Interesting View on the Future of Oil

The Economist magazine recently had an interesting take on the future of oil demand. Whereas many analysts see oil demand as perpetually on the rise given the emergence of China and India and their massive populations, the Economist sees other factors that counter the pressures added by these emerging economies. They speculate that world oil demand may be nearing a peak. If the Economist is right, Utahns could see cheaper gasoline prices sometime in its future.

“With billions of Chinese and Indians growing richer and itching to get behind the wheel of a car, the big oil companies, the International Energy Agency (IEA) and America’s Energy Information Administration all predict that demand will keep on rising. One of the oil giants, Britain’s BP, reckons it will grow from 89m b/d now to 104m b/d by 2030. We believe that they are wrong, and that oil is close to a peak.” Economist.com

Utah gas prices increase 13 cents in past month

The cost of driving is climbing in the Beehive State. Utah saw a 13-cent increase in gasoline prices over the past 30 days —the largest hike of the five-state mountain region, according to AAA Utah.
Utah’s average price for a gallon of regular gasoline has steadily increased since the first of the year, with the current average price at $3.54. While that price was higher than March, it was 17 cents less that the same time last year.

All of the Utah cities tracked in the monthly AAA survey reported increases this past month. The average price in Salt Lake City and Vernal rose 15 cents, while St. George reported the smallest increase of just 8 cents.

Nationally, 22 states have prices lower than Utah. And the national average price was $3.58, 12 cents less than last month’s AAA gas report. Today’s 35-cent decline from 2012 was the largest decrease since October 2009.

“Retail gasoline prices in the country surged at the start of 2013 with a record breaking increase of 49 cents attributed to somewhat higher crude oil prices, but mostly due to a decline in refinery production and higher gasoline futures prices,” said Rolayne Fairclough, AAA Utah spokeswoman. “The falling retail gas prices across the country are a result of increased refinery production and economic concerns.” Deseret News

Utah mineral production drops to $3.5 billion

The value of non-fuel mineral production in Utah fell 25 percent in 2012, slipping to $3.5 billion and making the state’s mining industry the nation’s seventh largest.

Formerly No. 4 in mineral production, Utah’s output came primarily in copper, molybdenum, gold, potash and magnesium, according to the annual report released Thursday by the U.S. Geological Survey.

The survey’s National Minerals Information Center reported that the production of 90 minerals essential to the economy rose for the third straight year to $76.5 billion, an increase of $1.7 billion over the preceding year. Leading the nation was Nevada, which produced $11.2 billion in gold, copper, silver and other metals, representing about 15 percent of the nation’s mining output.

With three operations in production and a few others proposed, Utah remains a top-three potash producer. Copper production climbed 4 percent, but output dipped in Utah, the nation’s No. 2 producer.

While U.S. production and prices increased for most industrial minerals, such as limestone and silica, production of nearly all other metals declined, according to the report. Salt Lake Tribune

Burn less money by using dropped prices for LED lights

LED lights have dropped in price, which means consumers can save about $69 or more a year for a three-bedroom house on a low-end estimate, according to an article in Stuff.co.

"Up until the last six months they were a little bit on the expensive side and a little on the dull side, and a little on the big side," Paul Crewther, owner of LED World in Auckland, New Zealand, told Stuff.co. "The manufacturers have made them smaller, brighter and cheaper."

Comparisons on savings differ, but LED World estimates that over a 10-year period, a 100-watt equivalent LED bulb will cost $74.09 to run compared to $493.20 for a regular incandescent bulb and $145.23 for a fluorescent energy-saving bulb. An LED could cost up to $36, which is on the high side of an estimate.

The advantage of LED’s is the projected 60,000 hours lifespan as opposed to the incandescent bulb's 1,500 hours. They also emit little heat. Until recently, however, bulb price has been a barrier for money-conscious consumers. Deseret News

Governor’s energy summit highlights stark divide

Utah’s abundant coal and petroleum can be mined, processed, and shipped to market without harming the land and fouling the air and water; Gov. Gary Herbert told some 1,400 gathered Thursday at his annual Energy Development Summit.

