Time to End the Renewable Fuel Standard

On August 10, 2012 The US Department of Agriculture released a specialized crop forecast sure to send corn prices higher than their already record setting $8 per bushel.  The USDA report said corn production would be “sharply lower” down 22.6 bushels per acre to 123.4 bushels per acre making the current harvest the lowest forecast since the 1995-96 growing season.  The number of acres of corn expected to be harvested for was also reduced by 1.5 million acres reflecting USDA’s estimate of …Continue Reading »

WoodMac Attack

Bloomberg reported rumors that McGraw-Hill had out bid it and others at 1.1 billion pounds ($1.7 billion) for energy consultant and advisory service provider Wood Mackenzie.  Wood Mac is being flipped by Charterhouse Capital Partners which acquired it in 2009 for 520 million pounds in a fire sale.   Other suitors in the auction according to the Bloomberg story include IHS, Thomson Reuters and Bloomberg itself but perhaps not all love it THAT much to outbid McGraw-Hill. All of this is …Continue Reading »

Will National Energy Policy ‘Evolve’ to a Clean Energy Standard?

Bingaman CES figure4-lg

Clean energy is something everyone is ‘for’.  Few people are in favor of dirty energy.  But the problem is the definition of what is clean depends upon who you ask.  We will say we are in favor of clean renewable energy, when polled, until a wind producer tries to site a wind turbine near us, or spreads out a sea of photovoltaic panels across the desert—or worse says a high voltage transmission line is needed to bring that clean, renewable energy from its remote location to serve demand …Continue Reading »

Put America’s 'Spare' Oil Productive Capacity to Work

Global oil prices are driven by a ‘rule of thumb’ that suggests prices will go up when the spare capacity of oil available on any given day is less than 5% of expected global demand.  In today’s high priced oil market that swing in spare capacity is about 2%. This a big deal because traders worry about risk such as events in the Middle East, or with Iran or any other places that supplies oil.  Spare capacity or swing productive capacity is the volume of oil than can be delivered as a …Continue Reading »

The Cushing Manifesto

"Right now, a company called TransCanada has applied to build a new pipeline to speed more oil from Cushing to state-of-the-art refineries down on the Gulf Coast.  And today, I am directing my administration to cut through red tape, break through bureaucratic hurdles, and make this project a priority."  --President Barack Obama That was the absolutely astounding message from President Obama in person in Cushing, Oklahoma taking credit for the decision by the pipeline sponsor to end run his …Continue Reading »

Solar Goldilocks Symbolism in Tariff Decision

Not too big.  Not too small.  It was just right! That seems to be the key takeaway from the decision by the US Government to impose import duties on China solar panels ranging from 2.9 percent to 4.73 percent to match the level of government subsidies received by the Chinese manufacturers.  The US International Trade Commission issued a preliminary ruling in December that the US PV manufacturing industry had been harmed by Chinese subsidy practices, but the decision issued March 20th …Continue Reading »

Gasoline Prices, Inflation and Politics: A Volatile Mix

The impacts of higher oil and gasoline prices are beginning to ripple across the economy.  Wells Fargo Economics reported today that higher energy prices increased the producer price index (PPI) by 0.4 percent in February 2012 which was the highest monthly gain in the PPI in five months. Wholesale gasoline prices were up for the second-straight month, increasing 4.3 percent, home heating oil was up 5.3 percent and residential electric power prices increased 0.6 percent. The growth in domestic …Continue Reading »

Between FERC and a Hard Place

The Federal Energy Regulatory Commission is trying to avoid being drawn into the political battle over the regulatory agenda being pursued by the US EPA against fossil fuel emissions in the wave of new environmental regulations being issued by the agency.   US EPA knows it is only a few votes away from being overturned in the US Senate where even Democrats running for re-election want desperately to avoid having to take a stand on this issue. Industry trade groups, state regulators and …Continue Reading »

The Seeds of the Next Power Boom were Sown in the Last Bust

The electric power industry is driven by boom and bust cycles as market fundamentals and volatility sends signals to market participants to speed up or slow down their efforts.   One of the lessons of that boom and bust experience is that seeds of the next boom are sown in the bust of the last business cycle.  By that I mean the enthusiasm of the boom stage of the market always attracts new entrants and leads to excess which volatility increases before the fundamentals of supply and demand …Continue Reading »

‘Go Early, Go Ugly, Fail Fast’ Strategy with Chevy Volt

The news out of Detroit had all the feel of a wake.  GM announced that it was suspending production of the Chevy Volt idling its Hamtramck factory where the electric car is made from March 19 to April 23 is “to match production with demand”.  The 1300 workers get laid off, but because of contract terms most still get paid. It may seem like a wake but the patient is not yet declared officially dead----but with sales at a miserable 7,671 vehicles in 2011 against a target of 10,000.  With …Continue Reading »