Fuel Freedom Staff

Oil prices dip as blizzard strikes the Northeast

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OPEC’s secretary-general, Abdullah al-Badri, said Monday that the great oil price-drop could be over, and that it could start to climb again soon.

“Now the prices are around $45-$50, and I think maybe they reached the bottom and will see some rebound very soon,” he told Reuters in London.

Al-Badri also warned that oil might spike to $200.

That may well occur in the future. But for now, the floor hasn’t been reached. Prices rallied briefly after al-Badri’s comments, but they settled down in Monday’s trading session. Brent, the international benchmark, fell 1.3 percent to $48.16. U.S., or West Texas Intermediate, fell 1 percent to $45.15, but narrowed after the restart of a refinery in Whiting, Indiana.

Some experts had anticipated movement in the markets following the death of Saudi King Abdullah last week. But his successor, half-brother Salman, pledged “continuity in energy and foreign policies on Friday and was quick to retain veteran oil minister Ali al-Naimi, sending a message aimed at calming a jittery oil market,” Reuters reported.

The massive blizzard in the Northeast affected crude prices: The anticipated storm caused prices of heating oil to rise, but jet fuel dropped, in anticipation of canceled flights.

As Reuters reported:

The blizzard will result in canceled flights, less driving and increased use of heating oil, creating mixed indicators for crude oil, Matt Smith, an analyst at Schneider Electric, said.

“We saw this with Hurricane Sandy,” Smith said.

Fuel Freedom Staff

GOP condemns White House proposal to add Alaska protections

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Reaction is pouring in after President Obama over the weekend announced his administration was seeking to permanently protect the majority of the Alaskan National Wildlife Refuge — about 12 million of 19.8 million acres — from oil and gas exploration.

The coastal plain in the refuge, home to about 200 species, as well as an estimated 10.3 billion barrels of oil (enough to satisfy U.S. consumption for about 18 months), has been “off-limits to development for years,” The Los Angeles Times writes. But:

… the White House move marks a new front in the long-running political and environmental battle over whether to authorize oil production in the refuge.

Only Congress can designate the area as protected wilderness. But even if lawmakers don’t support the measure, officials said, the Interior Department intends to continue barring oil and gas development — along with road-building and almost every other form of development.

As The Washington Post put it:

The move marks the latest instance of Obama’s aggressive use of executive authority to advance his top policy priorities. While only Congress can create a wilderness area, once the federal government identifies a place for that designation, it receives the highest level of protection until Congress acts or a future administration adopts a different approach.

Obama, in a video released Sunday, said: “Alaska’s National Wildlife Refuge is an incredible place — pristine, undisturbed. It supports caribou and polar bears, all manner of marine life, countless species of birds and fish, and for centuries it supported many Alaska Native communities. But it’s very fragile.”

Environmentalists praised the announcement, but Republican lawmakers weren’t happy, particularly Alaska Sen. Lisa Murkowski, who leads the Senate Energy and Natural Resources Committee. A statement on the senator’s website was titled “Obama, Jewell Declaring War on Alaska’s Future,” referring to Interior Secretary Sally Jewell.

Murkowski said:

“What’s coming is a stunning attack on our sovereignty and our ability to develop a strong economy that allows us, our children and our grandchildren to thrive. It’s clear this administration does not care about us, and sees us as nothing but a territory. The promises made to us at statehood, and since then, mean absolutely nothing to them. I cannot understand why this administration is willing to negotiate with Iran, but not Alaska. But we will not be run over like this. We will fight back with every resource at our disposal.”

The White House called her reaction overblown.

 

Fuel Freedom Staff

The Atlantic: Why the U.S. still needs Saudi Arabia

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The Atlantic’s Matt Schiavenza has some pointed commentary on the longtime U.S.-Saudi alliance, arguing that the United States needs the Middle East kingdom “more than ever.”

Following the death of King Abdullah last week at age 90, following a lung infection, President Obama cited his “enduring contribution to the search for peace” in the region. Secretary of State John Kerry said he was a “man of wisdom and vision.”

Schiavenza then lists the ways in which Saudi policy undermines the American praise, including the lack of rights of women, and the case of blogger Raif Badawi, who was sentenced to 1,000 lashes and 10 years in prison for defending atheism.

