The NEI Afternoon Clip File

Here are some of the news clips we're reading at NEI this afternoon. As predicted here yesterday, today's clip file brings news yet again of record-setting oil prices. The high this time was $66 a barrel for September crude, but that price quickly dropped to $65.55.

The International Energy Agency said non-OPEC output was falling short of expectations, compounding supply concerns.

"The presence of significant headline risk, most particularly from Iran's international relations, the Atlantic hurricane season and from tightness in refining, is continuing to support prices at higher levels," said Barclays Capital.

... Oil prices have risen in nine of the past 11 sessions as the market has been edgy over possible disruptions to exports from Iran and Saudi Arabia, OPEC's two-largest oil producers.

Coupled with ever-increasing demand, refinery strain is still being partially blamed for the price hike:

The International Energy Agency, adviser to 26 industrialized nations, earlier nudged up its world oil demand growth forecasts for this year and next, leaving already stretched OPEC to fill the supply void.

The IEA cut non-OPEC supply growth this year by 205,000 barrels per day, with production problems in the U.S. Gulf, Mexico, Norway and Britain accounting for most of the shortfall. Russia is also pumping less than expected.

Curiously, Reuters is reporting that Asian market are actually experiencing an oil glut, forcing refiners to reduce operations or seek far-flung markets. Thanks to Peak Oil Optimist for the link.

Responding to those who have been criticizing the energy bill for not immediately solving these pump price woes, Lumberton, N.C.'s The Robesonian provides a balanced voice of reason:

While the [Energy Policy Act of 2005] is far from perfect, it begins moving this country - albeit gently - in important new directions. Unfortunately, it offers no instant gratification; it will take years before the legislation will begin saving Americans any dollars on their utility bills or what they are paying at the pump.

Critics will focus on the billions of dollars in incentives that will go to energy companies. But those dollars - in the form of tax breaks and loan guarantees - are needed to inspire the construction of new nuclear power plants and oil refiners. Incredibly, this country hasn't built any of either in decades, which is the primary reason energy costs have soured. This nation's inability to refine oil is second only to increased world demand as the reason that you are now paying about $2.40 for a gallon of gas.

The Midland Reporter also touches on this point:

The naysayers will quickly tell you this bill offers no short-term relief from rising gasoline costs. It is true we are not going to solve our energy challenge overnight, which is all the more reason this nation needs to address its energy goals with a comprehensive energy policy. That is what we have been calling for all along. This bill goes a long way toward doing that.

As President Bush himself said:

"What this energy bill is going to do, it's going to help keep momentum in the right direction. This economy of ours has been through a lot and that's why it's important to get this energy bill done to help us continue to grow."

The Reporter also touted the bill because it provides focus for our national energy policy:

It also eliminates the quagmire that exists in our nation's way of dealing with energy problems. It gives us a new focus and vision on where we are headed in terms of facing our energy needs.

In other news, state utility regulators in Arizona voted yesterday to require that 15 percent of all electricity sold in Arizona by 2025 be generated from "renewable" sources. There is a downside:

The plan will allow utilities to increase their bills to residential consumers by up to $2 a month; businesses would pay up to $75 more. Commission staff members pegged the cost at about $50 million a year for the next two decades, or about $1 billion total.

However, [Arizona Corporate Commission] Chairman Jeff Hatch-Miller said, the vote should be seen as a way to help Arizonans avoid rate hikes in the future:

He said that in the 1990s Congress started pushing utilities to use natural gas to generate electricity. Most of the new generators built in Arizona since then use that as a fuel source.

"That was a good idea as long as we have enough natural gas," Hatch-Miller said. But he said the price has more than doubled "because we have such a great demand on it."

And now, he said, the United States is looking at getting more natural gas from Indonesia and Nigeria, "countries that are opposed to us politically." That, said Hatch-Miller, means the commission needs to push utilities here to look to alternatives to coal and natural gas.

High costs are the reason why the commission did not mandate that 20 percent of all the new alternative power come from solar - a technology that can cost consumers 35 cents a kilowatt hour vs. 9 cents for other sources.

Come back tomorrow morning for more news from the NEI Clip File.

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