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By Robert Rapier on Jul 10, 2014 with 15 responses

World Sets New Oil Production and Consumption Records

Last month BP (NYSE: BP) released the Statistical Review of World Energy 2014. This report is one of the most comprehensive sources of global and country level statistics on production and consumption of oil, natural gas, coal, nuclear power and renewables. Right after the release of the report, I wrote a short post discussing the highlights. Today I will take a deeper dive into oil production and consumption figures. In coming weeks, I will delve into the rest of the report.

Oil Production

First a note about BP’s definitions. “Oil” in the BP Statistical Review (BPSR) is defined as ”crude oil, tight oil, oil sands and natural gas liquids”, but excludes biofuels and liquid fuels produced from coal or natural gas. Consumption numbers do include all liquid fuels, so consumption numbers are always greater than production numbers, but this is merely an artifact of BP’s definitions.

Global oil production advanced in 2013 by 557,000 barrels per day (bpd), reaching a new all-time high of 86.8 million bpd (an increase of 0.6 percent over 2012). After declining in 2009, global crude oil production has now increased 4 years in a row. But as I noted in last month’s short article, while global oil production did indeed set a new record, the US production increase alone was 1.1 million bpd. Thus, outside the US global production actually declined by 554,000 bpd. CONTINUE»

By Robert Rapier on Jun 23, 2014 with 4 responses

Where The US Got Its Oil in 2013

How Much Oil Do We Import?

As events in Iraq continue to unfold, we have been getting quite a few queries on just how much oil the US imports from Iraq. In my previous post – The Top 10 Oil Producers in 2013 — I showed that even though the US is a major oil producer, we are an even greater oil consumer. So we import millions of barrels a day of oil from over 40 countries — one of which is in fact Iraq.

The Energy Information Administration (EIA) tracks US oil imports and finished product exports, and I have tabulated our Top 10 sources of crude oil imports from 2013. Overall, the US imported 7.7 million barrels per day (bpd) of crude oil in 2013, a 2 million bpd decline since 2008. We imported another 2.1 million bpd of finished products like diesel, gasoline, and jet fuel, but we also exported 3.6 million bpd of petroleum and petroleum products (mostly as finished products).

Where Does Our Imported Oil Come From?

Of the 7.7 million bpd of crude oil imports, 3.5 million bpd (45 percent of the total) came from OPEC countries. Saudi Arabia was our largest OPEC supplier at 1.3 million bpd (17 percent of the crude import total). But our biggest supplier of crude continues to be Canada. The 2.6 million bpd of crude we got from Canada in 2013 represents a 66 percent increase in the past 10 years and made up a third of US crude oil imports in 2013.

US Crude Imports in 2013

Top 10 Sources of US Crude Oil Imports in 2013 (million barrels per day).  CONTINUE»

By Robert Rapier on Jun 20, 2014 with 9 responses

The Top 10 Oil Producers in 2013

This week BP (NYSE: BP) released their Statistical Review of World Energy 2014. I have been diving into the report, and as always will write a series of articles based on the latest results. Today I want to provide an update of the world’s Top 10 oil producers for 2013 based on the BP report.

Top 10 Oil Producers in 2013
Top 10 Oil Producers in 2013. Figures are “million barrels per day.” 

CONTINUE»

By Robert Rapier on Jun 17, 2014 with 10 responses

The Oil Markets as a Thanksgiving Turkey

This week BP (NYSE: BP) released their Statistical Review of World Energy 2014. This is always a big event for energy wonks, and as always I will break it down in a series of articles. My goal is always to flesh out important tidbits that were perhaps overlooked by the media. Here are some of the major findings from this year’s release that have been reported. In 2013:

  • US oil production had the largest increase in the country’s history
  • US oil demand grew at a faster pace last year than China’s, although China’s overall energy demand grew faster
  • Asia increased solar output last year more than Europe for the first time ever
  • Emerging economies accounted for 80% of energy consumption growth
  • Global oil production rose to a new all-time high

In one of those overlooked tidbits I like to point out, while global oil production did indeed set a new record — rising in 2013 by 557,000 barrels per day (bpd) over 2012 — without the US increase of 1.1 million bpd, global production would have declined by 554,000 bpd. But I will take a deeper dive into that starting next week. Today I want to talk about Iraq.

