Category Archives: Energy News

Oil Prices Rise on Increased Demand

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The price of crude oil futures climbed a bit on Monday as demand from Asia and the US edged up as well.

Brent crude surged by 2 cents a barrel to $65.39 at 03:12 GMT. US crude showed a steeper climb, leaving it a bit below Brent crude, at $59.86 per barrel.

Energy Aspects, a London-based publication which discusses  the energy markets, commented on the increased price of oil:

“Global oil demand continues to surprise to the upside, with April data showing no signs of slowdown despite a pick-up in prices.”

Japan’s Ministry of Finance said that crude oil imports to Japan increased by 9.1 percent to 3.62 million barrels per day in April, compared to one year earlier. China hit a new record of crude imports, reaching 7.4 million barrels per day in April. That surge is despite China’s slowing economy which is offset by vigorous car sales.

“We expect Chinese imports to be high in H2 15, potentially averaging 7.5 million barrels per day. This is due to the start-up of 39 mb (million barrels) of commercial storage, five SPR (strategic petroleum reserve) sites and linefill for Kunming refinery—buying for which is ongoing we believe, even though the refinery won’t start up till early 2016,” Energy Aspects said.

On the other side of the globe the United States is now entering its peak season for driving with the Memorial Day weekend just coming to an end. According to the American Automobile Association, road travel in the US is expected to reach a ten-year high over the weekend, tightly correlated with higher oil use.

The Business of US Oil

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There are varying opinions about the next step for the oil business in America. David Bird explained his position in the Wall Street Journal:

“The U.S. is on track to reach records for crude-oil production by 2016, as hydraulic fracturing and horizontal drilling techniques continue to unlock oil in shale rock. The renaissance in the oil sector feeds into the debate of whether the U.S. should allow crude oil to be exported freely. The U.S. has kept a lid on oil exports since 1973, when the Organization of the Petroleum Exporting Countries stopped selling crude to the U.S. in retaliation for its support of Israel in a war with Egypt and Syria.”

Head of Citigroup’s Commodity Research, Ed Morse said that the increasing American production will have a large impact on oil prices. In the next few years the international benchmark price is likely to be around $15 a barrel less than its current price or even lower “if the shale revolution continues around the world,” which is anticipated.  Due to this abundance, oil producers are asking that restrictions on exports be lifted.  Ernest Moniz, Energy Secretary said that now might be the time for the government to review its oil exports policy, given that it shipped around 56,000 barrels of oil per day in October, approximately 1 percent less than the 7.7m barrels a day energy companies in America produced

Daniel J. Graeber in an article in Oil Price wrote:

“U.S. oil production last month reached its highest monthly total in 25 years. South of the border, the story is different, though Mexico’s decision to end a state oil monopoly in place for 75 years may consolidate the America’s supremacy over the international energy market.”

Alexander Kwiatkowski expressed his pessimism over the business of US oil in Bloomberg:

“Surging U.S. crude output is making Latin American oil cheaper than supplies from the Middle East, spurring Asian refiners to accelerate their purchases from Venezuela, Mexico and Colombia. Mexico will end 75 years of government control of its vast oil reserves after Congress approved the nation’s most significant economic reform since the North American Free Trade Agreement.”

American Natural Opens First Station in Pittsburgh

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American Natural, an extension of the New York-based Cleopatra Resources, opened a new gasoline, diesel and compressed natural gas station this summer. The company hopes to open additional stations throughout the year.

American Natural entered the Pittsburgh region last year with plans to install their first natural gas station and “fast-casual” convenience store at Station Square. Though the company’s future plans have yet to be revealed, executives have hinted at intentions of expanding the business’s reach and transforming several stations that are already owned.

Last September, American Natural acquired Mon Valley Petroleum, which included 12 Buy-n-Fly gas stations as well as a fuel distribution business. The South Side Station is linked to Equitable Gas’ distribution system, allowing American Natural to add compressed natural gas to the station’s repertoire.

Andrea Feinstein, Executive Vice President at American Natural, explained that several gas stations are likely to be transformed next year.

“Not that every single (former) Buy-n-Fly will turn into this brand, but there may be a couple more over the next 12 months.”

In an effort to promote the use of natural gas, the company has also set up a conversion business which enables existing cars to run on compressed natural gas. This project operates out of the McKeesport garage.

The Keystone Pipeline Great Debate

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Will Keystone Create Jobs or Not?

The debate about how many or even whether or not the great Keystone Oil Pipeline project will create jobs is on.

Republicans Say Yes

Republican legislators want to tie the forging ahead with the pipeline to the payroll-tax cut, insisting that the project will create jobs, as many as 20,000.

Other law makers beg to differ, some even saying that the pipeline project could ultimately lose jobs for Americans.

When, and if, the Keystone pipeline is ever built, it will be 1,700 miles long, extending from Canada’s oil sands area in Alberta all the way to US refineries along the Gulf Coast.

Obama Waiting

President Obama has been hesitating on the pipeline, saying he wants a thorough review of the environmental impact the project will have. Republicans want to push forward with it, making it an added incentive for them to approve and extension of the payroll-tax break and federal unemployment insurance benefits. The House already passed a bill on Tuesday linking the tax cuts to approval of Keystone.

TransCanada (TRP) is the company that desires to construct the pipeline. According to them Keystone will create 20,000 “direct” jobs. They say there will be 13,000 construction jobs and an additional 7,000 jobs making things like pump houses and the pipe.

Watch the Numbers

TransCanada adds that as many as 120,000 “indirect” jobs will be created, such as restaurant workers and hotel employees which will be needed to support the pipeline construction.

The numbers, however, can be deceptive. The jobs are counted on a yearly basis, so if the pipeline takes two years to build, what TransCanada means by 20,000 is 10,000 actual jobs over the course of two years. Also, many of the jobs will go to Canadians, where one third of the pipeline will be built. It is estimated that the pipeline will cost $7 billion to build.

Estimate Down

The US State Department, which must give its approval for the project for it can get underway, has a lower job creation estimate; closer to 5,000 direct jobs during the two years of building. Even TransCanada admits that the number of permanent jobs the project will create is only in the hundreds.

“Those are the real numbers,” said Susan Casey-Lefkowitz, director of international programs at the Natural Resources Defense Council. “The Republicans have been acting as if this is a national jobs package, and it’s not.”

Pepco Holdings Helping Minorities

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Yesterday, Pepco Holding, Inc. (PHI) conducted a one day Energy conference for certified Minority Business Enterprises (MBE’s). The goal is provide reverse discrimination opportunities for Minority Business Enterprises. MBE executives will receive information about opportunities to serve as suppliers for various products and services as contractors and sub contractors. Another goal for the 16 utility companies that attend is to make a concerted effort to use MBE’s as suppliers, contractors and subcontractors.

Pepco regional president, Thomas Graham, said that “PHI has a standing commitment to include and expand opportunities for minority-owned businesses.” PHI supplier Diversity is a member of the National Minority Supplier Development Counsel which was founded in 1972 to increase business opportunities minority owned businesses.

Pepco is a Fortune 500 company.

The main executives at Pepco are: John Huffman, Anthony Kamerick, Beverly L. Perry, Kirk J. Emge, David M. Velazquez, and Joseph M. Rigby.

Disclaimer: The information in this article is insufficient to base investment decisions on. All decisions should be based on a thorough analysis of the investment.