It’s one thing if you’re 25 or 30 years old and your 401(k) is just getting started — you’ve got time to build it up, so don’t sweat it — but it’s quite another if you’re 60 or 65 and you’ve still got to sock away a lot of money before calling it quits. It could be argued that the environmental community is facing a quandary very similar to that of an aging boomer short on retirement savings. The fact is that the International Energy Agency’s (IEA’s) target of achieving net-zero man-made carbon emissions globally by 2050 in order to blunt the human impact on climate change will require massive new investment and a complete and well-coordinated transformation of the world’s energy complex. In the near-term, progress along that path must include an extraordinarily rapid ramp-up in the use of carbon capture and sequestration (CCS). And like an aging worker whose late discipline may be thwarted by an unforeseen health challenge, as we’ve seen with the recent energy crisis, there’s a lot that could derail progress toward those goals. Is the IEA's goal achievable? Maybe. But, as we discuss in today’s RBN blog, it won’t be easy.
Daily Energy Blog
U.S. exports of crude oil, LNG, NGLs and refined products have moved into the spotlight on the world stage. Within the past few years, global markets have come to rely on U.S.-sourced hydrocarbons to meet critical needs for energy supplies. But export volume growth has slowed. Demand in the U.S. is ramping up, leaving less available for shipment overseas. And some members of Congress are encouraging the Biden administration to curtail or even ban some exports. What’s next for U.S. hydrocarbon sales to international markets? Will U.S. exports be there to challenge Russia’s use of oil and gas as political weapons? Or could market, logistical and political forces disrupt the flows that are meeting energy needs of the world? Today, we preview the deep dive into these issues on the agenda at RBN’s upcoming xPortCon conference.
Just downstream from the Appalachian supply basin — where daily spot natural gas prices are among the lowest in the country — cash and forward prices in the Mid-Atlantic and Southeast have rocketed, becoming the highest gas prices in the land, and in some cases are at never-before-seen levels for this time of year. No doubt it’s been a sweltering summer so far, and low storage levels aren’t helping either. But there’s more to the price premiums than that. Limited access to supply and constraints on Williams’ Transco Pipeline — the primary system delivering gas to the region — have created a demand “island” there just as persistent heatwaves boosted cooling demand. Moreover, without additional pipeline capacity, the dynamics unfolding this summer could become a regular feature of the Southeast/Mid-Atlantic markets. In today’s RBN blog, we break down the factors driving regional prices to new heights.
The official start of propane heating season is only two months away, and inventories are skinny, pretty close to the five-year minimum. Should that be a concern? After all, stocks were at the low end of the range last year, and it was a relatively benign market, with few supply chain disruptions. But there’s a potential gotcha in that statement. Because last year the first three months of winter were quite mild in propane country. What would happen if the market were hit with weather events like what we saw during the “polar vortex” of 2013-14, a winter etched into the minds of all propaners who lived through it? Obviously, the outcome would be quite different. In today’s RBN blog, we continue our series on the upcoming propane heating season with a look at the challenges that unusually cold weather could bring.
Refiners and the U.S. Environmental Protection Agency (EPA) have locked horns in a dispute over Renewable Identification Numbers (RINs). Now in its 10th year, the dispute stems from contradictory premises about how RINs affect the profits of the refiners and blenders who produce the ground transportation fuels sold in the U.S. To form an opinion of what ought to happen next, you need to understand the fundamentals of how RINs work in light of the RIN being a tax and a subsidy that forces renewables into fuels. In today’s RBN blog, we focus on how RINs force renewables into fuels and address the related question: Do RINs increase the price consumers pay for gasoline?
Over the past few years, the simultaneous drives for action on climate change, diversity in the workplace, and corporate accountability have coalesced into the environmental, social, and governance (ESG) movement. The energy industry has been at the center of all this, of course, because significant volumes of greenhouse gases (GHGs) are generated with the production, processing, transportation and –– especially –– consumption of hydrocarbons. But while many energy companies have developed ESG strategies and goals, the ESG movement has also come under increasing scrutiny and criticism –– and from all sides, it seems. So where does the movement stand today, and what are its prospects in a world that is now as focused on energy security and affordability as it is on quickly reining in GHG emissions? In today’s RBN blog, we discuss highlights from our new Drill Down Report on the issues surrounding ESG.
It took many decades to build out the U.S.’s natural gas production, processing and transportation infrastructure, and just as long to develop demand for natgas — the many millions of residential, commercial, industrial and power-generation customers that now depend on U.S. gas, both domestically and, more recently, internationally as well. Now, with action on both climate change and energy security top of mind, there’s a big push to add clean hydrogen to the energy mix as quickly as possible, as evidenced by the Department of Energy’s plan to invest up to $8 billion in the development of four or more “hydrogen hubs.” This time, we won’t have decades to build out the clean hydrogen supply, demand and infrastructure that will be needed to make a real difference — and that’s precisely the point being made by the folks in and around Houston, who assert that the region has just what it takes to get a consequential hydrogen hub up and running. In today’s RBN blog, we continue our look at the federal government’s push to advance clean hydrogen and the Houston-led effort to make the western Gulf Coast a center of hydrogen-related activity.
