Posts tagged “oil”
Energy’s Brief Appearance in the State of the Union Address
Energy issues received scant mention in Tuesday’s State of the Union speech, consisting mainly of a victory lap for the President’s “all of the above” formulation and a somewhat contradictory promise to place even more federal lands off-limits to drilling. While browsing through reactions from various energy leaders and environmental groups I was intrigued by one critique of Mr. Obama’s approach from an environmental NGO, arguing that he should instead be placing the country’s bets on “best of the above” energy. They weren’t the only ones to object to the current approach.
It’s clear from their statement that Earthjustice has definite ideas about what’s best and what isn’t, but their comment merits further discussion. After all, who could argue against supporting the best energy sources? And isn’t all of the above just a sop to the status quo, in which a diverse array of energy sources dominated by fossil fuels provides the energy for the rest of the economy?
Obama and “All of the Above”
As President Obama noted Tuesday, his reference to an “‘all of the above’ energy strategy”–a debatable characterization in itself–referred to a key phrase in his 2012 address to Congress. It’s worth recalling the context, in an election year in which the Republican nominee was certain to focus on conventional energy when it was delivering US production growth in both oil and natural gas that couldn’t have been imagined just a few years earlier.
A report issued by the International Energy Agency (IEA) suggests that coal will surpass oil as the world’s most popular fuel source within 10 years, threatening to inject more greenhouse gases into the air than ever before if policy changes don’t follow the warning.
The boost in coal use is due to extreme growth in emerging markets like China and India, countries that require cheap fuel sources for electricity production in order to support their quickly growing infrastructures and populations. At current rates of growth, the IEA says that it expects that coal consumption will rise to 4.32 billion tonnes of oil equivalent versus 4.4 billions tonnes of oil per year worldwide within only four years; with that trend continuing, coal would quickly overtake oil as the world’s fuel source of choice. (Read More: Global Carbon Dioxide Emissions — Facts and Figures)
The IEA is the energy advisory arm of the Organization for Economic Cooperation and Development (OECD), a group that oversees the economic activities of 34 industrialized nations, including Canada and the United States.
In Issue #7 of Energy Trends Insider, a reader asked about the potential implications of the Obama Administration’s recent announcement that they were considering a release of oil from the Strategic Petroleum Reserve (SPR). My view is that since it is an election season and gasoline prices have remained stubbornly high, the chance of a release from the SPR is high. Having a Democrat in the White House also increases the odds, as illustrated by this post.
If the Obama Administration orders a release, it would be the 2nd time the administration had tapped the SPR. In 2011 the Obama Administration ordered a release of 30 million barrels of oil in conjunction with a 30 million barrel release from other members of the International Energy Agency. At that time, oil prices were already well off their highs, and the impact was short-lived.
With the 2011 release, the price of West Texas Intermediate (WTI) dropped by 4% on the day the release was announced, but one week later the price was higher than it was before the release was announced. If you look at the data from the EIA, you can see the fleeting impact of that 30 million barrel release (the announcement was on June 23, 2011 when the price of WTI was $94.96). The price dipped, climbed back up, dipped again as summer driving season ended, but by year-end was back above $100/bbl.
An Expanded Look at Five Myths about Gas Prices This past week I had an article published in the Washington Post called Five Myths about Gas Prices. I will discuss each particular myth in detail below, but the five myths I addressed were: Fighting in Libya is sending gas prices higher. Tapping the Strategic Petroleum Reserve is a smart way to reduce gas prices. Oil companies produce less in the spring to make gas prices increase. The Obama administration is driving up gas prices. Americans can’t live without cheap gas. Because such articles go through an editing process and must conform to limits on the length of the article, some topics couldn’t be addressed in sufficient detail. Sometimes during the… Continue»
I am between flights and have been traveling for a few days, but wanted to get off a quickie on current oil prices. In hindsight, perhaps I was not aggressive enough with my predictions for 2011. My predictions covered two themes: Next generation biofuel producers whose business models would begin to collide with reality, and oil prices that would head back over $100 per barrel. Less than two months into 2011, there has been big news on both fronts. We have already spent a few weeks discussing the Range Fuels debacle, and now oil prices have once again breached $100. In fact, many markers such as Brent crude have been above $100 for several weeks, and they recently approached $120… Continue»