Marita: What’s up with oil and gas prices

 

Greetings!

 

Wow! It’s been a rough ride in the markets the past few days. While I can’t pontificate on that, I can answer a related question that people have asked me—which became the theme for this week’s column: Oil’s down, gasoline isn’t. What’s up? (attached and pasted-in-below). While not as political as much of what I write, and more geared to the consumer, those who’ve read the review draft have been very supportive. My go-to guy on energy economics said: “If this doesn’t get you a call from FOX Business, nothing ever will. Fantastic article and very informative, you don’t need anything from me. It stands on its own!” Even my proofreader commented: “I’ve wondered the same thing. Thanks for an easy to understand explanation!” I hope Oil’s down, gasoline isn’t. What’s up? Helps you understand–or explain the situation to someone else.

 

Last week, just after we sent my weekly column out, I became aware that a local newspaper had published a letter-to-the-editor that I’d written weeks ago in response to a front page story someone had shared with me. I’d about given up that they’d ever publish it and was disappointed as I’d put a lot of effort into crafting my response—even consulting with experts to be sure everything was accurate. Here’s the original article: Tech climate researcher appears on ‘700 Club’–and my response: Use sound mind to evaluate climate alarms. I hope you’ll check them both out. Maybe even add your own comments!

 

For those of you who publish my work, one more thing: I have new headshots (attached). I couldn’t decide which I liked better so I bought them both. Please exchange your preferred shot for the older one you’ve been using.

 

Thanks for posting, passing on, and/or personally enjoying Oil’s down, gasoline isn’t. What’s up?

Marita Noon 2015 Turquiose

Marita Noon

Executive Director, Energy Makes America Great, inc.

PO Box 52103, Albuquerque, NM 87181

505.239.8998

 

 

For immediate release. August 24, 2015

Commentary by Marita Noon

Executive Director, Energy Makes America Great Inc.

Contact: 505.239.8998, marita@responsiblenergy.org

Words: 901

 

 

Oil’s down, gasoline isn’t. What’s up?

A little more than a year ago, oil prices were above $100 a barrel. The national average for gasoline was in the $3.50 range. In late spring, oil was $60ish and the national average for gas was around $2.70. The price of a barrel of oil has plunged to $40 and below—yet, prices at the pump are just slightly less than they were when oil was almost double what it is today.

 

Oil and gasoline prices usually travel up or down in sync. But a few weeks ago the trend lines crossed and oil continued the sharp decline while gasoline has stayed steady—even increasing.

 

Oil’s down, gasoline isn’t. Consumers are wondering: “What’s up?”

 

Even Congress is grilling refiners over the disparity.

 

While, like most markets, the answer is complicated, there are some simple responses that even Congress should be able to understand. The short explanation is “refineries”—but there’s more to that and some other components, too.

 

Within the U.S. exists approximately 20 percent of the world’s refining capacity. Fuel News explains that “on a perfect day,” these domestic facilities could process more than 18 million barrels of crude oil. But due, in large part, to an anti-fossil fuel attitude, it is virtually impossible to get a new refinery permitted in America. Most refineries today are old—the newest major one was completed in 1977. Most are at least 40 years old and some are more than 100. Despite signs of aging, refining capacity has continued to grow. Instead of producing at 70 percent capacity, as they were as little as a decade ago, most now run at 90 percent. They’ve become Rube Goldberg contraptions that have been modified, added on to, and upgraded. The system is strained.

 

To keep operating, these mature refineries need regular maintenance—usually done on the shoulders of the busy driving seasons and when systems need to be reconfigured for the different winter and summer blends. Even then, things break. Sometimes a quick repair can keep it up and running until the scheduled maintenance—known as “turnaround.” Sometimes, not. Fixing the equipment failures on the aging facilities can take weeks.

 

This year, several unexpected maintenance issues happened in the spring. Other refineries worked overtime to make up the shortage. That, plus low crude prices, means that many refiners didn’t shutdown for the usual spring turnaround. Fuel News notes, potential profit encouraged refiners to “get while the getting’s good.”

 

This pedal-to-the-metal approach is catching up with the sagging systems. On August 8, BP’s Whiting, IN, refinery, the largest supplier of gasoline in the Midwest, faced an unplanned shutdown due to a leak and possible fire hazard in its Pipestill 12 distillation unit—which processes about 40 percent of its 413,000 barrel per day capacity.

