Tag Archives: energy policy

business news, environmental news, International news

Don't bet on OPEC

It’s gratifying to me to see the United States and Canada standing up to other oil-producing regions in the ongoing battle to control the price of fossil fuel.

According to an analysis on MSN.com, the North Americans are winning the fight.

http://www.msn.com/en-us/money/other/opec-is-wrong-to-think-it-can-outlast-us-on-oil-prices/ar-BBgej5T

The Organization of Petroleum Exporting Countries recently declined the opportunity to reduce production. The non-action sent Brent crude to new low prices. According to MSN: “The Saudis appear to be spoiling for a fight, trying to find out exactly how cheap oil must be to force surging U.S. shale-oil production to seize up like an unlubricated engine.”

The gratification comes in the knowledge that North Americans finally seem to understand the need to conserve energy and to use alternative sources of energy. Yes, the production of shale oil in North Dakota and Montana also is helping boost oil supplies that have been outstripping demand; the result has been the plummeting prices we’ve seen across the country.

Shale oil is less expensive to produce than when it first came onto the oil-production scene, according to MSN.

Add the falling production costs of shale oil and the growing use of alternative sources — wind, sunlight and hydropower, to name just three — then OPEC’s influence on world oil price becomes diminished.

We’ve come a good distance from the days of the Arab Oil Embargo, correct?

 

business news, local news

Price goes up … then comes back down

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Update: I thought for a moment I had been hallucinating earlier today when I noticed the price of gasoline had jumped 20 cents per gallon during the night. But nope. I saw it.

Then I noticed a competing convenience store chain had kept its prices the same as the day before, $2.79 per gallon of unleaded gasoline. Lo and behold, the two stations I noticed the big jump had rolled the price back to $2.79 during the day, and then dropped the per-gallon price a penny more by the end of the day.

Could there have been, shall we say, a gasoline pump trial balloon sent aloft this morning?

***

A mystery of economics has been made even more mysterious as of this very morning.

While completing an errand a few minutes ago, I noticed the price of regular unleaded gasoline jumped 20 cents per gallon overnight.

It’s still under $3, but it’s now at $2.99 at one local gasoline station. It’s a local chain, so I’m betting I’ll see a similar spike at other corner gasoline stations later this morning when I trudge off to work.

The mystery is this: I keep reading stories in the media about the plummeting price of crude oil and the accompanying decline of gasoline — which is a product of aforementioned crude oil. Then I witness this upward spike in prices here in West Texas, which supposedly is one of the centers of the domestic oil production boom that I thought was helping drive the price of energy down.

What in the world am I missing here?

I get the supply-and-demand drivers that fuel the economy.

News reports keep telling us that our supply is outstripping our demand. Production is up, demand is down. Thus, prices are supposed to come down. Isn’t that how capitalism works? It’s kind of basic.

Now the price of gasoline here in Amarillo, Texas, has shot back up — by a lot!

It’ll take some time for the price to trickle back down. That’s how it works. What jumps up quickly comes down at a snail’s pace.

I’ll be waiting and watching.

business news, national news, State news

Export oil, deplete supply, price goes up

Pressure reportedly is mounting on Capitol Hill to lift a four-decade ban on exporting U.S. crude oil.

This notion gives me pause. I’m not totally against it. It surely, though, does raise a fundamental economic question: If supply-and-demand policy regulates the price consumers pay for a product, would exporting oil overseas reduce the supply here at home and, thus, mean we pay more for what we purchase?

Momentum builds to allow US oil exports

I watched the price of gasoline drop twice Saturday while I was working. The price of regular unleaded gasoline is now around $3.07 per gallon in Amarillo.

Then this morning I read in the Wall Street Journal that prices might be coming down even more. And this comes as the pressure builds to allow U.S. exports of oil. Why? Because we have so much of it now being produced here at home, thanks to the enormous shale oil reserves being developed in places such as North Dakota and Montana — not to mention the production that’s occurring in West Texas and Oklahoma.

Some Republicans want to lift the ban enacted in the 1970s when oil was relatively scarce. We had been through those oil embargoes slapped on us by rogue Middle East nations. The price of fossil fuel products has gone nowhere but up ever since … until now.

The price is coming down, thanks to a lot of factors: better motor vehicle fuel efficiency; increased development of alternative energy sources, which means less reliance on fossil fuels to generate electricity.

All of this has contributed to a glut of oil supply in the United States.

Do we want to draw down that supply when Americans might start to see some serious relief as they fill up their motor vehicles with fuel?

Supply goes up, prices go down. Isn’t that what we want? I need to think some more about this idea.

Uncategorized

Explain gas prices, please

My list of things that need explaining keeps growing.

I’ll add another item right here.

Why is it that gasoline prices shoot up a dime or more per gallon at one shot, but trickle back down a penny, maybe two, at a time?

It’s happening all over Amarillo. Gasoline dealers across town are advertising prices for unleaded regular gasoline at a penny less than they were, say, yesterday. The “new normal” for cheap gasoline, remember, bears no resemblance to what we used to call “cheap.” But that’s another story.

I’m trying to get a handle on why the price escalates so rapidly and then stays at that new level until someone up the gasoline sales chain of command decides to start ticking it back down.

I keep thinking there’s some kind of mind game going on. Gas dealers want us to get used to the higher prices, it seems, so that the next price spike doesn’t seem as painful.

Or … gasoline dealers want to hang on to their profits for as long as they possibly can before giving some of it back. Is that the case?

I know. I should call one of the gasoline dealers and ask them personally. I happen to be acquainted with one of the leading dealers in the city.

