Energy Musings
An eclectic collection of stories and analyses by Allen Brooks, dealing with issues and developments within the energy industry that have potentially significant implications for executives operating oilfield service companies.
Energy Musings, May 19, 2023
Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.
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May 19, 2023
Who Will Save The Whales This Time?
BOEM has proposed changes to its offshore wind farm approval process to speed it up. We do not know what changes will be adopted, but likely whales will remain threatened. Moreover, the changes are designed to help improve the economics of projects by reducing the regulatory burden and cost for developers. Still, BOEM and NOAA officials refuse to acknowledge that underwater noise from offshore wind development likely contributes to whale deaths. A new NOAA report highlights how much is not known about underwater noise and marine mammals. READ MORE
Who Will Save The Whales This Time?
If the Biden administration has anything to say about it, offshore wind farms need to be built faster even at the risk of killing more endangered whales. The johnny-one-note policy of fighting climate change at all costs with renewable energy puts marine mammals at risk. Some 23 whales have died along the East Coast in the past five months as offshore wind activity has picked up. Slowing the activity or pausing it until we better understand how underwater noise from construction activity may disorient marine mammals would be a smart move.
Efforts are underway to revise the government’s rules for approving offshore wind farms making it easier for them to advance while ignoring the underwater noise and marine mammal issues. Equally questionable is accelerating approvals without requiring as much environmental data as early in the process as is now required.
After a one-month extension of the public comment period, the Bureau of Ocean Energy Management (BOEM) is considering the feedback it received about its Renewable Energy Modernization Rule proposal. BOEM wants to modify the approval process for new offshore wind developments “to reduce administrative burdens for both developers and the Department’s staff, reduce developer costs and uncertainty, and introduce greater regulatory flexibility in a rapidly changing industry to foster the supply of OCS renewable energy to meet increasing demand, while maintaining environmental safeguards.”
BOEM goes on to say that this is a “major modernization of the regulations,” which is based on lessons learned from the last 13 years. Modifying the process is estimated to save “the renewable energy industry $1 billion over 20 years,” certainly meaningful for an industry struggling to improve profitability while dealing with explosive inflationary pressures. Surprisingly, there is no mention of increased “safety or protection of commercial fisheries and species” when considering the potential conflict between fishermen and wind farm developers.
When you read the 85 pages of proposed modernization actions in the January 30, 2023, edition of the Federal Register, you find numerous changes proposed that would allow the approval process to proceed at a faster pace than under the existing process. BOEM’s proposal lists eight major components for revision. They include:
Eliminating unnecessary requirements for the deployment of meteorological (met) buoys.
Energy Musings, May 4, 2023
Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.
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May 3, 2023
Like UConn’s WBB, Our Luck Ran Out
For years, our reporting on our drive from Houston to our summer home in Rhode Island has been of keen interest to readers of Energy Musings because it provides a critical glimpse into current economic conditions. Turmoil is the best description of what we experienced on the drive. READ MORE
A Good April For Energy Quickly Reversed In May
Higher oil prices in April drove the Energy sector in the S&P 500 Index to a strong performance. The sector finished third, the first time this year it has been at the top of the sector rankings. May has started with falling oil prices and the Energy sector has followed the commodity lower. READ MORE
‘The Unpopular Truth’ Tells The Truth About Clean Energy
This is a review of a sobering book looking at the limitations of the energy transition and the misunderstandings of policymakers that produce bad rules and mandates. We recommend the book by an experienced energy economist and commodity trader for his insights. The review was previously published on MasterResource.org. READ MORE
Like UConn’s WBB, Our Luck Ran Out
Geno Auriemma, the University of Connecticut women’s basketball coach, described the 2022-23 season that ended with the team losing in the Sweet Sixteen, short of its goal of reaching the Final Four for the 15th time, as challenging. He lauded the successes the team achieved given the rash of injuries sustained. He noted that during the prior decade, UConn never experienced so many injuries. The team played shorthanded all season, having lost its star player and top freshman before the season began. Injuries forced constant line-up changes and even a postponement since there were not seven healthy players. Auriemma said their luck had run out.
