Publications

Energy and Environment News

May 6, 2015

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Oil.  Oil industry analysts warn that the physical market for crude oil is “deeply disconnected” with oil futures prices, which have begun to rebound upon signs of strengthening demand.   While high oil stockpiles suggest that near-term prices will stay low,  uncertainty remains surrounding future supplies — particularly from Iran and U.S. shale producers — which may give prices continued support.  Reuters

Energy Outlook.  The Wall Street Journal examines two opposing predictions regarding the direction of oil prices over the next six months.  Phil Verleger, an energy economist and consultant, forecasts that Brent oil prices will remain low due to high global inventory levels; conversely, Paul Hornsnell head of commodities research at a leading investment bank, argues that inventories are a “second-quarter phenomenon”, and predicts that prices will soon push above $80 per barrel due to strong expectations for third-quarter demand. WSJ

Climate Change.  India has committed to engage and take a leadership role in the global effort to combat climate change — a surprising pledge, given that the country is frequently signaled out for resisting mitigation action and for its reliance on fossil fuels like coal.   Samir Saran and Vivan Sharan of Brookings note that the main barrier to success with India’s pledge is a lack of technological and financial flows, particularly related to renewable energy sources.  Brookings

Energy Outlook. Amy Myers Jaffe of the Wall Street Journal argues that oil demand is set to peak and decline in coming decades due to transformational gains in industrial productivity, software-assisted logistics, urbanization, increased political turmoil in key developing markets, and growing investment in renewable energy resources.  Jaffe notes that forecasts of continued demand growth — including those of most oil-exporting countries and the International Energy Agency — overestimate the extent of demand growth expected to come from developing countries and underestimate future declines in demand from the developed world.  WSJ

Energy and Environment News

May 5, 2015

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Oil.  The U.S. benchmark oil price exceeded $60 a barrel today for the first time since December, extending a two-month rally.  The uptick was driven in part by interruptions to Libyan production as well as by Saudi Arabia’s announcement that it would increase prices for crude sold to Europe and North America — a signal that the world’s biggest oil exporter expects strong demand in those region.  WSJ

Oil.  A recent study published in the Proceedings of the National Academy of Sciences reveals that organic compounds attributed to shale gas development have been found in wells of homes located in the Marcellus Shale region.  This is the first case published of its kind that addresses the longstanding question about potential risks to underground drinking water from the drilling technique known as hydraulic fracturing, or fracking.  NY Times

Climate Change.  The European Union agreed today to overhaul its cap-and-trade system for carbon dioxide emissions as part of an effort to encourage investment in low-carbon technologies amidst a volatile investment climate.  The EU’s carbon market has been undermined by a severe drop in prices in recent years amid low industrial activity during the economic crisis and an over-allocation of emissions allowances; today’s agreement would create a stabilization mechanism for the system in order to increase the cost of releasing carbon dioxide into the air.  WSJ

Oil.  James Conca of Forbes argues that although the Department of Transportation’s new crude oil rail shipment regulations do address the growing dangers of transporting crude oil, their stipulations exempting specific information about rail shipments from the Freedom of Information Act, public records, and state disclosure laws are troubling.  Conca argues that the growing size and usage of railcars to transport crude oil requires that consumers and regulators need to know as much as possible about rail transport of oil.  Forbes

Energy and Environment News

May 4, 2015

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Energy Policy.  The Supreme Court agreed to review a case addressing whether the Federal Energy Regulatory Commission (FERC) has the authority to promote energy conservation through the use of incentives.  The rule in question — which seeks to promote higher compensation levels for large power users if they reduce their energy consumption during peak demand times — was struck down by a lower court on grounds that such incentives should be provided by states, not the federal government.  WSJ

Energy Outlook.  According to a new working paper by the International Monetary Fund, the U.S. energy boom may offer a “modest boost” to the U.S. economy over the longer term, adding between one and one and a half percent to GDP.   The authors’ conclusions stem from the assumption that the U.S. will become energy self-sufficient in 12 years’ time, and that households and firms will gradually adjust their behavior as they come to understand the prospects for U.S. energy production.  WSJ

