Energy

Last week (May 3 2013) a very late winter snowstorm crossed the Rocky Mountains into the upper Midwest, dropping over a foot of spring snow from Colorado to Wisconsin.  So-called winter Storm Achilles smashed snowfall records across the Upper Midwest. The storm was only the second May snowstorm on record for Kansas City and Des Moines.  Today we look at the impact of this year’s late winter weather on energy markets.

Last week our attention was drawn to the “State of Energy” report published by the Texas Independent Producers and Royalty Owners (TIPRO).  Using Bureau of Labor quarterly census data the report provides a summary of state and national benefits attributed to growing US oil and gas production during 2012. For example, TIPRO reports that oil and gas industry employment increased by 65,000 to 971,000 in 2012.  But the benefits of increased production are not just confined to the oil and gas industry. According to a presentation by the Chamber of Commerce Institute for 21^st Century Energy (ITCE) the shale revolution provided $237B of growth to the US economy in 2012. Today we look at how huge changes taking place in US energy supplies impact the wider economy.

Does lightning strike twice?  How about three times?  Sure seems like the coal industry has been hit by three lightning bolts in the past several years: a recession that reduced demand for electrical power, low prices for competing fuels (i.e., natural gas), and new federal regulations on smokestack emissions.  Today we review regulations that have left coal power generators singing the smokestack blues.

Last week (Feb 19, 2013) we explored California’s cap-and-trade program for Greenhouse Gas emissions (GHG) and saw that it has already increased electricity prices by 20% and pushed up the cost of refining a barrel of oil by $0.78/bbl.  These developments are just the tip of the iceberg.  California’s program will impact regional natural gas demand and basis.  Companies will shift the locations where crude oil is processed.  Power imports into the California market from the Pacific Northwest will soar.  Today we’ll dive even deeper into the emissions market to better understand the outlook for GHG pricing and how the cap-and-trade rules are likely to influence all sorts of energy and fuel markets.

There was a time when you could live out your career in the gas business, or the NGL business, or the crude business and get by with knowing very little about the other hydrocarbon markets.  That time has now passed.  Natural gas, NGLs and crude oil markets are tied together in ways we’ve never seen before.  Making sense out of the interrelationships between hydrocarbon markets is what RBN Energy is all about. To that end, we are now bringing the RBN Energy brand to a two-day course of study to be held in Houston next February. 

The demand for motor gasoline is declining.  The volume of ethanol in the gasoline pool is increasing.  That means the market needs less gasoline from refineries.  Another One Bites the Dust