If current domestic oil production trends continue, the U.S. will soon pass both Russia and Saudi Arabia to become the world's largest producer of oil by 2020. This would be a historic change, with both economic and political impact. Virtually no expert anticipated that U.S. oil production would hit a 15-year high. "Peak Oil" writers, where are you now?
In all fairness to those skeptics, many unforeseen factors have contributed to this development, but there are still industry observers that think that this trend might still not develop. Costly new government regulations on "fracking," lower oil prices, and global economic contraction could still slow U.S. production.
However, it looks like the oil locomotive has left the station, and is picking up speed. I, for one, would not want to be the politician or regulator that tries to slow it down. Given the realities of American political life, that is not going to happen.
Friday, January 11, 2013
China Environmental Protest Turns Violent
The environmental movement is still in its infancy in China. China has no Environmental Protection Agency, no statutory protections, and there is little public accountability by state-owned businesses. That leaves only one option for Chinese citizens who feel their health has been or is about to be threatened by environmental conditions, protests, which often turn violent.
Although the Chinese government has worked hard to improve its international environmental protection reputation, it has long sacrificed environmental concerns to boosting GDP by any means possible. Manufacturing requires energy, and lots of it, and China leads the world in the construction of greenhouse-gas-spewing coal-fired generators.
However, Chinese citizens may have latched onto an effective, if unorthodox by American standards, method fo containing environmental threats. Faced with the construction of a vast new petrochemical plant in the the eastern Chinese city of Ningbo which would have manufacture the highly-volatile compound paraxyline, a known carcinogin, thousands of protesters gathered at the site and fought with police and pro-government forces and security personnel. Scores were injured and many jailed, but it appears that the protests were successful. This protest follows another similar demonstration that resulted in the cancellation of another paraxyline manufacturing facility in Dalian, China, last year. It remains to see whether the Chinese government will take notice.
Although the Chinese government has worked hard to improve its international environmental protection reputation, it has long sacrificed environmental concerns to boosting GDP by any means possible. Manufacturing requires energy, and lots of it, and China leads the world in the construction of greenhouse-gas-spewing coal-fired generators.
However, Chinese citizens may have latched onto an effective, if unorthodox by American standards, method fo containing environmental threats. Faced with the construction of a vast new petrochemical plant in the the eastern Chinese city of Ningbo which would have manufacture the highly-volatile compound paraxyline, a known carcinogin, thousands of protesters gathered at the site and fought with police and pro-government forces and security personnel. Scores were injured and many jailed, but it appears that the protests were successful. This protest follows another similar demonstration that resulted in the cancellation of another paraxyline manufacturing facility in Dalian, China, last year. It remains to see whether the Chinese government will take notice.
Thursday, January 10, 2013
American Technology Will Drive Natural Gas Production
Not only does the United States have an abundant supply of natural gas, enough for both domestic consumption and export, but according to a new study from Deloitte LLP, is also well positioned to dominate the world market because of superior extraction techniques and refining infrastructure. Even other countries that are big producers do not have the technological expertise or processing facilities in place to compete with the U.S.
Complicating foreign exploration and production is their lack of knowledge about the characteristics of their particular oil-and-gas-rich shale deposits. Much more is known about U.S. deposits, and our extraction techniques and governmental regulation, although far from perfect, are far superior to that of other energy rivals. Another problem for the foreign competition is the lack of an entrepreneurial culture, unique to the U.S., which has helped overcome initial governmental skepticism about the safety of fracking. As a result, oil and gas companies in the U.S. are poised to even more aggresively pursue domestic deposits.
Going forward, it also appears that a profitable niche exists for energy companies not only to increase their own domestic production, but also to partner with foreign concerns so they might more effectively tap their underdeveloped natural gas resources
Complicating foreign exploration and production is their lack of knowledge about the characteristics of their particular oil-and-gas-rich shale deposits. Much more is known about U.S. deposits, and our extraction techniques and governmental regulation, although far from perfect, are far superior to that of other energy rivals. Another problem for the foreign competition is the lack of an entrepreneurial culture, unique to the U.S., which has helped overcome initial governmental skepticism about the safety of fracking. As a result, oil and gas companies in the U.S. are poised to even more aggresively pursue domestic deposits.
Going forward, it also appears that a profitable niche exists for energy companies not only to increase their own domestic production, but also to partner with foreign concerns so they might more effectively tap their underdeveloped natural gas resources
Wednesday, January 9, 2013
United States Soon to be Net Energy Exporter
In a world economy where access to energy equals political power, the United States is poised to be become a net exporter of energy once again, and that will require some mental adjustment on many people's part.
Decades ago U.S. oil wells were one of the principal sources of world energy. During World War II, almost all of the fuel used by the Allies came from U.S. oil fields. As U.S. production peaked and began to decline, other nations reaped the economic and political benefits of providing energy to the U.S. and the rest of the world. This forced a concentration of American financial, military, and diplomatic resources to safeguard our supply of foreign oil to keep the American economy humming. That is all about to change, for the better.
The new boom in domestic natural gas production has prompted a discussion as to whether domestic gas should be retained for the American market to help promote American manufacturing, leading to more competitively-priced good and more American jobs. Others want to just export the gas, arguing that this will also provide balance-of-payments relief, reduce the balance of payments deficit, and also add thousands of new jobs. The Department of Energy has delayed its decision as to the granting of export licenses to consider this very issue.