The message expressed was in stark contrast with views expressed outside the building, where about 150 protesters argued Utah’s political leaders are selling the state’s world-class landscape to extractive industries looking to exploit fossil fuels.

The crowd of protesters gathered outside the Salt Palace at midday to protest the summit’s focus on fossil fuel-based energy, including tar sands, oil shale and nuclear power. They also promoted renewable alternatives that would mean less impact on the air quality, water resources, public health and climate change, which scientists say is already taking a toll on the snowpack.

Underlying the two views that clashed Thursday at the summit are two opposing resource bases that support Utah’s economic prospects — vast deposits of hydrocarbons and a natural landscape of unparalleled beauty.

One creates high-paying industry jobs, helps meets the nation’s energy needs, and expands local tax bases. The other attracts high-spending tourists, outdoor enthusiasts and creative people key to building a knowledge-based economy.

Utah’s congressional delegation argued federal bureaucrats unnecessarily impede Utah’s ability to develop energy sources within its borders.

Despite these problems, political leaders conceded energy production in Utah is at a 24-year high and growing, driven largely by new technologies that can tap oil and gas in previously unreachable places. The state issued 2,103 drilling permits last year, setting a new record.

The summit continues Friday at the Salt Palace. Salt Lake Tribune

Gov. Herbert’s Summit to Explore Utah’s Energy Future

Hundreds of energy industry professionals, scientists and policy experts are gathering in Salt Lake City this week for Utah Gov. Gary Herbert’s Energy Development Summit, an annual forum addressing some of the energy issues confronting the Intermountain West.

"This conversation will help position Utah for an exciting energy future that embraces a diversity of resources and proceeds with a dual focus on responsible practices and economic growth," Herbert’s office said in a news release.

For Herbert energy adviser Cody Stewart, the forum is a chance to remind Utahns that their state is becoming a major player in the nation’s energy landscape, thanks to its abundance of natural gas, coal and oil.

"We are not in the top three, but we are top 10 to 12," said Stewart. "We want to emphasize Utah is a leading player. We are getting bigger and bigger."

The forum will be geared toward national policy concerns since two-thirds of the state’s fossil fuel reserves are found on federal land and Utah has become an energy exporting state.

Environmentalists, meanwhile, plan to use the event to draw attention to what they say is the state’s sorry record in developing renewable sources, such as geothermal, solar and wind, and other sources that have a smaller impact on the Earth.

Renewables account for less than 2 percent of Utah’s energy production, according to the governor’s energy plan. When expressed as a share of electrical power generation, these sources represent 4.4 percent, a far smaller piece than Utah’s neighbors except Arizona, according to Matt Pacenza, policy director for Healthy Environment Alliance of Utah.

Salt Lake Tribune

Reading the Economic Tea Leaves for 2013

The U.S. economy was a bit of a disappointment in 2012. During the early months of the year, job creation was surprisingly strong, but by the end of the year, uncertainty about the election and the "fiscal cliff" slowed the economy's forward motion. So will 2013 look any better?

Mark Zandi of Moody's Analytics says that while Washington likely will steer us away from the fiscal cliff at the last minute, some elements of the deal will be a drag on the economy early in 2013.

If we avoid the fiscal cliff, Zandi thinks the economy could be growing at a rate of about 3 percent by the end of 2013, an improvement from the 2 percent range of the past couple of years. And he says a housing revival will be key.

"That's been the missing link. In most economic recoveries — actually in every economic recovery since World War II — it's been a revival in the housing market that has led the economy out of recession into recovery. Obviously that's not been the case in this go-around. Housing was ground zero for our economic problems, but that's starting to shift," Zandi says.

The shift began in 2012, and Zandi expects housing to turn up in a big way in 2013.

Nariman Behravesh of IHS Global Insight agrees. He sees housing as a growth driver and rising home prices as a confidence builder for consumers.

"They're more upbeat, they feel more confident about the value of their homes and their neighborhoods and all that, so all of this is translating into fairly strong consumer spending, which as you know is 70 percent of the economy," says Behravesh.


