Publications

Energy and Environment News

October 19, 2015

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Climate Change.  Today the White House announced that 68 new companies have joined the original signatories of the “American Business Act on Climate Change Pledge,” a key component of the Obama Administration’s efforts to garner corporate and Republican support for a global climate change deal this year in Paris.  In addition to signing the pledge of support, many of the businesses announced separate commitments to reduce their own climate footprints, including reductions in carbon emissions and water usage and increases in the use of renewable energy. FT

Oil & Gas.  A new report by the JP Morgan Chase Institute finds that Americans used nearly half of the savings on lower gasoline prices to not only buy more gasoline, but also upgrade to higher grades.  Binyamin Appelbaum of the New York Times’ Upshot column remarks that this finding is an example of irrational behavior, illustrating consumers’ tendency to “earmark” money for particular kinds of spending.   NY Times

Energy Policy.  The U.S. Interior Department has canceled two sales of Arctic oil and gas leases, effectively halting all drilling off of Alaska’s coast for the remainder of the President’s term in office. The Interior Department justified its decision on grounds that it had received no indications of industry interest for the upcoming sales; the American Petroleum Institute countered that dwindling investment in the region is primarily due to uncertainty about federal regulations.   Bloomberg

Oil & Gas.  Art Berman of Forbes argues that over-production in the oil sector can only be solved with lower prices.  Although he hopes upcoming credit re-determinations and year-end reserve write-downs will halt capital spending, demand growth will balance the oil market, and OPEC will cut production, he is pessimistic about the likelihood of these outcomes; as such, Berman states that the market will balance only if prices go “low enough for long enough” to stop the flow of external capital to producers and force them to live within their means. Forbes

Energy and Environment News

October 16, 2015

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Climate Change.  Ten of the world’s largest oil companies jointly supported the United Nations’ goals of limiting global warming today by acknowledging that their industry must help climate change.  The public declaration was an effort to convince an increasingly skeptical world that energy companies are serious about delivering cleaner energy; however, its impact will be limited given that none of the biggest American companies participated and no specific commitments were made by the companies involved. NY Times

Oil Outlook.  Oil services company Baker Hughes reported that U.S. energy companies have cut oil rigs this week for the seventh week in a row — the longest streak of reductions in nearly four months.   This cutback brings the total number of U.S. oil and gas rigs to a fresh 13-year low, and suggests that U.S. production will decline between the second and fourth quarters of this year. Reuters

Climate Change.  A recent Brookings Institute Policy Brief reports that climate change mitigation technologies like carbon capture and storage (CCS) are likely to play a vital role in global efforts to reduce greenhouse gas emissions.  The authors assert that CCS is the only technology with the ability to achieve significant reductions from existing fossil fuel infrastructure, and argue that government policies and financial support are needed to ensure that CCS technologies are commercialized and deployed as quickly as possible.  Brookings

Oil Outlook.  Tim Treadgold of Forbes predicts that oil prices will eventually increase, but that the road to rebalancing requires patience.  Although large producers are likely to continue cutting capital expenditures in the near term, oil should slowly recover given that low prices will both force high cost producers out of the market and encourage greater consumption.  Forbes

Energy and Environment News

October 15, 2015

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Oil Outlook.  Lenders on Wall Street have quietly relaxed borrowing conditions in their contracts with struggling energy sector borrowers over the past year to avoid market volatility and the embarrassment of defaulted loans.  This behavior could start to change, however, as bankers accept that sub-$50 oil prices might be the new norm; the Financial Times predicts that lenders will become less willing to provide credit to the energy sector, which could open a void for large non-bank lenders to provide funds to cash-starved energy groups.  FT

Energy Policy.  The Supreme Court heard arguments on a consequential case today concerning the federal government’s authority to regulate energy markets.  The primary legal question at stake is whether the Federal Energy Regulatory Commission overstepped its boundaries by encouraging electricity users like schools, hospitals, and shopping centers to reduce consumption at peak times in exchange for price breaks — an approach that lowers costs for consumers but can cut into the profits of companies that own power plants.  NY Times