 

The closure of the largest of Whiting’s three units caused an immediate jump in gasoline prices in the Midwest. Stockpiles were drawn down to fill demand during summer’s peak driving season. Gasoline has been moved—via pipeline, truck, and train—from other parts of the country to balance out supply. So, while the biggest price increase was in states like Minnesota, Michigan, and Illinois, prices raised nationwide beginning on August 11.

 

Meanwhile, because the Whiting plant wasn’t sucking up crude oil, its supplies grew and drove crude prices down further—hitting a six-year low. The Financial Times reports: “An outage at Whiting’s main crude distillation unit could add almost 1m [million] barrels to Cushing [The OK oil trading and storage center] every four days as long as it is out.”

 

Making matters worse, another Midwest refinery, Marathon’s Robinson, IL, 212,000 barrels per day facility is down for repairs that are expected to take two months.

 

Others smaller outages include Philadelphia Energy Solutions and the Coffeyville Resources’ refinery in Kansas. BloombergBusiness states: “As many as seven other Midwest refineries could shut units for extended time this fall.” Though, other reports indicate that some of the planned maintenance may be put off due to profit margins that are at a seven-year high.

 

Adding to the price increases due to refinery issues, are two other factors—both having to do with the calendar.

 

First, we are almost to Labor Day, which is considered the end of the summer driving season. It is when families make that one last trip to the lake or to visit grandma—which always causes a jump in demand that tightens supplies. This year, with two big refineries down, the usual spike could well be exacerbated.

 

The other is hurricane season. While we are just past its peak, we’ve only had one hurricane so far: Hurricane Danny—which last week was barreling toward the Northern Caribbean islands, with potential to hit the refinery-rich Gulf Coast. On Friday August 21, it moved from Tropical Storm Danny to Category 3 Hurricane status. It has since weakened, but its presence caused risk and supply concerns.

 

High summer-driving demands and unscheduled refinery repairs have combined to reduce supply of gasoline, and raise the price, thus the need for crude oil—especially in the Midwest—is down. Crude oil inventories at the Cushing hub continue to increase and add to the current oversupply and slide in oil prices.

 

While there’s some other contributing factors, the current mix of supply and demand explains: “what’s up?” The lack of new refineries punishes the whole system. Gasoline prices are up—hurting consumers. Crude prices are down—hurting producers.

 

 

 

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column. Follow her @EnergyRabbit.

 

 

 

 

 

 

Marita: You colored the Animas … Now leave our souls alone

As Marita reports, the idiots that colored the Animas (soul in Spanish) are intent on messing with our backyard in the very near future.  Have a peek at Marita.s latest:

Greetings!

Being based in New Mexico,  the obvious thing for me to address this week was the EPA’s disaster at the Gold King Mine. However, you know, I like to address stories that are underreported and the orange river got plenty of eyeballs. While I was making my decision on what to cover this week, a source sent me several links addressing WOTUS—which I haven’t written on at all. Upon investigation, I was surprised to learn that the deadline for the implementation of this new rule is nearly upon us—and it has big implications for America’s energy development. I thought: “If I don’t know about this, chances are high, my reader’s don’t either.”

While I was heading away from writing on the spill and toward WOTUS. I received a phone call from one of my mentors: Paul Driessen. He was writing on the spill and had some New Mexico questions for me. I was able to share some of my thoughts with him. Once I knew he was addressing the issues (including some of my ideas), I easily made the decision to go with WOTUS. Driessen did a great job with the topic. I hope you will check it out! I sent him my WOTUS draft and he liked it too: “This is an excellent in-depth article—maybe the best and most detailed analysis I’ve seen so far. Thank you for your hard work in bringing all this to my and all of our attention.”

Yes, The Agency that contaminated the Animas River is about to start regulating water that may be in your backyard (attached and pasted-in-below), is a bit of a “detailed analysis,” but I think it is easy enough for the average reader to get the hard message: The EPA is coming soon to a backyard near you. WOTUS is a major expansion of power and intrusion on private property rights.

 

Please post, pass on, and/or personally enjoy The Agency that contaminated the Animas River is about to start regulating water that may be in your backyard.

Thanks for your interest!

Marita Noon

marita Noon 1

Executive Director, Energy Makes America Great, inc.

PO Box 52103, Albuquerque, NM 87181

505.239.8998

Commentary by Marita Noon

Executive Director, Energy Makes America Great Inc.