Schiavenza writes:

Contrary to President Obama’s statement, Saudi Arabia’s role in brokering Middle Eastern peace has, at best, been unhelpful. King Abdullah bitterly opposed Washington’s support of pro-democracy protesters in Egypt and urged President Obama to use force to preserve Hosni Mubarak’s dictatorship. Since Abdel Fattah al-Sisi assumed the country’s leadership in 2013, Riyadh has helped finance his brutal suppression of the country’s Muslim Brotherhood. Saudi Arabia has also resisted the rise of Shia movements in the region out of fear that Iran, their main rival, will gain influence. When Shia protesters threatened the Sunni dictatorship in neighboring Bahrain, Saudi Arabia dispatched its military to suppress the uprising. Riyadh’s support of Syrian rebels, too, has backfired: Islamic State fighters have benefited from Saudi money and weapons.

The reason the United States continues to “put up with” Saudi Arabia, the writer contends, is oil. And despite ramped-up production in the U.S. shale-oil fields, the U.S. will continue to need Saudi oil. Currently there’s a glut that might worsen, since Abdullah’s successor, his half-brother Salman bin Abdul Aziz, appears unlikely to reduce oil production to stem the drop in price. Right now the U.S. produces about 9 million barrels of oil a day, comparable with Saudi output.

But the kingdom, which is the leading oil-producer in OPEC (which controls 40 percent of the world’s oil supply), is “well-positioned to survive a sustained drop in the price of oil,” Schiavenza writes, adding:

Riyadh generally needs oil to trade at $80 a barrel in order to balance its budget. But with $750 billion stashed away in reserve, the kingdom faces little pressure to reduce supply and raise the price. In addition, Saudi Arabia and fellow OPEC members Kuwait and the United Arab Emirates have proved reserves of 460 billion barrels. The United States, by contrast, has proved reserves of just 10 billion—and the U.S. Energy Information Agency forecasts that American shale oil production will plateau in 2020.

Fuel Freedom Staff

Obama mentions oil, Keystone in State of the Union

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President Obama touched on several aspects of the energy debate during Tuesday night’s State of the Union Address, including:

Imported oil:

More of our kids are graduating than ever before; more of our people are insured than ever before; we are as free from the grip of foreign oil as we’ve been in almost 30 years.

Ramped-up U.S. oil production:

At this moment — with a growing economy, shrinking deficits, bustling industry, and booming energy production — we have risen from recession freer to write our own future than any other nation on Earth.

Consumers savings from cheap gasoline:

We believed we could reduce our dependence on foreign oil and protect our planet. And today, America is number one in oil and gas. America is number one in wind power. Every three weeks, we bring online as much solar power as we did in all of 2008. And thanks to lower gas prices and higher fuel standards, the typical family this year should save $750 at the pump.

The debate over the TransCanada Keystone XL pipeline:

21st century businesses need 21st century infrastructure — modern ports, stronger bridges, faster trains and the fastest internet. Democrats and Republicans used to agree on this. So let’s set our sights higher than a single oil pipeline. Let’s pass a bipartisan infrastructure plan that could create more than thirty times as many jobs per year, and make this country stronger for decades to come.

And something else about solar power:

I want Americans to win the race for the kinds of discoveries that unleash new jobs — converting sunlight into liquid fuel …

As The New Republic noted, it was the first time in his six SOTU Addresses that Obama mentioned Keystone:

It’s not surprising he’d weigh in now, given how Keystone has dominated the first few weeks of debate in the new Republican Congress. Lately, Obama has sounded skeptical of the pipeline’s economic benefits, but we still don’t have many clues as to how he will decide Keystone’s final fate in coming months.

(Photo: WhiteHouse.gov)

Fuel Freedom Staff

Hydrogen-powered cars steal some sex appeal in Detroit

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Visitors to the North American International Auto Show in Detroit this week likely were awe-struck, along with critics, at the sight of the new high-powered Acura NSX and the Ford GT.

But this might be the show where hydrogen-powered vehicles finally graduated from the drawing board to the public consciousness.

Much buzz was created in the Motor City when Honda unveiled its FCV (for fuel-cell vehicle) concept car, which is expected to go on sale in the United States in 2016. The car is an answer to Toyota’s Mirai FCV, which is expected to be available in the U.S. later this year (Japanese prime minister Shinzo Abe became the first person in the world to get one last week.)

The cars join the Hyundai Tucson and the Mercedes F-Cell in the hydrogen ranks. Hyundai reportedly has decided to lower the price of its vehicle (said to be about $139,000) to increase its competitiveness with its rivals.

Cost could be a big issue with consumers: The Mirai costs about $62,000, roughly the same as the Honda FCV.

Refueling access is another issue: There are only 13 hydrogen stations in the U.S., 11 of them in California. But the state is investing more than $46 million to build 28 new stations.

