Fuel Freedom Staff

Alaska’s Bristol Bay placed off-limits from oil, gas drilling

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President Obama on Tuesday pulled Alaska’s Bristol Bay from consideration for federal oil and gas leases.

As AP reported:

The decision announced Tuesday under the federal Outer Continental Shelf Lands Act means no leases will be sold for petroleum drilling in the area. The bay provides 40 percent of America’s wild seafood and supports up to $2 billion in commercial fishing every year.

Obama said: “These waters are too special and too valuable to auction off to the highest bidder.”

Watch the video the president made announcing the decision.

The area, west of the Alaskan peninsula near the start of the Aleutian Islands, has been the subject of a tug-of-war for drilling for years. President Clinton issued a moratorium on drilling in the bay in 1995, and Congress and the executive branch have wrangled over the region ever since. This site has more on the battle.

Fuel Freedom Staff

Does Keystone XL even make economic sense?

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A story in The Los Angeles Times asks a pertinent question: With the price of oil low (by recent historical standards) and continuing to fall, do the economics of the proposed Keystone XL pipeline even make sense anymore?

After all, it’s expensive to extract the kind of tar-sands oil in western Canada that would flow through the pipeline, and the price of oil has to be a certain level for the process to be profitable.

That’s why even pro-business people who are in favor of oil production are questioning whether the pipeline extension — which would be built from Canada to Nebraska, linking up with an existing line to the Gulf of Mexico — would reward investors.

With the GOP about to take control of both houses of Congress, backers of the pipeline say they are close to having a veto-proof majority for a bill that would order the Obama administration to give the project the federal permit required for pipelines that cross a U.S. border.

But “the political debate is not paralleled by the realities” in the market, said Sandy Fielden, director of energy analytics at Texas-based RBN Energy. “The economics of this project are becoming increasingly borderline.”

President Obama could use his veto pen to scuttle the legislation, but the State Department will ultimately have the final say on whether the pipeline gets approved. TransCanada Corp. still wants to build it, and GOP leadership still wants to get it done as well, economics or no.

TransCanada says investors still want it, because they’re thinking long-term and aren’t concerned about a short-term glut of oil that has suppressed prices.

“We sign binding, long-term commercial agreements with our customers so they can reserve space to deliver the crude oil they need to their customers,” Mark Cooper, a spokesman for TransCanada Corp., which would own the pipeline, wrote in an email.

The oil shippers investing in the pipeline, Cooper wrote, “have a good understanding of what the market needs over time. They do not make decisions based on short-term views or changes in commodity prices.”

 

Fuel Freedom Staff

Lima Accord is first deal to require all nations to cut emissions

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Negotiators at the U.N. climate conference in Lima, Peru, emerged after 36 straight hours of talks with a deal that has received mixed reviews.

On its face, the Lima Accord is a breakthrough: For the first time, the world’s nations, rich and poor, have signed on to an agreement requiring everyone to cut their own greenhouse-gas emissions. Yet some critics say the deal is so diluted that there are few penalties, beyond international scorn, for nations failing to come up with a plan.

According to The New York Times‘ Coral Davenport:

The strength of the accord — the fact that it includes pledges by every country to put forward a plan to reduce emissions at home — is also its greatest weakness. In order to get every country to agree to the deal, including the United States, the world’s largest historic carbon polluter, the Lima Accord does not include legally binding requirements that countries cut their emissions by any particular amount.

“If a country doesn’t submit a plan, there will be no punishment, no fine, no black U.N. helicopters showing up,” said Jennifer Morgan, an expert on climate negotiations with the World Resources Institute, a research organization.

Under the draft of the final agreement, each of the 190 nations has until March 31 to enact its own domestic plan to reduce carbon emissions. Countries that miss the deadline will have until June. Collectively, the plans, known as the Intended Nationally Determined Contributions, will be the foundation for an agreement to be signed at a Paris U.N. conference next year.

Many questions about the deal persist: Megan Rowling of Reuters has a story about how rich countries will help poorer ones deal with the cost of reducing emissions without stunting their own economies.

And The Guardian notes that language in the deal mentioning specific targets was amended:

… there will be few obligations to provide details and no review to compare each nation’s pledges – as had been demanded by the European Union – after China and other emerging nations refused. The text says INDCs “may include” details such as base years and yearly targets, far weaker than a former draft that said nations “shall provide” such details.

But as AP’s Karl Ritter reported, many were still hopeful and optimistic about what had been accomplished:

“As a text it’s not perfect, but it includes the positions of the parties,” said Environment Minister Manuel Pulgar-Vidal, who was the conference chairman and had spent most of the day meeting separately with delegations.

 

Fuel Freedom Staff

Crude falls again, IEA cuts outlook for demand growth

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The price of oil continued falling Friday: Brent crude, the international standard, dropped nearly $2, to $62. U.S. WTI crude dropped $2.14, to $57.81, its lowest price since May 2009.

A story by Reuters and CNBC notes that the International Energy Agency is predicting further downward pressure, owing to slack demand:

The IEA, which coordinates the energy policies of industrialized countries, cut its outlook for global oil demand growth for 2015 by 230,000 barrels per day (bpd) to 900,000 bpd on expectations of lower fuel consumption in Russia and other oil-exporting countries.

