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World Oil Market Risks: Future Shale Oil and Saudi Oil Declines

February 28, 2013 in EV News, Oil

The latest data from the Energy Information Administration (EIA) shows that the United States is now producing over 7 million barrels a day of crude oil.  This partly explains the drop in oil prices of recent as more production has come into the market from the shale oil fields.  Undoubtedly, many oil men would gripe that too much of this oil is bottled up at Cushing Oklahoma in storage tanks.  The glut of oil at Cushing has hampered the price of WTI oil, currently trading at about $92 a barrel.  In contrast, Brent oil trades at about $111, which is considered by many to be a far better measure of the international price of oil.

The EIA has made fairly accurate estimates to date on shale oil production, but there are some industry experts voicing concerns that these shale oil fields have steep decline rates after peaking.  The EIA data moving forward is going to be watched closely by market strategists to judge the stability of these shale oil fields.  To be curt, the jury is still out.

Saudi oil production is a big question mark for 2013.  As always, there are scant details, but the overall production numbers have been weak.  Bloomberg reported: “Saudi Arabia, OPEC’s biggest oil producer, pumped 9 million barrels a day this month, the lowest level since May 2011.  Output was down 100,000 barrels a day from January and 900,000 barrels from May, when production reached the highest level since at least January 1989.”

Source: EIA

Source: EIA

The international oil market has numerous potential problems, but it has managed to balance oil supply and demand fairly well.  This may change in the not so distant future.  The decline rates of post-peak shale oil fields and the recent production declines of Saudi Arabia are big gambles for the United States and the world.  At some point, this overly stretched risky bet on oil is going to bust the world economy.

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U.S. crude oil production tops 7 million barrels per day, highest since December 1992, Source: EIA

February 28, 2013 in EIA, EV News, Oil

Source: EIA Today In Energy 2-28-13

Source: EIA Today In Energy 2-28-13

U.S. crude oil production exceeded an average 7 million barrels per day (bbl/d) in November and December 2012, the highest volume since December 1992. The end-of-year data were reported on February 27 in EIA’s Petroleum Supply Monthly.

Increasing oil production in North Dakota and onshore Texas drove the increase in U.S. crude oil production over the last several months (although crude oil production in North Dakota took a dip in November, before increasing again in December). Much of the increase in crude oil production is coming from shale and other tight (very low permeability) formations.

Initial estimates for production in November were below 7 million bbl/d, but revisions based on additional data indicate that production exceeded 7 million bbl/d in November 2012. That was followed by December production estimated to be more than 7 million bbl/d.

Because of time constraints in publishing monthly petroleum supply statistics, EIA uses an estimate of production for the most recent month. This estimate is derived from actual data reported by federal and state agencies that supply the information in time for EIA’s publication. For remaining states, EIA estimates crude oil production using the latest available data from those states. As reported data become available, EIA revises the estimated production data with actual production data. The revised data appear in the historical data series on EIA’s website. In the future, EIA is proposing to collect crude oil production data directly from companies in the top-producing states in order to provide a more accurate and timely assessment of U.S. crude oil production volumes.

This article is a repost, credit: EIA Today In Energy

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Time to Join the Party: Early Data on Plug in Adoption and Industry Investment, By Barry Woods

February 28, 2013 in Economics, EV News, Politics

Barry Woods of DriveEVs and Plug In America Director

Barry Woods of DriveEVs and Plug In America Director

By choosing to employ regulatory streamlining and supportive policies and incentives on consumer deployment and in-state industry development, Oregon and California now have evidence that those dollars leverage high economic value.

In late 2009 in Oregon, a few EV oriented businesses, manufacturers and professionals created an industry cluster in a third floor conference room of the Portland Development Commission, and concocted a strategy to harness state funds to promote its development.   Now called Drive Oregon, the group convinced the Oregon Innovation Council of its value and successfully lobbied state legislators to invest $1.2m of state funding at a time when the state’s budget left many lawmakers on the retreat, cutting public safety measures and teacher salaries.  The pitch, that Oregon needed to have a means of fueling its EV industry cluster’s growth and have a conduit for federal and private grants funding alternative fuel technologies, was persuasive but not without great uncertainty.  Should Oregon gamble on using state funds to fuel development in a sector that many, even today, dismiss as doomed to fail?  Recently the Northwest Economic Research Center (“NERC”) released the results of its first study designed to define what companies constitute Oregon’s EV cluster and measure its strength and economic impacts.