As UConn alumni and avid WBB supporters, my wife and I felt like Auriemma during our annual drive from Houston to Rhode Island. It was the worst trip we have experienced in years. We spent hours sitting in traffic, dealt with downpours and slowing speeds, had unusual food experiences, were challenged to find our hotel, and even had to sit in the car until the rain let up when we arrived in Rhode Island.
Energy Musings, April 28, 2023
Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.
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April 28, 2023
Bananas, Kumquats, and Today’s Inflation Problem
Many investors believe inflation is on the run and soon will return to pre-pandemic lows. There is a history of head fakes about inflation that needs to be examined. READ MORE
Bananas, Kumquats, and Today’s Inflation Problem
Cornell University economist Alfred Kahn, President Jimmy Carter’s advisor on inflation and chair of the Council on Wage and Price Controls, was famous for talking about recessions and depressions as necessary to win the battle with the raging inflation of the 1970s. He was chastised for using such scary language – remember we were not far removed from the Great Depression. Kahn switched to calling them bananas until a banana company took offense and he changed to kumquats. Who knew what a kumquat was?
Politicians in Washington hate talking about recessions, let alone depressions. But if inflation does not retreat to the Federal Reserve’s 2% target rate, people will continue suffering. The good news: the March Consumer Price Index (CPI) for all items posted an increase of 5.0%, the smallest monthly rise since May 2021. Energy falling 6.4% helped, with gasoline falling 17.4%, although electricity rose 10.2%. Fortunately, the latter counts less in the index than the former.
In the 1970s when the CPI was rising by 15%, Arthur Burns, chair of the Federal Reserve, asked his economists to develop an index that was less politically sensitive. They came up with Core CPI which strips out the volatile food and energy components. In March, however, Core CPI increased by 5.6%, largely attributed to an 8.2% increase in housing that represented over 60% of the total increase. So much for getting rid of the volatile categories. Compared to expectations, the March CPI was slightly better while Core CPI was slightly worse. Good news or bad?
On the bad side, since March 2021, the CPI has increased by 14.0% driven by food prices climbing 18.0% and energy soaring 23.6%. Without those categories, Core CPI was 12.4% higher – better but not by much. For consumers, food and fuel claim significant shares of people’s budgets but so do housing, autos, and health care expenses. Inflation hurts, no matter who you are.
Despite Main Street’s suffering, Wall Street cheered the CPI report. Investment managers and CNBC talking heads rejoiced at the lower rate declaring the “end of inflation!” They called the CPI’s steady decline since peaking at 9.1% last June a victory. For them, the CPI is heading directly to the Federal Reserve’s 2% inflation target. The stock market will soar. Break out the champagne!
At What Cost?
Energy Musings, April 18, 2023
Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.
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April 18, 2023
Offshore Wind Is Hot; Rhode Island Only Got One Bid
Is a single bid a sign of monopoly power or concern about economics of offshore wind projects? READ MORE
Renewables Can Violate International Safety Standards
Governments, except the Coast Guard, are waiving safety rules when shipping wind turbines. READ MORE
Early 2023 Hurricane Outlook Is Positive
Assuming El Niño develops, there will be slightly fewer storms, hurricanes, and days of storms. READ MORE
EPA Takes America Back To Early 1900s
Proposed emissions standards can only be met with transition to EVs, despite Americans’ dislike. READ MORE
Offshore Wind Is Hot; Rhode Island Only Got One Bid
Energy Musings, April 3, 2023
Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.
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April 4, 2023
It’s The Battery, Stupid! Really?
Ford disclosed it has lost billions over the past two years on its EV business and will lose another $3 billion this year. Never fear, Ford has a plan to reach profitability in two years. Really? READ MORE
What Happened To Oil Prices?
