Great news for the US balance of trade. Starting on 2015 the US will begin to export Liquified Natural Gas (LNG). As the US has a glut of natural gas, this action will up demand by opening another market. There is a great deal of uncertainty on the future of the world LNG market, but European and Asian demand remains strong. If you’re hoping for the US to become a net crude oil exporter, we a long way off from there.
As gas prices have been unusually high inventory of crude oil have also been rising.
Data on crude oil inventory is available here: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCESTUS1&f=W
This combination of price increases and inventory increases at the same time defies tradition market explanations of supply and demand. According to Barak Obama, this points to market manipulation. Mr. Obama wants to set an oversight board to correct this issue. However I think it makes more sense to close all the loopholes leftover from the Eron era that allow for rampant speculation. According to Forbes speculation may be adding $23.39 to the price of a barrel of oil.
Hybrid owners are now only 35% likely to make a repeat purchase. Factoring out the Prius that number drops to 25%. Considering that information, Toyota takes an odd turn. Now Toyota looking at more radical design changes. Toyota has had more success with the Prius than any other hybrid has in the world. Prius buyers are also incredibly loyal. Prius is also lauded as a great car to convert to an electric car. And Camry is the best selling car in North America. When looking at competitive stats remember that Toyota competes with GM an Chrysler who got propped up by bailouts. Some people think an over emphasis on design and cyclical redesign drives down resale value and drives a away value buyers. Toyota would be smart to remember why customers keep coming back. For Toyota’s best customers purchase decisions are all about value. And their competitors struggle mightily to catch up. I have already blogged on GM struggles for value here and here.
Source: Los Angeles Times
Exxon has an agreement with Kurds of northern Iraq to develop 6 oil fields. The problem is the Iraqi government has failed to pass an oil law, since 2007. Oil revenue is key to funding the rebuilding of Iraq. Also with the problems in Iran, having stable oil production Iraq is even more critical. But, Kurdistan has suspended exports due to lack of payment from Baghdad
Source: Washington Post
I have questioned how much sense the Chevy Volt Makes. The New York Times did a similar analysis on several hybrid and electric vehicles. The cars are selling nicely. So GM will restart production a week earlier. The city of Detroit really needs this right now even with a the help they are getting from the state. Personally, I am glad to see this move in the direction on energy independence. Even though it does not make micro-economic sense.
Price drops in Germany for electricity as a long term trend. The blue line is price and the columns are solar electricity capacity. This is matches up with increased use of solar power. 80% of the installed panels are on rooftops. Houses in California have higher resale when they solar panels installed. Perhaps because of fear of rolling blackouts. Germany has complicated of incentives designed to trail off as the technology becomes more widely implemented, kind of like a dutch auction. Germany is an good case study for the US. It has basically no oil fields, so it must make something out of nothing energy wise. Still this only about 3.2% of Germany’s electrical use.
Oil subsidies are not popular and will be with us for at least 1 more year. I think the government should almost never subsidize an industry. When the government subsidizes it takes money from working people and spends it to pick winners and losers in the market. The exceptions for me are when short term market interests go against long term US interests, or when market results are socially unacceptable. And some of these subsidies individually make sense. Still for the most part I would like to see these hand outs phased out. The source article is from ethanol.org and is trying to make the argument that ethanol subsidies are small compared to oil subsidies. There is a list of 26 state oil subsidies, which I may write a future post on. If you want to end big oil subsidies too click here.
Wind Map of the Continental US. Wind is often listed along with solar as the cleanest energy sources. However, the wind doesn’t always blow and 50-60% of electrical energy is baseline (always needed). Also as you can see many of the strongest lines are far from population centers. So using them will involve upgrading the power grid. There is no perfect solution to the energy crisis, but wind is renewable and domestic.