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Energy, Security, and Climate

CFR experts examine the science and foreign policy surrounding climate change, energy, and nuclear security.

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Showing posts for "oil"

State of the Union Hints at Ways to Bridge the Gap Between Old and New Energy

by Michael Levi

The State of the Union address last night was notable for the prominent placement of energy and climate and for its recommencement to what President Obama has called an all of the above strategy. I was particularly struck by the inclusion of two new efforts that would aim to concretely bridge the gap between fossil fuel backers and clean energy enthusiasts: the Energy Security Trust Fund and a new prize for development of natural gas with carbon capture and storage. Read more »

A New Study on Oil Taxes

by Michael Levi

Dan Ahn and I have a new energy brief out that takes a fresh look at oil taxes. From the introduction:

“Policymakers are confronting difficult choices [regarding tax hikes and spending cuts]…. In this context, it might be possible to reconsider oil taxes not only as an unwelcome burden, but as an alternative to something worse. We have modeled the potential consequences of substituting taxes on oil consumption for either higher non-oil taxes or reduced government spending, both as part of a larger deficit reduction package. [We show that] doing so can improve economic performance while reducing oil consumption if done right.” Read more »

President Obama: The World’s Best Oil Market Manager?

by Blake Clayton

Okay, so the title of this post is tongue-in-cheek: the U.S. president has far less power to influence gasoline prices than campaign-season banter would lead you to believe. But I figure if a sitting president can take the blame for high and volatile oil prices, maybe the White House should take a little pride in the fact that, by some measures, oil prices reflect the lowest volatility in years. (There’s a bit more to the story, though.) Read more »

Thinking Carefully About Tight Oil

by Michael Levi

A piece in Slate by Ray Pierrehumbert arguing that tight oil abundance is a myth is making the rounds. The essay makes some fair warnings against irrational exuberance when it comes to hundred year supplies, claims of endless energy independence, and complacency on climate change as a result of abundant natural gas. But the piece does at least as much to confuse as illuminate. Fortunately, that provides a good opportunity to look at a few important misunderstandings that frequently arise in discussions about U.S. oil. Read more »

Why Roll Yield Matters to Oil Benchmark Preferences

by Blake Clayton

In my last post I discussed how trading volumes show a migration into ICE Brent from NYMEX West Texas Intermediate (WTI), two of the world’s most watched crude oil benchmarks. The trend is part of Brent’s broader rise as the preeminent world price of oil. Here I’d like to show graphically part of the reason why some financial market participants are opting to trade the North Sea crude instead of its American cousin. It has to do with recent trends in the futures prices for both crudes. Read more »

Chavez’s Troubled Legacy for Venezuela’s Oil Industry

by Blake Clayton

The failure of ailing Venezuelan president Hugo Chavez to return from Cuba, where he is recovering from another round of surgery, to Caracas for his inauguration underscores the uncertainty of the South American country’s future as a critical oil supplier. Chavez, first elected in 1998 and inaugurated in 1999, rode ultra-low oil prices to power, promising a tougher stance against the majors and a more hawkish voice within OPEC. So how’s the country’s oil industry faring today versus when he entered office? Read more »

Five Critical Questions About the U.S. Strategic Petroleum Reserve

by Blake Clayton

Constant chatter about an impending oil release from the U.S. Strategic Petroleum Reserve (SPR) was a prominent feature of the oil market last year. Much of the speculation was driven by the ongoing loss of crude from Iran, due to sanctions, and the possibility of a confrontation with Tehran over its nuclear program, which could have cut off traffic through the vital Strait of Hormuz. Read more »

How Far Have U.S. Oil Imports Fallen?

by Michael Levi

There’s a lot of buzz today about new projections for U.S. oil imports showing that imports are poised to continue diving. The Financial Times captures the essence well with the headline “U.S. oil imports to fall to 25-year low”, referring to projections through 2014. I’ve written before about the risks of focusing on imports rather than consumption. If you want to focus on imports, though, the number to drill down on isn’t the volume of imports – it’s spending on imports as a fraction of GDP. Alas, by that measure, despite a positive trend and strong improvements over the last decade, the United States will remain in worse shape next year than in any year between 1983 and 2003. Read more »

Drilling into the American Energy Boom, in Four Charts

by Blake Clayton

One interesting feature of the U.S. hydrocarbon boom is the widening gap between the industry’s interest in drilling for oil and other liquids versus dry natural gas. It’s all about economics: the disparity in prevailing market prices and outlook between these commodities is dictating companies’ willingness to sink money into, and bear the risk of, trying to produce them. Read more »

The (Possible) Problem With Methanol

by Michael Levi

People looking for a way that natural gas could break oil’s stranglehold on the U.S. transport system typically run into forbidding limits. Gas could be used to run power plants that would charge electric cars, but those cars are currently too expensive for most drivers. Gas could be compressed and used directly in automobiles, but limited range and fueling infrastructure are big barriers. Natural gas could also be converted into gasoline or diesel, but the costs and risks of building plants can scare investors. Read more »