An esoteric fight of the Renewable Fuels Standard (RFS2), which mandates that the United States use an increasing volume of ethanol each year, has become a bit more prominent in recent weeks, with some accusing the mandate of contributing to rising gasoline prices in new and troubling ways. I remain perplexed as to what exactly is going on – more on that a bit further down – but I do find the defense from the Renewable Fuels Association, published last week in the form of a white paper commissioned from Informa Economics, hugely unpersuasive. Read more »

Want to understand the energy challenges the world might face in the future? There are few better places to turn than this year’s BP Energy Outlook to 2030, an annual publication that shows the company’s projections for energy supply and demand over the next two decades. The three graphs below highlight some of the trends likely to define the energy landscape in the years ahead, in BP’s view. Read more »

My last post noted that inflation-adjusted natural resource prices—even for exhaustible resources—tend to fall over time. This trend surprises people who think that prices are doomed to rise indefinitely because it gets more and more expensive to mine/grow/pump these resources in larger volumes over time. So what’s behind the downtrend? Read more »

There is a tempting intuition to the idea that the real prices of non-renewable goods like coal, iron ore, or oil should rise, more or less, forever. It’s an easy argument to make, and it sounds right: The world’s population is getting bigger and bigger, so more and more goods like metals and hydrocarbons are being consumed. Every year, the sum total of what we’ve taken out of the ground mounts, never to be replaced. Supply of the stuff is limited—once it’s gone, it’s gone. So, this argument goes, as we exhaust our resources, we’ll have to mine, drill, or otherwise get our hands on it somehow but it will get more and more expensive to do so, because we’ll have exhausted the best stuff. Left to exploit ever-greater quantities of ever-more-marginal deposits, prices will rise indefinitely into the future. Read more »

Nuclear power promises zero-carbon electricity but suffers from serious cost challenges. That makes calls for more research, development, and demonstration (RD&D) efforts to promote innovation natural. But ask sixty experts where nuclear energy is heading, or ask them whether innovation could change that, and you’ll get sixty different answers. Who should you believe? Read more »

The dramatic takeoff in oil and gas production in the United States and Canada over the last half decade has left many people asking whether a similar boom will happen in other countries. It’s a good question. To answer it, you have to start by identifying what critical factors enabled the boom to happen here, then figure out whether these same enabling factors exist elsewhere. Read more »

A team at Resources For the Future (RFF) led by Sheila Olmstead has a neat new paper in the Proceedings of the National Academy of Sciences (PNAS) that takes a rigorous look at water pollution due to shale gas development in Pennsylvania. (Hat tip: John Quigley.) The team collected thousands of data points measuring shale gas activity and water quality across a wide geographic area and more-than-ten-year span, and then used careful statistical analysis to test a series of hypotheses about how shale gas development might have affected water quality. What’s particularly interesting about this study is that it doesn’t require physical assumptions. It can also shed light on the cumulative impacts of large-scale shale gas development, going beyond analysis at the level of single pads and wells. Read more »

I have a new note in the Journal of Geophysical Research (JGR) that I hope will be the last word in an increasingly tedious battle over an isolated but highly publicized methane leakage study that was published last year. I’ll explain what the note says in a moment, but first some background is in order. Read more »

As part of a book I’m working on, I’ve spent some time wading through the econometric literature on speculation in commodity markets, oil in particular. This body of research tries to shed light on how the inflow of investor money into commodity derivatives over the last decade has affected these markets. I’m skeptical of a lot of what’s out there on this topic, though there is also some excellent work, too, like from Bassam Fattouh at the Oxford Institute for Energy Studies. Read more »