Tom Potiowsky, director of NERC and former Oregon state economist, concluded that: “Our research indicates that the electric vehicle industry generates gross economic activity of $266.56 million, total value added of nearly $148 million and provides more than $89 million in total employee compensation.  The industry continued to grow during the Great Recession, while other transportation industries suffered enormous losses.”

NERC estimated that EV economic activity created a ripple effect, adding 1169 jobs to the economy in addition to the 411 full-time EV jobs.  Tax revenue to the state amounted to $11.9m and $20.8m to the federal authorities.   More importantly, in a little over a year DriveOregon has gotten over forty businesses to join the cluster and leveraged over $2.5 million dollars to date through its matching grants program.

Why has the EV industry taken root in Oregon?  Sophisticated local demand may explain some of this phenomena, a population given to a willingness to try new things for the benefit of themselves and the planet.    Oregon’s skilled workforce, supportive legislative and regulatory policy atmosphere, and a diffuse EV industry structure involved in manufacturing of different types of EVs, parts and components all contribute to its health. But it is more.  It took impassioned individuals and courageous political leadership.

What of the other side of the coin- deployment? What benefits might be achieved through a state’s aggressive measures to foster consumer purchasing of PEVs?

In the UCal-Berkeley study released in September 2012, titled, “Plug-In Electric Vehicle Deployment in California: An Economic Assessment”, focused on providing an economic assessment of the state’s accelerated deployment of PEVs.   Its author, David Roland-Holst, who employs a long-term economic forecasting model, concludes that:

-Light duty vehicle electrification can be a catalyst for economic growth, contributing up to 100,000 additional jobs [in California] by 2030.

-On average, a dollar saved at the gas pump and spent on other goods and services that households want creates 16 times more jobs. (Yes, read that again).

-The majority of the new demand financed by PEV fuel cost savings goes to in-state services.

Individual Californians gain from economic growth associated with fuel cost savings due to EVs, whether they buy a new car or not. Average real wages and employment increase across the economy and incomes grow faster for low-income groups than for higher-income groups.

(Emphasis added.)

In essence the type of savings achieved through PEV adoption are quite different than those expenditures on the fossil fuel supply chain, creating stronger multiplier effects on state product and job creation and providing a positive net value to those states that adopt them.  PEV-related transportation efficiency also stimulates job creation across all economic activities, not just in the  ”green collar” sector, through this expenditure shifting phenomenon.  Quite simply, “a dollar saved on traditional energy is a dollar earned by 10-100 times as many new workers.” (p.17)

The importance of these studies should not be underestimated.  They add yet another analytic block to the foundation supporting the business case for society’s investment in PEV technology and adoption and, perhaps most importantly, for the ongoing political support of policies designed to assist its rapid ascent.  When read in conjunction, these studies make clear that we have ever more to gain by the acceptance of EVs then “just” GHG reduction, balancing the grid, and a better driving experience.   We have local jobs to gain and, with them, hope for a sustainable energy future.  For California and Oregon, the gamble appears to be paying off.  Can other parts of the country afford to not to invest in a technology sector whose odds get more favorable all the time?

This article is a repost, credit: Barry Woods of DriveEVs


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No Time to Cool Off, By Michael Brune, Sierra Club Executive Director

February 27, 2013 in Environment, EV News

Michael Brune, Sierra Club Executive Director Photo credit: Martin Sundberg

Michael Brune, Sierra Club Executive Director
Photo credit: Martin Sundberg

Unless you happened to be on a monastic retreat last weekend, you probably know that the Sierra Club,, the Hip Hop Caucus, and other allies held the largest climate-action rally in U.S. history. More than 50,000 people came out to tell President Obama that we want him to lead on climate, starting with a rejection of the Keystone XL pipeline.

It was an incredible day. If you were there with us in Washington, D.C., or any of the simultaneous rallies held around the country, you know what I mean. Thank you for being part of it!

Decades from now, we may well look at 2013 as a turning point in climate action. The groundswell of grassroots activism that we’re seeing will keep gathering momentum until it sweeps our nation into a clean energy future.