The banking turmoil spawned by SVB’s bankruptcy caused oil prices to crash. Traders sold its long holding and bought short ones. As the dust cleared, oil prices recovered as demand built. READ MORE
Here We Go Again With Offshore Wind Cost Fantasy
The Biden administration wants more offshore wind and announced dramatically lower cost targets. Costs are rising, not falling, and only models are showing any improvement in LCOE. READ MORE
Second European Oil CEO Assails Poor Green Energy Profits
Shell Oil’s new CEO is recrafting the company’s business strategy. He, like his bp counterpart, recognizes that renewables earn marginal returns and the world needs oil for “a long, long time.” READ MORE
Banking Crisis And Recession Fears Swamp Energy
Energy Musings, March 21, 2023
Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.
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March 21, 2023
Silicon Valley Bank Bankruptcy And Its Impact On Energy
SVB was a major lender and deposit holder for tech and cleantech startup companies. Its bankruptcy removes a key financier in this space that will disrupt the energy transition. READ MORE
Offshore Wind’s Economics Questioned By A Big Player
New offshore projects continue to be proposed while the head of the U.S.’s leading renewable energy utility company warns his CERAWeek audience that “offshore wind is a bad bet.” READ MORE
The Cost Of Getting To Net Zero By 2050
States are mandating utilities reduce their carbon emissions to reach net zero by 2050. An analysis of Wisconsin’s plan shows its consumers will paying $248 billion (2022$) more. READ MORE
SVB And The ESG And Woke Attacks
Critics blame SVB’s ESG and DEI focus for its failure. They point to the directors’ backgrounds and associations. Their skills instead raise questions about the lack of management oversight. READ MORE
Silicon Valley Bank Bankruptcy And Its Impact On Energy
Energy Musings, February 21, 2023
Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.
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February 21, 2023
The Energy ‘Transition’: Learning and Retreat
BP’s CEO announced revised targets for oil production and emissions reductions below targets. READ MORE
Why Did Dominion Fight Offshore Wind Performance?
CVOW’s Pilot turbines have outperformed the performance standard Dominion Energy fought. READ MORE
Biden’s Climate Agenda Ignores New Emissions Reality
The EPA is adopting realistic climate scenarios, but they undercut Biden’s net zero goals. READ MORE
Warren Buffett Et Al Likes Renewable Tax Subsidies
Duke And Dominion are exiting renewable energy projects for greater regulated returns. READ MORE
The Energy ‘Transition’: Learning and Retreat
Energy Musings, February 7, 2023
Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.
February 7, 2023
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What Is Going On With European Oil Companies?
BP and Shell are slowing their renewable energy push on economic concerns. READ MORE
EVs Are In The News With A Confusing Outlook
A price war has broken out and we review calculations of how much additional power is needed. READ MORE
A Day In The Life Of A Plastics Avoider
A costly experiment showing how important plastics are for today’s lifestyle. 164 violations! READ MORE
Troubled Massachusetts Offshore Wind Landscape
Commonwealth Wind asks state supreme court to bail it out of unprofitable power agreements. READ MORE
Energy Starts 2023 With Another Positive Month
Energy Musings, January 10, 2023
Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future. While published every two weeks, events and travel may alter that schedule. I welcome your comments and observations. Allen Brooks
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January 10, 2023
Demographics Will Create An Unforeseen New World Order
We have been warned for years about the impending retirement of the Boomer generation, but seldom has anyone focused on how significant this event will be for our economy and society. A higher cost of capital due to fewer workers will drive interest rates up for years with impacts READ MORE
Energy Stocks Had A Terrific 2022, But What About 2023?
What have you done for us lately will be the initial 2023 view of investors more interested in flashy gadgets and social software? Few investors expect a third consecutive year as the top-performing S&P 500 sector, but if oil prices mirror the early 2000s trend, we may be surprised. READ MORE
Random Energy Topics And Our Thoughts
Financial Times 2022 Word Selection Highlights Changing World
Massachusetts Offshore Wind Battle’s Devastating Outcome
Climate Risk Management In The Reinsurance Industry
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