Beyond the Barrel
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Signing Your Economic Stimulus to the Saudis, Part II
Continue reading… 7 CommentsPresident Bush yesterday voiced faith that the nation will not slide into a recession, in part because of the economic stimulus package he and Congress worked out. However, he appeared flummoxed and perturbed at the notion that gasoline might reach $4 per gallon.
As I noted when the stimulus idea was first floated, it might be good to keep tabs on what's happening at the pump when considering how effective that stimulus plan will be.
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Some Deem Double-Hull Tankers Worth the Cost
Continue reading… 5 CommentsLet's look at the backward economics of environmental protection in the oil industry.
Here's how a company with fewer resources is more likely to invest in an extra safeguard than a company with more resources than any other in the world.
Tesoro, the second-largest refining company in the western United States, made $566 million in profit last year. Point of comparison: That's 1.4 percent of the profit pulled in last year by Exxon Mobil, $40.6 billion.
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Exxon Still Sails Single-Hulled in Alaska
Continue reading… 6 CommentsAs we write in this story, Exxon Mobil is telling the Supreme Court that it has paid enough for the worst oil spill in U.S. waters, the 1989 wreck of its Valdez supertanker that poured 11 million gallons of crude into Alaska's Prince William Sound.
In its fight to avoid paying $2.5 billion in punitive damages—a sum that amounts to three weeks of the company's astounding profits—Exxon's lawyer, Walter Dellinger, asked the justices to look at the $3.5 billion that the company had already spent on cleanup and to settle state and federal fines. "That amount is enough to deter anyone from anything," Dellinger said.
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Florida's Electricity Picture Had Red Flags
Continue reading… 6 CommentsDid anyone foresee the risk of a midwinter electricity crisis like the one that plunged hundreds of thousands of south Floridians into darkness today?
The North American Electric Reliability Corp., the self-regulating industry group that oversees the grid, concluded in November that "the outlook for electricity reliability for the coming winter season is good" across the country, even with demand projected to increase 2 percent over last winter.
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High Uranium Price Doesn't Faze the Industry
Continue reading… 0 CommentsOther fuels have boom-and-bust cycles. So why not uranium?
But perhaps befitting an atomic fuel that decays rather slowly, uranium's commodity price swings appear to be unfolding over generations instead of years. From the 1950s through the 1970s, when uranium was being used in nuclear weapons, and later, nuclear power plants, it was selling at a hefty price. Then the market got a one-two punch: first, when the tide turned against nuclear energy in the United States after Three Mile Island, and a decade later, when the Cold War ended and weapon stockpile uranium became readily available.
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Nuclear Industry Eyes a Smaller Renaissance
Continue reading… 11 CommentsCorrected on 02/25/08: An earlier version of this article incorrectly reported that $18 billion in loan guarantees were in the energy bill passed last December. The $18.5 billion in loan guarantees were part of the omnibus federal budget bill.
Although 17 companies are preparing license applications for as many as 31 new nuclear power plants, don't expect the "nuclear renaissance," if it happens—at least the first phase of it—to be nearly this big.
The Nuclear Energy Institute, the industry's policy organization, today told a gathering of more than 100 Wall Street analysts that it expects the big group of contenders to winnow itself down for the first wave of new construction. NEI projects that four to eight new power plants will move ahead and be operational by about 2016.
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The Next Price to Watch for After $100 Oil
Continue reading… 5 CommentsNow that oil has closed at $100.01 a barrel, what is the next benchmark to watch for on the way to potential global energy crisis?
Well, the price of oil still has to rise about $1.70 more to surpass its all-time inflation-adjusted peak of $101.70, as calculated by the International Energy Agency. As we've noted here, there are a lot of different calculations for that all-time high, since the futures market in oil did not exist when oil hit its old apex in 1980.
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Exxon’s Search for Oil Gets Harder
Continue reading… 1 CommentMake sure to read the fine print in Exxon Mobil's announcement that it added more oil to its portfolio last year than it produced.
The world's largest publicly traded oil company did add 1.6 billion barrels of oil (and the oil equivalent of natural gas) to its books in 2007, or 101 percent of production, by the accounting method it likes to use. But as Exxon Mobil states later in the press release, its so-called reserves replacement was only 76 percent of production by the method that the Securities and Exchange Commission favors. And no matter the accounting method, Exxon Mobil's reserves replacement number was the lowest since 1993, the Wall Street Journal reported (subscription required) over the weekend.
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How Big Oil Could Help on Climate Change in Iraq
Continue reading… 11 CommentsLook at this satellite image of fires rising up from Iraq:
These hot spots, detected from 500 miles into space, were not sparked by bombings or by gunfire on the war-torn ground. They are neither flames of insurgency nor of combat. This is a snapshot of energy waste and the pointless release of millions of tons of greenhouse gas into the atmosphere.
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Energy is Pricey—But So Is Building More Power Plants
Continue reading… 0 CommentsSo far, the pain of rising energy costs has been visible mostly at the gas pump and not in the electricity bill. But that is bound to change—unless we find a way to use a lot less power—due to the skyrocketing cost of building new power plants.
A new study by Cambridge Energy Research Associates shows that the cost of new power plant construction in North America increased 27 percent in just the last year and is 130 percent higher than in 2000. A plant that would have cost $1 billion in 2000, in other words, would cost $2.31 billion today. What's driving those costs is essentially the same thing driving the high cost of gasoline—demand in Asia. That demand is ratcheting up the cost of raw material, equipment, and engineering talent ever higher. CERA said the trend is especially marked in nuclear power construction—if you don't include nuke plants, power construction costs have risen 79 percent since 2000.