Renewable Energy.  According to a new report from the International Energy Agency, renewable energy accounted for more than 45 percent of all new electricity generation capacity worldwide in 2014 and is expected to supply more than half of all new capacity over the next five years.  While much of the growth is in hydro power, other sources such as wind and solar have seen significant price reductions and improved public policy support, which is expected to promote their growth over the near term.  IEA, FT

Energy Policy.  Tim Boersma of the Brookings Institute argues that Europe’s experiences with integrating local natural gas markets and enhancing energy cooperation between member states has efficiently enhanced the region’s energy security.  He also asserts that the EU’s experience speaks to the need for additional incentives for gas infrastructure investments, as well as expanded regulatory power that spans national jurisdictions. Brookings

Energy and Environment News

October 14, 2015

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Climate Change.  Eduardo Porter writes in the New York Times that the current Republican position on climate change is vastly different than that held by the party a decade ago, due mainly to the financial influence of fossil fuel interests and anti-government sentiment of the Tea Party.  He believes that a “Republican-compatible strategy” to address climate change exists — specifically citing a price on carbon emissions — as “street-level” Republicans become less likely to deny climate science, and Republican governors start taking action to avoid more federal intervention. NY Times

Energy Outlook.  The most populated states in New England are looking to take advantage of Canadian dams and rivers to supply their electricity — a move that would help cut greenhouse-gas emissions and keep notoriously high energy prices in the region at bay.   While Canada has plenty of energy to supply from hydroelectric dams, transporting that power to New England may prove difficult, as various power-line proposals have garnered criticism from New England residents. WSJ

Oil Outlook.  John Kemp of Reuters writes that there is a lack of accountability among oil market forecasters, as the accuracy of predictions is never properly tracked and measured after they are made.  Kemp argues that because these forecasts drive decisions affecting billions of dollars of investment,  forecasts should be subject to rigorous analysis, verification, and accountability.  Reuters

Climate Change.  Michael Lynch writes in Forbes that proposals dealing with climate change differ from more “effective” policy solutions in that they attempt to solve the problem by attacking the Industry, rather than addressing consumers.  Lynch asserts that policies designed to send price signals — such as the importance of fuel efficiency — are far more likely to be successful in achieving climate change goals than ordering companies to meet aggressive efficiency targets that create significant stress among producers and are ultimately relaxed by lawmakers.  Forbes

Energy & Environment News

October 13, 2015

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Oil Outlook.   The International Energy Agency’s monthly oil market report forecasts that world oil consumption will rise by 1.2 million barrels per day (bpd) in 2016, approximately 200,000 barrels a day less than previously estimated and down from an increase of 1.8 million bpd in 2015.  The anticipated slowdown in demand growth, along with the expected entrance of Iranian oil on the world market, means that the market will likely remain oversupplied throughout next year.  WSJ

Oil.  The New York Times reports that the oil sands boom has “dried up in Alberta” given the high cost of projects and sustained low global oil prices.  Declining profitability of the oil sands has led to the loss of nearly 35,000 jobs in the energy industry across the region, and shifted the political landscape as residents question the long-term economic viability of the oil projects.  NY Times

Renewable Energy. Depressed oil prices and fears of a spike in interest rates have dampened interest in renewable energy investments, most visibly in “yieldcos”, or new financing mechanisms used by renewable energy corporations to inexpensively raise capital from contracted electricity fees of owned and operated power plants.  Executives maintain that although operational shifts are needed to ensure the profitability of the industry, its long-term prospects remain strong.  NY Times

Oil Outlook.  Leonid Bershidsky of Bloomberg View writes that the U.S. shale industry will likely “survive” next year, but that sustained low oil prices will likely bring much more drastic cutbacks in 2017.  Bershidsky supports his prediction with a recent analysis by consultancy Wood Mackenzie, which forecasts that impacts from shrinking investment in the industry will peak in 2017.  Bloomberg View