FCVs combine hydrogen, from a tank or cell, with oxygen that powers an electric motor. The key benefit is the short refueling time: Honda said its FCV could be fueled in about 3 minutes (at about 10,00 pounds per square inch). The vehicle has a range of roughly 300 miles, an improvement over the 240 achieved by Honda’s first-generation fuel-cell vehicle, the FCX Clarity. The Mirai also has about a 300-mile range.

One person unimpressed with all the attention hydrogen-powered cars were getting in Detroit was Tesla founder Elon Musk. As MLive reported:

“I just think they’re extremely silly,” he told reporters at Automotive News’ annual World Congress.

Musk argued that hydrogen acts as an energy storage unit, not a source of it, making it impractical for powering vehicles. He called drawing hydrogen from water “an extremely inefficient” process.

“If you’re going to pick an energy storage mechanism, hydrogen is just an extremely dumb one to pick,” Musk said.

Toyota is undaunted, saying it will share the 5,680 patents that went into its hydrogen fuel cells. Musk announced last year that Tesla would make its patents available to other carmakers.

Time reported:

“Hopefully by sharing these patents with others, these new fuel systems can be refined and improved,” said Toyota Senior Vice President Bob Carter, “to attract a larger market of buyers.”

The Mirai is starting with a small batch of 700 vehicles in 2014 with the goal of growing to tens of thousands by the 2020s. “We believe hydrogen electric will be the primary fuel for the next 100 years,” Carter said.

(Photo: Honda FCV, via Honda.com)

Fuel Freedom Staff

2014 was the warmest year in recorded history

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There were pockets of pure hotness in the United States in 2014. California, for instance, endured an unprecedented drought, worsened by the warmest year in the state since 1934.

Although the United States, overall, had just its 34th-warmest year on record, the rest of the world suffered much more: As climate scientists had been predicting for much of the year, 2014 was the hottest year around the globe since records began being kept in 1880.

As USA Today reported:

The global temperature from 2014 broke the previous record warmest years of 2005 and 2010 …

Two separate data sets of global temperature — from NASA and the National Oceanic and Atmospheric Administration — confirmed the record. Another data set released last week by the Japan Meteorological Agency also found 2014 was the planet’s warmest.

The average temperature for 2014 was 58.24 degrees globally, 1.24 degrees above the 20th-century average, NOAA said.

(California’s average was 61.5 degrees. Alaska, Nevada and Arizona also had their warmest years on record. Earlier this month, it was announced that Anchorage had exactly zero days of below-zero weather in 2014.)

More USA Today:

“It just shows that human emissions of greenhouse gases, mainly from the burning of fossil fuels, are taking over the Earth’s climate system,” [University of Arizona atmospheric scientist Jonathan] Overpeck said. “The data are clear: The Earth is warming, and humans are causing the bulk of this warming.”

Nine of the 10 warmest years on Earth have now occurred in the 21st century, the data show.

The warming trend was driven by ocean temperatures moreso than land temperatures, which alarms scientists, since there wasn’t even a heat-producing El Nino event.

As The Washington Post reported:

Ocean temperatures were more than 1 F above average, NOAA said. They warmed to a new record even in the absence of an El Niño event, a naturally occurring cycle of ocean heating in the tropical Pacific.

“This is the first year since 1997 that the record warmest year was not an El Niño year at the beginning of the year, because the last three have been,” Gavin Schmidt, who directs the NASA Goddard Institute for Space Studies, told the Post’s Chris Mooney.

Fuel Freedom Staff

Poll: Most Americans think gas prices are going up

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Give the American consumer credit: They know gasoline prices are volatile, and that there’s no guarantee that this vacation from expensive gas will last.

According to a phone survey by Rasmussen Reports:

Ninety percent (90%) of American Adults say they are paying less for a gallon of gas than six months ago, but 69% think it’s at least somewhat likely those prices will go up again over the next six months … Just 19% believe they are unlikely to be paying more in six months’ time. These findings include 40% who say it’s Very Likely a gallon of gas will cost more and only three percent (3%) who say it’s Not At All Likely.

Better start pocketing all that money you’ve been saving with every fill-up.

But how can we make low gas prices sustainable for the long term? If only there were a high-quality documentary that lays this all out in a tidy 127 minutes.

Fuel Freedom Staff

Oil prices surge in final half-hour of trading

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Oil prices climbed took off in the final 30 minutes of Tuesday’s trading session, and analysts wondered whether the surge represented a temporary blip or the start of a comeback from a 7-month-long losing streak.

