In the Pipeline: 2/23/11

OPEC says we can count on them for oil — Mr. President, there is always oil in the Gulf of Mexico, the Arctic and let’s not forget about onshore. New York Times (2/22/11) reports: The political turmoil sweeping the Arab world drove oil prices sharply higher and stocks much lower on Tuesday despite efforts by Saudi Arabia to calm turbulent markets… The unrest that has spread from Tunisia to Libya pushed oil prices to a two-year high and has spurred an increase in gasoline prices. The specter of rising energy costs and accelerating inflation in turn unsettled investors….Oil is now at a price not seen since the recession began, and it is more than $20 above goals set in recent months by Saudi officials as strong enough to satisfy the top producers but not so strong they might suffocate the global economic recovery…Although there are still plentiful supplies of oil and gasoline in the United States and in much of the world, American consumers are now paying an average of $3.17 a gallon for regular gasoline, a steep rise of 6 cents a gallon over the last week, according to the AAA daily fuel gauge report. With consumers paying roughly 50 cents more a gallon than a year ago, analysts are warning that prices could easily top $3.50 by the summer driving season.

Whoops! Cape Wind folks forgot the number one rule in business — customer focus Yahoo! (2/22/11) reports: The second-largest utility in Massachusetts has agreed to buy electricity from three wind power companies to help it meet renewable power mandates, but it won’t be buying from a high-profile wind farm off the coast of Cape Cod…On Friday, NStar filed contracts with the Department of Public Utilities to buy power from Hoosac Wind in Massachusetts, Groton Wind in New Hampshire and Blue Sky East in Maine…Cape Wind, the nation’s first offshore wind farm, is still trying to find a buyer for half its power. It agreed last year to a 15-year deal to sell the first half to National Grid starting at 18.7 cents per kilowatt hour, and increasing 3.5 percent annually…If Cape Wind doesn’t sell the rest of its power within the next several months, it may be forced to move ahead with a project smaller than the 130-turbine, 468-megawatt wind farm planned in Nantucket Sound.

I wonder if Dept. Sec. Poneman is speaking about the spare capacity in the Gulf or OPEC? “…Ample supply [of oil] in the market place and in fact there seems to be spare capacity…” Bloomberg (2/22/11) video interview: U.S. Deputy Energy Secretary Daniel Poneman discusses the outlook for oil prices and supply amid the unrest in Libya. Poneman speaks with Erik Schatzker on Bloomberg Television’s “InsideTrack.”

Sen. Feinstein pens editorial explaining how rent seeking works; essentially, when taxpayer money is cut off the project folds. Los Angeles Times (2/23/11) reports: The House of Representatives this week approved legislation that irresponsibly eliminates a key Energy Department loan guarantee program that is helping grow California’s renewable energy industry and creating jobs across Southern California…Before I get into the particulars, here’s the bottom line: By rescinding about $2 billion in Recovery Act funds and loan authority, the House has jeopardized some $40 billion of private industry investment in clean energy… Twenty-four California companies have applied for a total of $16.2 billion in loan guarantees that would bring tens of thousands of jobs to California, firmly establishing an industry of the future in our backyard.

Greenies can’t help themselves — environmental groups slow down the Obama Administration’s effort to fast track renewable energy permits. Maybe if the permits were printed on recycled paper they’d be happy Politico (2/23/11) reports: The Obama administration wants to double the amount of renewable power permits awarded this year but is running into a potential problem: environmentalists…Partly driven by the presidential election, the Interior Department has set a goal of approving permits for 9,000 megawatts’ worth of renewable energy on public lands by the end of 2011. That’s more than twice what Interior approved in 2010 through its Fast Track program for a dozen renewable projects… On paper, this should be easy…Environmental groups can ill-afford to fight forms of energy that they are promising will keep the lights on without contributing to climate change. And renewable energy developers — already struggling to compete with older, more established and, for the moment, cheaper fossil fuels — cannot afford to spend years in court waiting for their projects to move forward. So the groups are continually collaborating to head conflict off at the pass…But there is already grumbling at the margins that one side or the other isn’t holding up its end of the bargain.

Wind and Solar meet Shale Gas — new study argues EU can reach carbon targets and save a ton of money by switching to natural gas New York Times (2/22/11) reports: Energy companies across Europe are probing the ground for natural gas trapped in shale rock, hoping to replicate an American boom that has given consumers in the United States a major new supply of affordable fuel… In countries like Britain, Germany and Poland, exploratory drilling is under way, or about to begin, as engineers try to determine how much shale gas is present and how easy it will be to retrieve. New technologies for extracting natural gas from stone have raised worries about contamination of drinking water while also driving a huge drilling expansion in the United States, helping push prices down by two thirds since 2008 and reducing dependence on imports…Shale gas production accounted for 14 percent of U.S. natural gas production in 2009 and is expected to reach 45 percent by 2035, the U.S. Energy Information Agency estimates.