Escalating Russian aggression and LNG supply shortfalls, exacerbated by outages in the U.S. and Australia, have put the pressure back on international gas markets and sent prices in Europe and Asia back toward their winter highs. Around the world, high prices have pushed some end users out of the LNG market and spurred on the global, cross-commodity energy shortage that has had utilities and governments scrambling, sometimes unsuccessfully, to keep the power on. The European Union (EU) is pushing its members to reduce gas consumption by 15% through winter and parts of Europe face austerity measures. Some European countries are turning back to coal generation as the continent prepares for the prospect of a winter with less — or potentially even no — Russian gas. In today’s RBN blog, we look at where things stand in the international gas market and the ramifications for the winter ahead and beyond.
We are only two months away from the official start of propane heating season in the U.S., and inventories are 3.5 MMbbl lower than last year, or 2.6 MMbbl below the five-year week-on-week low. Volumetrically, it’s a story very much like last summer: Propane exports are running high and while production is up it’s not increasing fast enough to get inventories back to where we would like to see them. But propane prices are not behaving at all like last year. At this point in 2021, the price of propane was moving higher, both in absolute terms and relative to the price of crude oil. This year, prices have been falling for the past four months and are much weaker relative to crude than a year ago. With low inventories and low prices, what are the prospects for the propane market being prepared for the upcoming heating season? And what are the risks if there's a cold-weather surprise? We’ll consider those issues and more in the blog series we begin today, focusing first on how we got here.
Europe is trying to wean itself off Russian natural gas, and few things would help it more than an expansion of U.S. LNG export capacity. But LNG projects don't just need long-term commitments for their output, they also need pipelines to transport natural gas from the Marcellus/Utica and other distant production areas to their coastal liquefaction plants. And, in case you hadn't noticed, new interstate gas pipelines face a lot of hurdles during the regulatory review process these days — getting a pipeline approved is tougher than snagging a Saturday morning tee time. Which brings us to, of all things, an important court ruling. In today's RBN blog, we discuss the implications of the DC Circuit's decision in City of Oberlin v. FERC.
Western Canada’s propane market has been rapidly evolving in the past few years. Rising Canadian demand for propane and direct exports to Asia from British Columbia’s (BC) two export terminals have been jockeying for supremacy with railed propane exports to the U.S. Those exports to Asia and the U.S. will soon be facing another challenge: the pending startup of Inter Pipeline’s Heartland Petrochemical Complex, which will increase propane demand in Western Canada by a hefty 22 Mb/d in the coming weeks. In today’s RBN blog, we look at what it could mean for propane exports to the U.S., which has traditionally depended on an assist from Canadian volumes.
Refining margins today — whether in the U.S. Gulf Coast (USGC), Rotterdam or Singapore — are at record highs. Given current high crude oil prices, gasoline and diesel prices at the pump everywhere are also at unprecedented levels, making refinery profits a major topic of conversation — and not just for politicians. While some of the explanations of refining margins are just political talking points, several others are well-established and accepted, and still others consider factors that are less frequently cited, even by those familiar with energy markets. One such factor is the price of natural gas and how it’s impacting refinery operations and competitiveness around the world. Today’s RBN blog discusses the crucial role natural gas prices play in refinery operating expenses and refining margins, and examines how favorable natural gas prices in the U.S. are providing a substantial competitive advantage for domestic refiners.
As the world economy tries to dust itself off after COVID, increased demand for transportation fuels coupled with tight supplies has become a pain. The shortage escalated to crisis levels this spring and summer when, in response to Russia’s invasion of Ukraine, sanctions eliminated Russian exports of crude oil and intermediate feedstocks to the U.S. and severely reduced flows to Europe. While Russia has been able to find some alternate markets, its overall product exports are down significantly. Adding to these product-supply reductions are policy decisions by Putin’s allies in China to reduce their product exports to a trickle. Chinese exports had been an important part of regional supply in recent years, but authorities there have decided to decrease the number and size of export quotas issued, leaving many refineries in China operating at rates well below their capabilities. In today’s RBN blog, we take a closer look at how developments in Russia and China have played a major role in the current global shortage of refined products.
When you boil it down, there are only two energy-related responses to Russia’s war on Ukraine. First, there’s a big push to find sources of crude oil, refined products, natural gas and NGLs to replace Russian supplies as quickly as possible. Second, governments on both sides of the Atlantic are scrambling to reaffirm and even expand commitments to lower-carbon energy sources to delink from Russian hydrocarbons as well as meet energy transition goals. Both raise the same question: How fast can the world bring online any new sources of energy on the scale needed? Policymakers would like to believe the answer can be found through the stroke of a legislative pen invoking aspirational language. No one doubts the power of that pen to create incentives or impediments. But the answer to that question is dictated by the realities of the physical world. In today’s RBN blog, we discuss the options for accelerating the availability of the minerals, metals and other materials needed to build the required machinery for the energy transition.
The global reaction to Russia’s invasion of Ukraine was swift, with calls of condemnation and plans quickly surfacing for the U.S. and other countries to stop their purchases of Russian crude oil and natural gas immediately, or at least as soon as practical. The strategy has been to make the situation as politically and financially painful as possible for Russia, which has not been shy about using its energy supplies as a weapon, before or after the invasion. But those plans haven’t worked as well as hoped, and some impacts are bringing back memories of the 1973 oil embargo which, though driven by a far different series of events, may provide insight into the current situation. In today’s RBN blog, we look at the many parallels to today, including weaponized oil, regional supply shortages, price spikes and well-intentioned (if sometimes ill-conceived) government responses.