Behravesh says another area of strength is energy production. He says oil and natural gas production in the U.S. will continue to boom.

"And it's not just energy — it's downstream industries, as it were, things like chemicals, for example," he says. As an industry, "chemicals all of a sudden have access to huge amounts of cheap natural gas, which is a big feedstock for them, and it's making the U.S. chemicals industry highly competitive, and they're adding jobs, adding facilities," he says.

The industry is producing chemicals for export for the first time in 30 years, says Behravesh.

But while the economy may gain strength in 2013, Joel Prakken of Macroeconomic Advisers in St. Louis says the unemployment rate is unlikely to fall much. The unemployment rate (for the nation) in November was 7.7 percent, according to the Bureau of Labor Statistics. It was 7.9 percent in October.

Zandi says the unemployment rate could actually go up before it comes down. But he says, by the end of 2013, the picture will brighten and monthly job creation will be in the 200,000 range after two years of being stuck at about 150,000 jobs a month.

But all these economists say there are risks to this forecast even if we avoid the fiscal cliff. At the top of the list is a conflict with Iran over its nuclear program, which could lead to a sharp increase in oil prices, says Prakken.

Europe's ongoing financial crisis could also be a threat to U.S. growth in 2013. However, all of these economists believe that threat has diminished in the past months. Utah Public Radio

2013: A Cloudy Forecast for Renewable Energy, With a Silver Lining

On the surface, it looks like the renewable energy industry has never been healthier. This year, wind-turbine installation in the U.S. actually outpaced the installation of new natural gas capacity—despite the shale gas boom, which has pushed down the price of natural gas. In 2012 new wind capacity reached 6,519 MW as of Nov. 30, just edging out gas capacity and more than doubling new coal installations. Meanwhile new solar capacity in the U.S. reached nearly 2,000 MW, beating out 2011′s numbers. Globally the stock of installed wind and solar power hit 307 GW in 2011, up from 50 GW in 2004, while total investment in the sector hit $280 billion last year. Those are some bright numbers.

Yet there are clouds on the horizon for renewables. (Sorry—weather metaphors are hard to avoid with wind and solar.) The wind industry faces the loss of the valuable production tax credit next year if Congress won’t renew it—and indeed, some of the growth the industry experienced this year may be due to companies rushing to get their projects in while the credit is still in place. (And those capacity figures comparing wind to gas or coal are a bit misleading—the intermittency of renewables means that a MW of wind doesn’t deliver the same amount of actual juice as a MW of gas.) The solar industry faces serious global oversupply, which has driven a number of manufacturers in the U.S. and elsewhere into bankruptcy, and while helped depress the recent IPO of the major panel installer Solarcity. According to the Financial Times, total investment in wind and solar in 2012 may well fall compared to 2011—the first time that’s happened in nearly a decade.

Read more: TIME

The Energy Industry in America

“It’s an exciting time to be in the energy industry in America. The impact of unconventional oil and gas development on the U.S. economy is considerable.” The development of fracking and its releasing of previously trapped oil and gas has completely changed the outlook and the language surrounding America’s energy needs. Overnight the talk has gone from not having enough, to having enough to share with the world. Forbes

Index Launch Reveals Significant Differences in Countries' Energy Systems

• New Global Energy Architecture Performance Index Report ranks energy systems of 105 countries from an economic, environmental and energy security perspective.
• Norway, Sweden and France top the ranking; OPEC countries and the USA languish outside the top 50.
• Purpose of the index is to help countries position themselves for the widespread transition that is expected in the global energy system.
• Explore the interactive report map (above) and executive summary; see the rankings and the full report.

Geneva, Switzerland, 11 December 2012 – High-income countries are leading the transition to a new energy architecture but still have work to do on environmental sustainability, according to the Global Energy Architecture Performance Index Report 2013, released today by the World Economic Forum.

For the full release and supporting information, please visit: World Economic Forum

Shale Gives US One More Shot

This is a very good big-picture article from the Australian Financial Review concerning the emerging shale gas boom going on in America and its long term economic impact and benefits.