You could not see the tens of thousands of people gathered at the National Mall last Sunday without remembering the other great social movements that have found powerful expression there. We’ve all heard the stirring conclusion of Martin Luther King, Jr.’s extraordinary “I Have a Dream” speech: “Free at last! Free at last! Thank God Almighty, we are free at last!” But Dr. King also had words that day for those who agreed that segregation was wrong but worried that change was coming too fast. “This is no time to engage in the luxury of cooling off or to take the tranquilizing drug of gradualism,” he said. “Now is the time to make real the promises of democracy.”

I hear a similar kind of “gradualism” when well-meaning people say that renewable energy is a worthwhile goal, but we’re just not ready to start cutting our ties to fossil fuels. For some folks, change is scary no matter how exciting it might be.

Well, we aren’t about to cool off, because the clean-energy future is already happening. Here are just three examples I’ve learned this week alone:

■The Federal Energy Regulatory Commission announced that all of the new electricity-generating capacity added in the U.S. was renewable. Every single megawatt. Now January was a rather extraordinary month, but did you know that more than half of the total electricity-generating capacity added in the U.S. during 2012 was renewable?

■The Electric Reliability Council of Texas set a new wind-power generation record on February 9: 9,481 megawatts — nearly 28 percent of system load. As coal-fired power plants close in Texas, wind power is taking their place. Last year, wind supplied more than 9 percent of the power in Texas, and that number will go up this year.

■A new report from the Michigan Public Service Commission reviewed the effects of the renewable energy standard that the state adopted in 2008. Thanks to more than $1.78 billion in investments, more than 895 megawatts of new renewable energy projects came online in Michigan through 2012. The cost of new renewable energy there is now lower than new combined-cycle natural gas and new coal.

Across the nation, we’re showing we can trade dirty fuels for clean energy. Change is happening, and it’s up to us to keep that momentum going if we want to save our climate. We’re only getting started. Stay tuned for more!

This article is a repost, credit: Michael Brune, Sierra Club Executive Director

John Kerry on Iran Negotiations, Electric Society Independence

February 27, 2013 in EV News, Oil, Politics

Secretary of State John Kerry shakes hands with French President Francois Hollande upon arrival at Elysee Palace. Photo courtesy of US State Department.

Secretary of State John Kerry shakes hands with French President Francois Hollande upon arrival at Elysee Palace. Photo courtesy of US State Department.

The nuclear talks with Iran did result in some positive comments from Secretary of State John Kerry, but the actual results remain to be seen.  Oil prices are lingering at the low end of a trading range with WTI oil at about $93 a barrel and Brent $112.  Reuters reported: “In Paris, U.S. Secretary of State John Kerry commented that the talks had been ‘useful’ and that a serious engagement by Iran could lead to a comprehensive deal in a decade-old dispute that has threatened to trigger a new Middle East war.”  The negotiations are to continue, which is a positive sign, but there are certainly skeptics.  Reuters continued: “Israeli Prime Minister Benjamin Netanyahu said economic sanctions were failing and urged the international community to threaten Iran with military action.”

Overall, I suspect that the Iran negotiations took some of the nervousness out of oil prices temporarily.  The market seems to believe that progress is coming, but the reality is still quite stark for Iran with oil sanctions biting into Iranian government revenues.  Iran’s leaders have their backs to a wall, and they are humiliated by these Western sanctions.  This is a hostile situation that could erupt into a major world problem at any moment.  Regardless of Western interests, Israel may go it alone if the sanctions do not have some near-term result.  In that case, we are all going to be wishing that Americans purchased electric vehicles in droves.

The stock market was very strong today on news that the US housing market is gaining strength.  The Dow closed at 14,075 and is now within easy striking distance of the record high of 14,164.  CNN Money reported: “A realtors group said Wednesday that pending home sales rose in January to the highest level since April 2010.  The pending home sales data came one day after reports on home prices and sales came in better than expected.  Homebuilder stocks rallied Wednesday, with shares of Hovnanian (HOV) jumping 5%, leading rivals Toll Brothers (TOL), DR Horton (DHI) and Lennar (LEN).”

The rebounding housing and stock markets are fantastic news for the US economy, and this will eventually push energy prices back up.  And hopefully, we will see a significant rise in electric vehicle sales in the months to come with consumer sentiment on the rise.  February auto sales will be released soon.  Tesla (TSLA) shares closed up almost 2% to $35.10.  GM closed at $27.40.  Ford (F) closed at $12.76.