Fuel Freedom Staff

Bloomberg: U.S. Refineries Boost Oil Use to Record as Prices Plunge

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Refiners in the U.S. used the most oil ever last week, taking advantage of crude prices tumbling to a five-year low.

Plants processed 16.6 million barrels a day of crude in the week ended Dec. 5, the most in Energy Information Administration data going back to 1989. The rise occurred as futures tumbled to the lowest in more than five years after the Organization of Petroleum Exporting Countries decided Nov. 27 to maintain output levels and as U.S. production climbed to the highest level in three decades.

The access to cheaper domestic crude and natural gas has enabled U.S. refiners to increase operating rates to above 95 percent for the first time since 2005, increasing gasoline supply and driving down prices at the pump to the lowest level in more than four years. Refineries have used more crude in each of the past six weeks as seasonal turnarounds wound down.

Read more at: Bloomberg

Fuel Freedom Staff

Market Watch: Here are the reasons oil is plunging toward $60

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[Slideshow] Oil’s stunning price collapse is undoubtedly one of 2014’s top stories and will remain a major theme for investors in 2015. Here’s a look at the factors that have led to the largest price decline since the 2008 financial crisis.

Indeed, oil futures CLF5, -2.94%  have plunged 39% from the beginning of the year, including carnage in Thursday trading that saw oil settle below $60, at $59.95, marking its lowest settlement price since July 14, 2009, while Brent LCOF5, -1.62%   is down about 42% for the year (though marginally higher in Thursday trade).

Read more at: MarketWatch

Fuel Freedom Staff

The Hill: Lawmakers frustrated at EPA over ethanol mandate delay

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Lawmakers vented their frustration at the Environmental Protection Agency (EPA) Wednesday over its repeated delays of the annual ethanol mandate. The Wednesday hearing in the House Oversight Committee’s subpanel on energy came weeks after the EPA announced that it wouldn’t make a 2014 ethanol blending requirement for fuel refiners until next year.

The Wednesday hearing in the House Oversight Committee’s subpanel on energy came weeks after the EPA announced that it wouldn’t make a 2014 ethanol blending requirement for fuel refiners until next year.

The few representatives present at the hearing ripped into Janet McCabe, the EPA’s acting administrator for air and radiation.

Read more at: The Hill

Fuel Freedom Staff

Los Angeles Times: Falling gas prices may boost the U.S. economy

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For the first time in four years, Los Angeles drivers are paying less than $3 on average for a gallon of gasoline, part of a nationwide free-fall in fuel prices that could provide a substantial boost to the economy.

Because they’re spending less at the pump, Americans are expected to shell out more on holiday gifts, parties and travel this year. Airlines are projected to pass some of their fuel savings along to consumers next year. Businesses with previously hefty fuel bills may find room now to lower prices or increase wages.

Read more at: Los Angeles Times

 

 

Fuel Freedom Staff

Idea emerges from Lima conference: Zero emissions by 2050

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An idea is gathering momentum among several governments: Reducing global greenhouse-gas emissions by 2050.

As AP reports from the United Nations climate talks going on in Lima, Peru, this week:

… in a historic first, dozens of governments now embrace her prescription. The global climate pact set for adoption in Paris next year should phase out greenhouse gas emissions by 2050, says the London-based environmental lawyer.

“In your lifetime, emissions have to go to zero. That’s a message people understand,” said the Pakistani-born [Farhana] Yamin, who has been instrumental in getting that ambitious, some say crucial, goal into drafts being discussed at U.N. talks in Lima this week.

As The Guardian notes, the ambitious goal is spelled out in a policy document titled “ADP 2-7 agenda item 3 Elements for a draft negotiating text.”

The guidelines being hashed out in Lima could make their way onto the agenda for the next big U.N. climate conference, in Paris next year. The Guardian writes:

While a year seems like a long time, it’s not in the world of UN climate talks.

As one Australian observer pointed out, there are only six weeks of negotiating time on the UN’s schedule between now and Paris.

But if language such as “full decarbonization by 2050” were to become a reality, it basically defines an end point for the fossil fuel energy industry as we know it.

Fuel Freedom Staff

OPEC: Oil demand next year will be lowest in a decade

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OPEC cut its forecast for global demand Wednesday, expecting that demand in 2015 will be at the lowest level since 2004.

Reuters reports that the cartel, in its monthly report, said it expects worldwide demand for its oil to be 28.92 million barrels per day, about 1 million bpd less than the 12-nation group is producing now.

Last month OPEC’s decision to keep output the same — about 30 million bpd — sent prices falling even more precipitously. Brent crude is down about 40 percent overall since June, when it was about $110 a barrel.

If the cartel produces 28.92 bpd next year, that’ll be its lowest output since it produced 28.15 million bpd in 2004.

Saudi Arabia, the cartel’s largest producer, gave no sign it’s willing to cut production levels to try to prop up the price. As Bloomberg reports:

“Why should I cut production?” [Saudi oil minister] Ali Al-Naimi said in response to reporters’ questions today in Lima, where he’s attending United Nations climate talks. “This is a market and I’m selling in a market. Why should I cut?”