JPMorgan chief Jamie Dimon was ticking off the things America had going for it in these troubled times when he realized he’d left something out. “Oh yeah, we’ve just been given another gift, called shale oil,” he told guests at a Council on Foreign Relations luncheon in Washington last week. “I mean, God looked down upon us and said, ‘I know you wasted all that energy bounty, let me give you one more shot’.”

Dimon didn’t overstate shale’s impact on the struggling US economy. Cheap abundant energy from shale rocks is the chance America seized while its economy healed and the rest of the world dithered.

Shale gas has slashed energy prices in the US, sparked a revival in petrochemicals and manufacturing, pushed coal aside as the top source of power and created 1 million jobs. And it’s helped put the world’s most energy-hungry economy on track to meet its Kyoto emissions reduction targets, without even signing up. Read more: Financial Review

Rocky Mountain Power settles rate case

Rocky Mountain Power has agreed to a two-part settlement in a pending rate case, a pact that will increase the typical Utahns’ monthly electricity bill by about $4.55 a month starting in mid-October, followed by another $2.48 cent hike in fall 2013.

The agreement —which also bars the public utility from seeking another rate increase before January 2014 —has the support of consumer advocates, the state’s Division of Public Utilities and many of the state’s large industrial energy users.

The Utah Public Service Commission is expected to schedule a hearing later this month to consider whether the settlement is in the public interest and should be approved.

Michele Beck, director of the state’s Office of Consumer Services, acknowledged the settlement appeared to give the regional utility company most of what it wanted. But, she explained, the settlement also benefits ratepayers by keeping rates down well into the future.

Beck said the utility also gave up its demand that Utah customers help pay for the cost of removing a dam on the Oregon- California border, a plan with would have cost Utah ratepayers $7.4 million annually for the next 10 years. Salt Lake Tribune

State says ConocoPhillips 'double-dipped' $25M from state cleanup fund

A state lawsuit says petroleum giant ConocoPhillips used false insurance claims to take $25 million from Utah over 14 years, allegedly misrepresenting it had no other insurance to pay for cleanup of leaky underground storage tanks.

In a complaint filed Monday in 3rd District Court, state assistant attorney general Paul McConkie said the Houston-based multinational company filed at least 1,500 claims from 1995 to 2009 with the state's Petroleum Storage Tank Fund — even though it had its own private insurance to cover the costs.

According to the complaint, the fund reimbursed the company for action taken at 47 ConocoPhillips sites in Utah. Prior to the merger of the Conoco Inc. and Phillips Petroleum Co. in 2002, the stations operated under names or brands known as Husky, Phillips 66, Conoco, Tosco, Circle K, Flying J and Phillips.

The state established the fund in 1989 to help owners and operators of gas stations to cover costs when a tank had a release of petroleum. Members of the fund are assessed a surcharge on the petroleum products dispensed from their gas stations to help pay for the expenses of cleanup if a leak happens. Deseret News

Utah grants awarded to boost renewable energy

The U.S. Department of Agriculture has awarded grants to two Utah firms to conduct feasibility studies designed to reduce energy consumption and costs.

Salt Gulch Electric, LLC out of Boulder has received $15,000 to investigate a small hydro power project. The project, located in Garfield County, will include replacing an irrigation ditch with pipe and using its pressure to generate electricity.

The second study will be conducted by Time Energy Associates, LLC, which received a $50,000 grant to explore the benefits of constructing a wind farm in rural Utah.

The USDA, through its Rural Development agency, administers and manages housing, business and community infrastructure and facility programs through a national network of state and local offices. Rural Development has an active portfolio of more than $165 billion in affordable loans and loan guarantees. Salt Lake Tribune

Fiorina to Utah crowd: Be smart, be ethical, be digital

If the U.S. is to remain ascendant in the world economy, it must lead in the development of energy, health, information and aerospace technologies, former Hewlett-Packard Co. CEO Carly Fiorina said Wednesday.