Or, more precisely the impact the unfolding events in Iraq have had on the global oil markets, and more specifically how those oil markets actually work. I had an interesting discussion with someone last week, after a remark was made about oil companies using any excuse — like potential supply disruptions in Iraq — to immediately jack up oil prices. CONTINUE»

By Robert Rapier on Jun 9, 2014 with 98 responses

When the Wind Doesn’t Blow

Hawi Wind Farm

Every morning after I wake up, I have a routine. The first thing I do, regardless of how sleepy I might still be, is slip on my shoes and run a mile. This erases the fog of sleep and gets me ready for the day. As an aside, I can highly recommend a quick run in the morning for just about everyone. The time commitment is minimal, it’s good for the heart, helps with stress, and it kicks the brain into high gear much faster than a cup of coffee can (which I still have later in the morning).

When I am traveling, I will often use a hotel treadmill, and catch up on the news for a few minutes as I run. But when I am in Hawaii, I run outdoors in all but the worst weather. The town I live in — near the north end of the Big Island — is known for the wind. In fact, the school mascot where my children have attended school for the past five years is “Ka Makani”, which means “the wind” in Hawaiian. There is a 10.6 megawatt (MW) wind farm — Hawi Renewable Development Wind Farm  (shown in the picture above) — 20 miles north of where I live.

While the wind there blows enough to support a wind farm, and more often than not I have to run against it during some part of my run, on some mornings everything is dead still. On those mornings, I know I can look to the west and see black smoke rising into the sky. CONTINUE»

By Robert Rapier on May 29, 2014 with 10 responses

The MLP Parity Act is a No-Brainer for Renewable Energy

Introduction to MLPS

A Master Limited Partnership (MLP) is a publicly traded partnership with a tax structure that enables it to attract low-cost capital. The main attraction of an MLP from an investor’s point of view is that MLPs don’t pay corporate income tax. Profits are passed directly to unitholders via regular distributions. Profits from conventional corporations are taxed at the corporate level, then a second time via the personal income tax on distributed dividends. In contrast, MLP distributions are taxed just once, at the individual level.

But MLP distributions aren’t immediately fully taxed either. In fact most of the distribution — typically 80 to 90 percent — is classified as a return of capital under the depreciation allowance, which subtracts capital depreciation from net income to account for the fact that assets like pipelines and wells lose value over time.

The depreciation allowance lowers the immediate tax bill but also the cost basis of the MLP investment, resulting in a larger capital gain when the MLP is sold. Over time the tax-deferred income can be invested elsewhere, allowing investors to compound returns that would have otherwise been taxed, while also earning a steady stream of income. This has made MLPs an extremely popular income investment. CONTINUE»

By Robert Rapier on May 20, 2014 with 82 responses

Hoping for a Rational Climate Change Discussion

The Best Path Forward on Coal?

This week the Wall Street Journal is running the latest set of answers from their “Experts Panel.” Four questions were posed to the energy panel, and I chose to answer three of them. (The 4th was about solutions to the drought in the Western US — which I don’t feel qualified to answer). The first question I answered was “What’s the best way to move forward on coal?” – and my answer was published yesterday: The Case Against Burning Coal. That was followed up with a podcast “debate” between former Shell President John Hofmeister and myself on coal’s future: Time to Stop Burning Coal? WSJ Experts Debate.

I suppose the topic of climate change will always be polarizing. One side believes that fossil fuel consumption threatens our very existence while the other sees climate change as a huge scam that threatens to destroy economic progress. Of course there are many shades of gray between these extremes, but those with the most extremist views are generally the loudest voices.

