.32 cents for commercial, 6.89 for industrial. That set a record for the highest annual average for residential use electricity.

Rates have increased steadily in the past five to six years, even during the lengthy recession and a time of sluggish economic growth at best. Back in 2005, the average price was 9.45 cents per hour for residential use, 8.67 cents for commercial, 5.73 for industrial. That set a record for the highest annual average for residential use electricity. These price increases have come while demand has grown quite slowly; the EIA reports that from 2000 to 2009, increases in electricity demand averaged 0.5 percent per year.

USA Today noted in December: “Electric bills have skyrocketed in the last five years, a sharp reversal from a quarter-century when Americans enjoyed stable power bills even as they used more electricity. Households paid a record $1,419 on average for electricity in 2010, the fifth consecutive yearly increase above the inflation rate, a USA TODAY analysis of government data found. The jump has added about $300 a year to what households pay for electricity. That’s the largest sustained increase since a run-up in electricity prices during the 1970s.”

If only someone had warned us that under Obama’s policies, electricity rates would necessarily skyrocket… wait, someone did!

Barack Obama warned us under his plans, “electricity rates will necessary skyrocket…. Coal-powered plants, natural gas plants, you name it, whatever the plants were, whatever the industry was, they would have to retrofit their operations, that will cost money, that they will pass that money on to consumers.”

One can only imagine what prices will be when the EPA’s new “effective ban” on coal plants takes effect

Tags: Barack Obama , Energy

President ‘All of the Above’ Bans New Coal Power Plants


President Obama, fresh off touting his “All of the Above Energy Plan,” is instituting a ban on new power plants that use coal.

The Environmental Protection Agency will issue the first limits on greenhouse gas emissions from new power plants as early as Tuesday, according to several people briefed on the proposal. The move could end the construction of conventional coal-fired facilities in the United States.

The proposed rule — years in the making and approved by the White House after months of review — will require any new power plant to emit no more than 1,000 pounds of carbon dioxide per megawatt of electricity produced. The average U.S. natural gas plant, which emits 800 to 850 pounds of CO2 per megawatt, meets that standard; coal plants emit an average of 1,768 pounds of carbon dioxide per megawatt.

Industry officials and environmentalists said in interviews that the rule, which comes on the heels of tough new requirements that the Obama administration imposed on mercury emissions and cross-state pollution from utilities within the past year, dooms any proposal to build a coal-fired plant that does not have costly carbon controls.

“This standard effectively bans new coal plants,” said Joseph Stanko, who heads government relations at the law firm Hunton and Williams and represents several utility companies. “So I don’t see how that is an ‘all of the above’ energy policy.”

Then again, Joe Biden warned us: “No coal plants here in America.”

Come to think of it, back in 2008, Barack Obama warned us under his plans, “electricity rates will necessary skyrocket…. Coal-powered plants, natural gas plants, you name it, whatever the plants were, whatever the industry was, they would have to retrofit their operations, that will cost money, that they will pass that money on to consumers.”

So President Obama supports “all of the above” except building the Keystone Pipeline to Canada, drilling in the Gulf at the normal pace, drilling off the East, West, or Eastern Gulf Coasts, drilling in ANWR, building new oil refineries, and perhaps fracking.

Tags: Barack Obama , Energy

Energy Production on Federal Lands Declining Under Obama


Darn that Energy Information Administration. They keep putting out data that conflicts with Obama’s boasts.

The latest EIA report:

Production and sales of fossil fuels from Federal and Indian lands can be influenced by a variety of factors, including, but not limited to, Federal leasing and regulatory policies. Total sales of all fossil fuels produced on Federal and Indian lands, which are measured in terms of British thermal units (Btu) to allow for aggregation across all fossil fuels, rose by about 1 percent between fiscal year FY 2009 and FY 2010 and dropped by about 6 percent between FY 2010 and FY 2011 (Table 1).

Crude-oil production? Down from 739 million barrels to 646 million barrels in FY 2011.

Natural-gas production? Down from 5,415 billion cubic feet (Bcf) to 4,859 billion cubic feet (Bcf) in FY 2011.

Natural-gas plant liquids? Down from 115 million barrels to 111 million barrels in FY 2011

Coal production? Down from 478 million short tons to 470 million short tons in FY 2011.

Taken altogether, the total amount of fossil fuel produced from federal land hit 18.6 quadrillion British thermal units (Btu), lower than every year since 2003.

So when Jay Carney or Barack Obama brags about increased domestic production, they mean on private lands, not on federal lands. In fact, the private-land boom has to be even bigger to overcome the lower production from federal lands.

Tags: Barack Obama , Energy , Gas Prices

Americans Paying $33 More Per Month for Gas Than Last Year


This morning, Obama adviser David Axelrod cheerfully spotlights a Bloomberg story declaring:

The U.S. is the closest it has been in almost 20 years to achieving energy self-sufficiency, a goal the nation has been pursuing since the 1973 Arab oil embargo triggered a recession and led to lines at gasoline stations.

The recent increased use of fracking, shale-gas technology, and directional drilling are all wonderful developments — all opposed, of course, by the president’s Green allies. The article talks about the boom in North Dakota, which makes one wonder why the administration wouldn’t want the Keystone XL Pipeline to expand our energy production and transportation capacity.

Meanwhile, all of this surging production still isn’t helping consumers, and that’s likely to be the factor that most moves perception of the economy and votes in the year ahead:

Last month turned out to be the most expensive January ever at U.S. gasoline pumps, boosted by growing economic strength.

January is typically a month of falling gasoline prices because fuel demand falters in the slower travel weeks that follow the year-end holidays.

Not so this year.

In January, retail gasoline prices averaged $3.37 a gallon, according to the Oil Price Information Service, a private fuel information service. That compared with the previous record average for the month of $3.095 a gallon, set last year. In 2010, January gasoline prices averaged just $2.71 a gallon.

The new record meant more pain in Americans’ budgets. A typical household, burning about 50 gallons of gasoline a month, paid about $168.50 for that fuel in January, or $33 more than in January 2010.

Tags: Barack Obama , David Axelrod , Energy , Gas Prices

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