Maybe I can ask him. However, if I do, will he give me a straight answer?

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Pipeline won’t affect climate … so let’s build it

My environmentalist sensibilities have been taxed by this debate over whether to build the Keystone XL pipeline from Canada to the middle of the United States.

My inclination is to oppose such a thing because, the theory goes, it would emit too many carbon-based pollutants and harm the planet’s climate.

Then comes this government report that says the pipeline’s effect on the climate is negligible.

http://www.realclearpolitics.com/articles/2014/02/02/obama_running_out_of_reasons_to_reject_keystone_xl_121434.html

Oh, what to do?

I believe President Obama should rethink his opposition to it and allow its construction.

The report comes from the U.S. State Department, which heretofore had been on the right wing’s hit list of nasty federal agencies. Now State has declared the Keystone project poses no serious environmental threat, which pleases proponents of the pipeline. They contend the project will create jobs and will strengthen U.S. energy policy.

The pipeline would carry oil pulled from western Canada tar sands to Nebraska, where it would then be sent through existing pipelines to the Gulf Coast, where it would be refined. Much of it would be exported abroad. Some of it would be used here at home.

Its job creation potential is huge, which of course is what the president wants. It also brings those vast tar sands reserves into play, relieving North America of the need to import oil from faraway nations, such as those in the volatile and explosive Middle East.

Is it a win-win deal? Not just yet. But it’s getting closer to becoming one, based on the State Department’s assessment of minimal environmental impact.

Uncategorized

Economy takes a hit … or does it?

Economics question of the day: When does a drop in the unemployment rate mean bad news?

When the drop is caused by people giving up on their search for jobs.

So it is that the Labor Department today reported that the jobless rate fell to 6.7 percent, the lowest rate since 2008, but the economy added only 74,000 jobs in December, which is far below economists’ prediction.

Is it time to push the panic button? Time to throw in the towel? Time to storm the White House with torches and pitchforks?

No to all of the above.

As my financial adviser keeps telling my wife and me: Take the long view.

The nation added 2.2 million jobs in 2013, which is about what it added in each of the previous two years. The labor market isn’t great. As one economist said on NPR this morning, it’s gone from being “terrible to just plain bad.”

I’m not going to join the amen chorus of critics who keep insisting the economy is in the tank.

We’ve recovered all the jobs lost during the great recession of late 2008 and early 2009; manufacturing is up; the budget deficit is down, as is the trade deficit; domestic energy exploration is way up, as evidenced by all those pump jacks working furiously along the Texas and Oklahoma panhandles.

Let’s just wait for next month’s job figures … and maybe the month after that.

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Shall I take credit for gas price decline?

I am trying to decide whether to take credit for the decline in gasoline prices all across Amarillo.

My wife and I recently purchased a hybrid automobile, a Toyota Prius. It runs partially on gasoline and partially on electricity. It’s a nice little rig, a 2010 model with about 71,000 miles on it. A young sales rep at the auto dealership where I work told me the engine “won’t even get broken in until it hits 100,000 miles.” Good to know.

I filled up today. We went nearly two weeks since topping off the tank in the little bugger. The car consumed 3.6 gallons of gas during that time.

I’m not an economist, but I do understand a couple of basic principles. One of them is that when demand goes down, supply goes up. Another is that when suppliers have too much of something to sell, they tend to mark down the price to reduce their inventory.

President Obama touched on all of that Thursday when he toured a steel plant near Cleveland, Ohio. He talked about the decline in fossil fuel consumption and the decline in oil being imported into the United States, coupled with the increase in renewable energy and increases in fuel-efficient automobile production.

Do you see a pattern there? I do.

My wife and I believe we’re doing our part with the purchase of our hybrid car.

Look at the gasoline pump prices in Amarillo. I have read data that suggest the price could fall even farther, again as supplies increase because of reduced demand. My hope is that people don’t start driving a whole lot more as gasoline becomes more affordable.

OK. That settles it. I have decided to take some credit for the price decline.

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Falling gas prices a boon or a bust?

A Bloomberg News Service columnist is issuing a warning about the falling gasoline prices.

They aren’t necessarily good for the nation’s economy or its long-term energy policy.

Pump prices in Amarillo now stand at about $2.92 per gallon for regular unleaded gas. That’s “cheap,” yes? And who would have thought $2.92 would be considered a bargain for gas?

http://www.bloomberg.com/news/2013-11-11/beware-of-falling-gas-prices-ritholtz-chart.html

Barry L. Ritholtz, writing for Bloomberg.com, thinks the price reduction is going to produce a spike in driving. We’re going to forget that we have a limited supply of fossil fuels used to produce gasoline. It happens every time we see these dramatic dips in gasoline prices, as Ritholtz has noted.

Then comes the sticker shock when the next overseas crisis erups in an oil-producing region — Syria, Iran, Egypt, Libya, Yemen … they all come to mind.

I don’t want to sound like a know-it-all, but my wife and I have recently invested in a hybrid automobile. It runs on electricity and gasoline. Our Toyota Prius is our No. 1 in-town vehicle, and so far the investment is paying tremendous returns for us. We’re averaging about 47 miles per gallon and filling it up about every two weeks for a mere pittance of what we normally have paid for fuel.

Our 3/4-ton diesel-fueled Dodge Ram pickup, the one we use to haul our fifth-wheel travel vehicle? That’s another story. Won’t go there. Suffice to say it stays parked most of the time.

We’re all enjoying the relatively cheap fuel at the moment. However, I intend to take Ritholtz’s warning to heart.