The country also needs to reverse falling numbers of small-business formations and figure out ways to improve education without simply throwing dollars at the problem, Fiorina told an audience of more than 800 people who attended Zions Bank’s annual trade and business conference in Salt Lake City. Salt Lake Tribune

Keeping sage grouse off endangered species list helps state, economy

By early July, Gov. Gary Herbert will receive a list of recommendations that could shape Utah's plan to keep the imperiled sage grouse from landing on the endangered species list.

Such a classification could jeopardize energy development and ranching while forcing a federal solution rather than a local one — reminiscent of the economic fallout from endangered listing of the northern spotted owl.

The listing is not what any of the 11 impacted states want, said Kathleen Clarke, chairwoman of the Utah Governor's Sage Grouse Working Group.
In a legislative interim meeting earlier this week, Clarke updated state lawmakers on efforts made so far to craft a locally driven plan to conserve the species, which has suffered drastic declines in population due to myriad threats.
In March 2010, the U.S. Fish and Wildlife Service said the species warranted being listed, but the designation was precluded because of a backlog of other species with higher priority.

The delay in the designation has given states a new deadline of 2014 to prove to the federal agency that conservation efforts on a state-by-state basis are sufficiently protective. After a one-year progress review period of the affected Western states, the agency will make a decision in 2015. KSL

Utah’s 10-year energy plan relies on conventional fuels

Utah will continue to rely on coal, natural gas and crude oil to meet its energy needs, and less on renewable resources, state officials said Tuesday during the annual Unconventional Fuels Conference at the University of Utah.

Officials discussed the state’s 10-year energy initiative, which calls for the establishment of a centralized state energy office and a research triangle made up the U. of U., Utah State University and Brigham Young University to help develop energy technologies.

The plan, however, does not estimate the costs of implementing its recommendations.

The initiative categorizes Utah’s oil shale and oil sands as unconventional fuels, along with uranium, hydroelectric, geothermal solar, wind and biomass. It was the development of oil shale and oil sands that was discussed at the conference. Organizers pointed to a 2005 Rand Corp. report indicating that the world’s largest known oil shale deposits are in the Green River formation, which covers portions of Utah, Colorado and Wyoming. Salt Lake Tribune

Derek Miller: Utah Leads the Way in Responsible Energy Development

"Energy development will assuredly be a top campaign issue in national and state elections this year. The connection between energy to economic development and national security (in addition to $4 gallon gasoline that makes it a very real part of our everyday lives) will put a white-hot spotlight on the debate", says Derek Miller, Chief of Staff, Office of the Governor.

"Meanwhile, as the nation grapples with how to address the economic and environmental issues surrounding energy independence, Utah is once again leading the way and providing the example to follow.  Abundant energy resources and responsible production provide our state with a significant competitive advantage in recruiting new companies to the state and helping Utah companies to expand.  In fact, when Forbes named Utah the “Best Place for Business” the article specifically cited energy costs which are 30% below the national average.  That is great news for the citizens and businesses of our state NOW but we must do what is necessary today to maintain that competitive edge in the future."

Read more as Miller describes the energy objectives and the action items in the Governor’s 2012 workplan. Utah Pulse

Questar asks approval to give each customer $34.50 refund

Questar Gas Co. said it has asked Utah utility regulators to approve an immediate $42 million one-time refund to its customers.

If approved, the refund will amount to about $34.50 for each customer and will appear as a credit on their May natural gas bills.

The one-time refund, which will be equal to about a five percent decrease in a typical Utahns natural gas bill, will give customers a more immediate reduction. Salt Lake Tribune

Utah an active player in geothermal market

Utah continues to be a strong player in the geothermal industry, outpacing most of its neighboring states in electrical generation and on tap to increase capacity with 11 projects under development.

A new report by the Geothermal Energy Association released Tuesday identifies eight additional geothermal prospects for power development  in Utah.

The annual U.S. Geothermal Power Production and Development Report tracked industry activity throughout 2011 and for the first quarter of 2012, indicating the geothermal industry experienced sustained and steady growth, adding 91 megawatts of newly-installed capacity. A megawatt is enough to power 500 homes. Deseret News