Today I hope to engage some of those loud voices with a rational, fact-based discussion. CONTINUE»

By Robert Rapier on May 9, 2014 with 43 responses

How Fossil Fuels Subsidize Us

Meet Nate Hagens

A good friend of mine said something to me the other day that I thought was profound. Nate Hagens is a former editor for The Oil Drum, and has written and lectured extensively on the risks of resource depletion. Nate holds a Master’s Degree in Finance from the University of Chicago and a PhD in Natural Resources from the University of Vermont. In his previous life Nate was a Vice President at the investment firms Salomon Brothers and Lehman Brothers.

Today Nate sits on the Board of Directors of Bottleneck Foundation, Post Carbon Institute, Institute for Study of Energy and Our Future, and Institute for Integrated Economic Research — and he farms in Wisconsin. He described his personal journey from Wall Street to Wisconsin in one of the last articles ever published on The Oil Drum: Twenty (Important) Concepts I Wasn’t Taught in Business School.

Fossil Fuel Subsidies

We were discussing the topic of fossil fuel subsidies on Facebook. The background is that two years ago I wrote an article for Forbes called The Surprising Reason That Oil Subsidies Persist: Even Liberals Love Them. The article is neither a defense of subsidies, nor a dig at liberals, but it became the most highly read article ever on Forbes Energy Source. Today the article still generates some rabid comments, often by people who obviously didn’t take the time to read much beyond the title before offering their opinion on the article. I had just responded to a recent comment and posted that comment to Facebook, and thus began the discussion. CONTINUE»

By Robert Rapier on Apr 30, 2014 with 25 responses

Keystone XL’s Emissions Versus Coal-Fired Power

Another Courageous Punt

I hadn’t planned to write yet another Keystone XL pipeline article, but I have gotten a lot of questions since the recent announcement by the Obama administration that they are still unable to make a decision on the project. I agree with the Washington Post’s assessment of the situation, that this is now into absurd territory.

At this point I don’t think the project will be approved by this Administration, although it could be approved by the next. I think this is a simple political calculation by President Obama, that by foot-dragging and delaying he is keeping his environmentalist allies at bay, but without all of the political fallout around Democratic Keystone XL supporters should he simply reject the pipeline.

This is one reason I would make a terrible president. I can’t play games like this. You make a decision. It can go one of two ways. You can say “I am going to make a stand along with my environmentalist allies who voted me into office and reject a continued expansion of fossil fuel infrastructure.” That would be a courageous stand, albeit one more steeped in symbolism than in measurable climate impact. More on that below. CONTINUE»

By Robert Rapier on Apr 23, 2014 with 27 responses

Renewable Hydrogen on the Big Island

The Big Island

For the past five years, home for me has been on the northern end of the island of Hawaiʻi. For those unfamiliar with the Hawaiian islands, they consist of eight major islands. The biggest of these islands is the island of Hawaiʻi, also known as the “Big Island.” The Big Island has a land area of 4,028 square miles — bigger than the area of Rhode Island and Delaware combined, and almost as large as Connecticut. It is also home to a couple of volcanoes that are over 13,500 high (and incidentally do see snow during the cooler months). But the population density of the Big Island is much lower that the other small states at 185,000 people, versus around a million in both Rhode Island and Delaware, and 3.5 million in Connecticut.

Hawaii has abundant energy resources from wind, the sun, geothermal, water, and biomass. Yet Hawaii relies on petroleum for 80 percent of its energy, making it by far the most petroleum-dependent state. One major reason for this is that Hawaii is the only state that still gets a large portion of its electricity from oil. Over the years the states on the mainland displaced oil with coal, natural gas, and nuclear power, and today are starting to displace some of these with renewables. But Hawaii doesn’t have coal trains or natural gas pipelines, so we continued to use oil for electricity even as everyone else switched. The cost of continued oil reliance to electricity consumers has been very high.

But because of the relatively low population density and the abundant natural resources, the Big Island has the potential to do something that will prove to be much more challenging elsewhere: Derive most or all of its energy from renewable sources. I recently visited a laboratory that is working hard to realize this vision. CONTINUE»