As Reuters noted, for most of the day oil was flat or slightly lower, owing to “data showing that U.S. crude oil stockpiles rose far more than expected last week.”

But Brent and U.S. crude each soared $2 late in the session. Brent, for February deliver, settled up $2.10 (4.5 percent), to $48.69 a barrel. That’s the biggest one-day advance since June 2012.

U.S. crude rose $1.01 (5.6 percent), to $48.48, the biggest one-day jump since August 2012.

Reuters added:

Most dealers saw the late-day rebound as a temporary correction in the seven-month slump that wiped more than 60 percent off of oil prices, reluctant to call the bottom of a rout that has repeatedly defied forecasts of a floor.

“(With the) velocity of the downward trend that we’ve been in, you can expect to see violent snapbacks,” said Tariq Zahir of Tyche Capital.

Even so, there were growing signs that low prices were finally beginning to slow the unrelenting growth in U.S. oil production, a key factor for markets as OPEC powerhouse Saudi Arabia refrains from cutting output despite a growing glut.

North Dakota’s chief oil regulator said he expects production to be steady until mid-year and could decline in the third quarter.

The late rally was attributed to many traders holding expiring options, leading them to scramble to square their positions. As Oliver Sloup, director of managed futures at iitrader.com LLC, put it:

“A lot of shorts are so deep into their put options, the only way to exit their position is to buy back futures.”

Fuel Freedom Staff

Obama aims to cut methane emissions 45 percent

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President Obama’s latest effort to mitigate the effects of climate change will be to crack down on methane leakage from oil and gas wells, The New York Times reported.

The EPA will announce new regulations this week aimed at reducing methane emissions by 45 percent by 2025, compared with 2012 levels. Final rules will be set by 2016, the newspaper reported, citing anonymous sources.

Obama, stymied by Republican opposition that stands to become more solidified now that the party controls the Senate as well as the House, has increasingly turned to executive action, skirting Congress, to deal with climate change. The administration says the Clean Air Act gives it the green light to issue such mandates.

Methane, the primary component of natural gas, sometimes escapes from oil and gas wells, in addition to pipelines. Although the gas accounts for only 9 percent of overall greenhouse-gas emissions, it’s 20 times more potent than carbon dioxide, another GHG that accounts for the majority of emissions.

The Natural Resources Defense Council applauded the proposed regulations, but the oil and gas industry said they’re unnecessary, since they’re already motivated to capture methane instead of allowing it to escape into the atmosphere. If it’s captured, it can be burned in power plants to generate electricity, making it a cleaner alternative to coal. Methane can also be used to fuel cars and trucks, as compressed (CNG) or liquefied (LNG) natural gas. It can also be converted into two types of inexpensive liquid alcohol fuels, ethanol or methanol.

Howard Feldman, director of regulatory affairs for the American Petroleum Institute, said:

“We don’t need regulation to capture it, because we are incentivized to do it. We want to bring it to market.”

That market would grow if the infrastructure for transportation fuels were expanded, creating more of an incentive to capture methane. The price of natural gas stood at $12.68 per million metric British Thermal Units (MmBTU) in June 2008, only to crash to $1.95 by April 2012. Last month the average was $3.43 at the Henry Hub terminal in Louisiana. Profit margins are still so low that oil drillers flare off much of it.

Fuel Freedom Staff

Oil dips again amid signs that export ban might be relaxed

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American crude and the international benchmark, Brent crude, met at the same price point Tuesday: about $46. West Texas Intermediate crude, the U.S. benchmark, briefly traded below Brent, the first time that’s happened in a year and a half.

Brent closed down 84 cents, to $46.59 a barrel. U.S. crude closed down 18 cents to $45.19. Read more in the Reuters story.

On average, Brent traded at $6.64 higher than WTI last year.

Bloomberg offers a reason why U.S. crude might be on the upswing: The news agency reports that the United States might be edging closer to relaxing the ban on oil exports.

The 40-year-old ban on most U.S. crude exports is set to be loosened after Petroleos Mexicanos, Mexico’s state-owned oil company, asked to import 100,000 barrels a day of light crude. Senator Ted Cruz, a Texas Republican, plans to propose an amendment to a bill approving the Keystone XL pipeline that would lift the export restrictions.

“WTI is relatively strong because it looks like exports will be rising,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. “The Mexican request could be the first of many.”

Cruz must know something the rest of Washington doesn’t yet know, since President Obama already has promised to veto the Keystone XL bill if Congress passes it.