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Are Nukes Needed to Stop Climate Change?
Continue reading… 1 CommentHere's a new pitch for comprehensive federal climate change legislation— from John Rowe, chief executive of Exelon, the largest nuclear power generator in the United States. Rowe has long been out front in the utility industry on the climate change issue, and one obvious reason is that his company is so much better positioned to thrive in a carbon-constrained world than its coal-burning brethren in the power business. But no matter your view on nukes, he made some points worth noting in his speech for the Brookings Institution's energy security initiative program:
1) The $400 billion that the Energy Information Administration says the utility industry—source of one third of carbon emissions—will have to invest by 2030 to address climate change is almost as much as today's market capitalization for the entire investor-owned utility sector.
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Emissions Decision Critics Target EPA Blog
Continue reading… 14 CommentsHere's a new way to drive traffic to your website: Deny California permission under the Clean Air Act to control greenhouse gas emissions from cars.
Yes, since its inception last July, the Flow of the River blog by Marcus Peacock, the Environmental Protection Agency's deputy administrator, has never seen anything quite like the activity of the past week. That's when the Union of Concerned Scientists decided to use it as a platform to criticize the EPA's California decision.
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Oil May Stay High
Continue reading… 1 CommentThe government’s energy forecasting agency looked at the big question of whether oil prices will fall due to a slowing economy and came up with a big shrug of the shoulders. However, at the same time the Energy Information Administration’s economists were avoiding predictions, the same agency’s weekly report on petroleum inventories were telling a pretty stark story. Crude oil stocks jumped 7 million barrels last week, nearly triple what analysts expected. Even the inventories of distillates, which include both heating oil and diesel fuel, rose by 100,000; analysts thought they would fall by 1.8 million barrels, following their usual pattern of winter decline. If the stocks are building at a high rate, market analysts believe that means demand is weakening, and that caused the price of oil to drop to $87.14. We’ll see if that trend continues and leads to lower pump prices in the weeks ahead, instead of the same kind of spring run-up we’ve seen for several years.
One person who thinks that a recession will ease prices this year and possibly next year is Charles T. Maxwell, senior energy analyst of Weeden & Co., who has been watching the oil market’s ups and downs from Wall Street for 40 years. EnergyTechStocks.com has this interview with the dean of energy analysts, in which he explains that the fall in demand and prices we are likely to see will be only a prelude to a global nightmare scenario of scarcity that will begin in 2010.
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Bush Budget Puts Weatherization in the Cold
Continue reading… 3 CommentsIn light of the focus in Washington on doling out economic stimulus money, it is worth noting the money that the Bush administration is proposing to take out of low-income households this year by ending the 32-year-old federal weatherization program.
The just-released Department of Energy $25 billion budget plan, while increasing 4.7 percent over the current fiscal year, would zero out the $220 million program, which has been weatherizing about 100,000 homes across the country each year. The administration says the reason for the cut is to focus the agency's energy efficiency office "on its core mission of advanced energy efficiency and renewable energy [research and development]."
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Slow Down and Save...Gasoline
Continue reading… 57 CommentsWhen I was in high school during the Arab oil crisis of 1973, there was a lot of talk in our civics class about how driving slower was one way to use less gasoline. The next year, the Nixon administration put a national 55-mile-per-hour speed-limit policy in place, and it is credited in part for the decline in gasoline consumption that decade. However, years passed, oil prices fell, the speed limit policy was eased in the late 1980s, and any tie to federal highway funds was completely repealed as one of the first acts of Newt Gingrich's Republican Congress in 1995. Today, I doubt that many drivers think about the connection between speed and gas consumption.
So I was surprised to read in the Congressional Budget Office's recent study on the impact of high gasoline prices the conclusion that pain at the gas pump was causing many motorists to drive more slowly. The researchers looked at uncongested (weekend) freeways in California, where numerous automatic data collection devices have recorded large quantities of traffic data from many locations over long periods. After doing statistical tests to rule out whether the effects were due to seasonal or other factors, the researchers concluded that many drivers did seem to be easing off on the gas pedal. Perhaps a minority of drivers were having an impact, slowing the drivers around them—ever so slightly.
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Stimulating a Senate Vote on Energy
Continue reading… 0 CommentsIt now appears certain that Senate Democrats do not have the votes to pass their own version of an economic stimulus package, which would have contained $5.5 billion in tax breaks for wind, solar, and alternative energy. However, they are aiming to amend the bill piece by piece, forcing at least one vote on energy.
About 35 senators—including cold-state Republicans Olympia Snowe and Susan Collins of Maine and Lisa Murkowski of Alaska—have already voiced support for adding to the deal $3.6 billion in heating assistance to poor families. Without it, the increase in heating bills—especially in households that use oil—will eat up much of the taxpayer rebate. Such a move would more than double the $2.6 billion that now is in the budget for the Low-Income Home Energy Assistance Program. But it would bring the program up to the full funding level that Congress authorized in the 2005 energy bill.
It's uncertain whether there will be an effort to revive the renewable tax credits on the Senate floor. The renewable energy industry argues that it creates jobs, making the economic stimulus a fitting vehicle for the tax credits. But the stimulus bill may be moving too fast for renewables to get aboard.