Energy Policy.  A recent study led by researchers at Syracuse and Harvard Universities finds that the EPA’s Clean Power Plan would substantially improve human health and prevent more than 3,000 premature deaths per year.  The Clean Power Plan — which aims to reduce pollution by phasing out coal-fired power plants — will be finalized by the Obama administration in coming months.  NY Times

Oil & Natural Gas.  David Einhorn, a prominent investment analyst recognized for betting against the Lehman Brothers, called out five prominent oil exploration companies for “wasting money on uneconomic [natural gas] wells” today.  Equity investors reacted quickly to Mr. Einhorn’s comment — shares of several of the companies he highlighted tumbled within minutes of his presentation.  FT

Energy and Environment News

May 1, 2015

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Oil.  Amid concerns surrounding the growing number of rail accidents in recent years, a group of six senators have proposed that the government charge companies a special fee to ship oil, ethanol, and other flammable liquids in older tank cars.  This proposal — which would be paired with a tax break for companies that upgrade to newer tank cars that can better withstand derailments — represents legislators’ ongoing efforts to offer companies market-based incentives to improve safety.  NY Times

Climate Change.  Debate surrounding the impact of dairy consumption on the environment has surged recently as global demand for milk products continues to skyrocket — particularly in developing economies like China and India, where increasing prosperity and urbanization have sparked changes in tastes.  According to the United Nations’ Food and Agriculture Organization, manure, feed production, and milk processing emit climate-warming gases that pollute on a massive scale, rendering livestock one of the two or three most environmentally damaging sectors.  WSJ

Energy Policy.  The EIA reports that eight states have “permanent funds” that are primarily funded by oil, coal, or natural gas tax revenues. The permanent funds — which are revenues earned from taxing the extraction of energy resources and set aside for strategic or long-term use — supplement general government expenditures; in Alaska, however, state residents are issued an annual portion of the fund’s earnings.  EIA

Energy Outlook. Research shows that while consumers are increasingly cognizant of the need to purchase sustainable foods, “green” kitchen utensils and appliances are too often considered a luxury item.  Given that kitchens are the one place in an household where relatively extreme temperatures are produced, tremendous strides in food sustainability could be made by making major appliances more energy-efficient.  NY Times

Energy and Environment News

April 30, 2015

Top Stories

Climate Change.  California Governor Jerry Brown issued an executive order yesterday requiring California reduce its greenhouse gas emissions by 40 percent by 2030 in efforts to speed up the state’s already ambitious emissions reduction program.  This tough new interim target represents an effort to motivate industry players to act immediately, and positions California as a leading force in the global effort to address climate change.  NY Times

Oil.  Saudi Arabia is burning through its foreign reserves as it attempts to maintain current spending levels despite revenue losses stemming from persistently low oil prices.  The Kingdom is currently offering bonuses to military personnel, for example, despite warnings from the International Monetary Fund (IMF) that Gulf states should attempt to cut extraneous spending on wages and subsidies in order to preserve monies abroad.  FT

Energy Policy.  Kevin O’Marah asserts that President Obama should be permitted authority to fast-track the Trans-Pacific Partnership (TPP) because the deal would not only improve global supply chain performance, but also establish a rule of law governing the environmental, labor, and public health impacts of the continually evolving business world.  Specifically, he argues that the TPP will help key stakeholders engage in long-run horizon planning and strategic network modelling, which will in turn enable smarter use of resources and faster economic growth.  Forbes

Oil.  Daniel Gilbert of the Wall Street Journal argues that takeovers in the oil industry will become increasingly prevalent amid rising oil-exploration costs and shrinking valuations of small- and medium-sized players.  In many cases, it has become cheaper for the world’s largest crude producers to replace reserves by purchasing other companies rather than developing new oil products;  Gilbert asserts that although another wave of “megamergers” is unlikely at this moment, companies will likely make smaller deals to fill gaps in their holdings or build on existing strengths.  WSJ