Although the export of natural gas would undoubtedly cause domestic prices to rise, this in turn would probably result in more money being available for exploration and production, leading to even higher employment. It would also bring the United States new economic leverage and increased "soft power," and
help protect and promote American interests abroad without the human and economic costs of military entanglements. That is a development that we could all welcome, but after decades of national concern about our dependence on foreign energy, it will require some mental readjustment for all concerned.
Decades ago U.S. oil wells were one of the principal sources of world energy. During World War II, almost all of the fuel used by the Allies came from U.S. oil fields. As U.S. production peaked and began to decline, other nations reaped the economic and political benefits of providing energy to the U.S. and the rest of the world. This forced a concentration of American financial, military, and diplomatic resources to safeguard our supply of foreign oil to keep the American economy humming. That is all about to change, for the better.
The new boom in domestic natural gas production has prompted a discussion as to whether domestic gas should be retained for the American market to help promote American manufacturing, leading to more competitively-priced good and more American jobs. Others want to just export the gas, arguing that this will also provide balance-of-payments relief, reduce the balance of payments deficit, and also add thousands of new jobs. The Department of Energy has delayed its decision as to the granting of export licenses to consider this very issue.
Although the export of natural gas would undoubtedly cause domestic prices to rise, this in turn would probably result in more money being available for exploration and production, leading to even higher employment. It would also bring the United States new economic leverage and increased "soft power," and
help protect and promote American interests abroad without the human and economic costs of military entanglements. That is a development that we could all welcome, but after decades of national concern about our dependence on foreign energy, it will require some mental readjustment for all concerned.
Doha Climate Meeting Brings No Breakthroughs
After a largely disapointing meeting of world leaders and climate experts in Copenhagen in 2009, climate-change exponents were hoping for some progress toward reducing greenhouse gases when they met in Doha recently. Unfortunately, this was clearly not the case.
According to the United Nations Environment Programme, 2012 greenhouse emissions reached 50 gigatons of carbon, 20% more than in 2000, and well above limits set in Copenhagen. The Kyoto Accords have clearly failed to rein in emissions, and Russia, Japan, and Canada have largely ignored its terms. China continues to add coal-fired generating capacity at a rapid rate. Only the United States has made some progress in this area, largely from increased use of cheaper natural gas.
According to the World Bank's most recent reports, the resulting rise of the oceans from increasing global temperatures will weigh heavily on coastal areas, especially in east and south Asia. This is a problem that need to be addressed on a long-term basis, but it is imperative that it be brought to the public's attention now. Unfortunately, no new proposals came out of the Doha conference and none are currently on the horizon. Perhaps some enterprising coalition of the world's business elite can come up with an economically feasible alternative where governments have failed. We can only hope.
According to the United Nations Environment Programme, 2012 greenhouse emissions reached 50 gigatons of carbon, 20% more than in 2000, and well above limits set in Copenhagen. The Kyoto Accords have clearly failed to rein in emissions, and Russia, Japan, and Canada have largely ignored its terms. China continues to add coal-fired generating capacity at a rapid rate. Only the United States has made some progress in this area, largely from increased use of cheaper natural gas.
According to the World Bank's most recent reports, the resulting rise of the oceans from increasing global temperatures will weigh heavily on coastal areas, especially in east and south Asia. This is a problem that need to be addressed on a long-term basis, but it is imperative that it be brought to the public's attention now. Unfortunately, no new proposals came out of the Doha conference and none are currently on the horizon. Perhaps some enterprising coalition of the world's business elite can come up with an economically feasible alternative where governments have failed. We can only hope.
Monday, January 7, 2013
U.S. Fuel Production Targets Spur Renewables
A 2007 law requires U.S.refiners and fuel importers to increase the amount of renewable fuels in gasoline. By 2022, 36 billion gallons of renewable fuels must be produced. However, the annual amount of corn-ethanol to be produced annually is capped at 15 billion gallons, so the question is where the rest will come from.
Currently, 13 billion gallons of corn-ethanol fuel are produced annually, but the amount of other alternative fuels is still relatively small. Now certain companies appear to be coming up with creative solutions to eliminate this renewable shortfall.
Companies hope that "advanced biofuels," such as wood chips, will help close the gap, and new facilities are beginning to process other biofuels, like the inedible portions of corn chips. KIOR and Du Pont are two of the companies investing heavily in this areas. Unfortunately, lawsuits filed by the American Petroleum Institute threaten the EPA's renewable energy mandates, arguing that the agency's alternative fuel targets are unreasonable. Nonetheless,both companies are proceeding with their research, vowing to make these arguments moot by technological advances and corresponding increased production of non-ethanol renewable fuel.
Currently, 13 billion gallons of corn-ethanol fuel are produced annually, but the amount of other alternative fuels is still relatively small. Now certain companies appear to be coming up with creative solutions to eliminate this renewable shortfall.
Companies hope that "advanced biofuels," such as wood chips, will help close the gap, and new facilities are beginning to process other biofuels, like the inedible portions of corn chips. KIOR and Du Pont are two of the companies investing heavily in this areas. Unfortunately, lawsuits filed by the American Petroleum Institute threaten the EPA's renewable energy mandates, arguing that the agency's alternative fuel targets are unreasonable. Nonetheless,both companies are proceeding with their research, vowing to make these arguments moot by technological advances and corresponding increased production of non-ethanol renewable fuel.
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