Contact: 505.239.8998, marita@responsiblenergy.org

The Agency that contaminated the Animas River is about to start regulating water that may be in your backyard

Unless a federal judge issues a preliminary injunction, the definition of the “Waters of the U.S.” will change on August 28—giving the Environmental Protection Agency (EPA) the authority to regulate the water in your backyard (even the water that might be in your backyard due to a heavy rain). Even, according to West Virginia Attorney General Patrick Morrisey: “any area where agencies believe water may flow once every 100 years.”

 

Thirty-one states, in four districts, have filed motions with the federal courts to block the EPA and the U.S. Army Corps of Engineers (ACOE) from beginning to enforce the new “Waters of the U.S.” rule (WOTUS), which represents a new interpretation of the Clean Water Act (CWA). The Federal Register calls the new rule “definitional” and states: “The rule will ensure protection for the nation’s public health and aquatic resources, and increase CWA program predictability and consistency by clarifying the scope of ‘waters of the United States’ protected under the Act.”

 

WOTUS was published in the Federal Register on June 29 and will become effective on August 28.

 

The interpretation is important. The CWA used to apply to “navigable waters,” which now, as Texas Attorney General Ken Paxton recently said: “include almost any piece of land that gets wet and puddles.”

 

Morrisey calls the rule “regulatory lunacy.” He’s hosted town-hall meetings where he’s heard from citizens concerned that “this rule would infringe on their property rights and force them to pay thousands of dollars to do basic work around their homes, farms and workplaces.” Morrisey adds: “This rule expands a scheme whereby property owners have to ask the EPA for permission to do yardwork.” He claims: “Failure to comply with the new regulations could result in fines of up to $37,500 a day.”

 

While the word “navigable” hasn’t been removed from CWA—as that would require an act of Congress—the EPA has expanded that definition to include any water that has a “significant nexus” with navigable waters. This is where water in your back yard could be impacted. Regarding the final rule, Paxton explains: it “is so broad and open to interpretation that everything from ditches and dry creek beds, to gullies, to isolated ponds formed after a big rain could be considered a ‘water of the United States.’”

 

The CWA’s single word, “navigable,” has, for decades, been contentious with those who want to expand government control and limit industrial activity such as oil-and-gas development, mining, ranching, and farming. Former Representative Jim Oberstar (D-MN) fought hard to have the word navigable removed from the CWA and to expand its control to any waters. Despite repeated bites at the apple, prior Congresses refused to pass his legislation.

 

EPA, once again, uses rulemaking to do what its proponents couldn’t do through legislation—a hallmark of the Obama administration.

 

A July 28, 2015, a letter signed by officials from 31 states, sent to EPA and ACOE by North Dakota Assistant Attorney General Margaret Olson, requesting a minimum nine-month extension of the WOTUS effective date, states: “the new regulation will also have a significant impact on agricultural, homebuilding, oil and gas and mining operations as they try to navigate between established state regulatory programs and the EPA’s and ACOE’s new burdensome and conflicting federal requirements. This uncertainty especially threatens those states that rely on revenues from industrial development to fund a wide variety of state programs for the benefit of their respective citizens.”

 

On August 11, thirteen states—including oil-and-gas “heavyweights,” as Natural Gas Intelligence (NGI) calls them, Alaska, Colorado, North Dakota, and New Mexico—became the latest to ask a federal judge to block the controversial rule from taking effect. The states have asked for a hearing on the motion during the week of August 24. NGI states: “The oil and gas industry is opposed to the regulations because they believe it could stifle development.” A statement from the Independent Petroleum Association of America supports this assertion: “The 297-page rulemaking would require a federal permit for any activity that results in a discharge into any body of water covered by the new definition of ‘waters of the United States,’ including small streams and wetlands.”

 

The Texas Railroad Commission, which overseas oil-and-gas activity in the state joined the multi-agency, multi-state lawsuit because “the rule redefines navigable waters as used in the CWA, allowing the EPA and ACOE to regulate private land anywhere in the United States where water can conceivably flow—even dry creek beds and manmade ditches. The Texas economy is a proud beneficiary of shale drilling, and some of the water used in this process would move under the jurisdiction of the EPA with the implementation of this rule change.”

 

Luke Popovich, spokesman for the National Mining Association told me: “This rule embodies all that is wrong with EPA’s overall regulatory approach: its costs will far outweigh any benefits, it violates both the spirit and intent of Congress in the Clean Water Act, and it has been sold as a benign attempt to add ‘clarity’ and ‘certainty’ to the marketplace when in fact it only clarifies and makes certain the threat EPA poses to a wide swath of the economy—from mining and farming to home building and construction.”

 

Jason Bostic, Vice President of the West Virginia Coal Association, adds: “It’s no longer about water or discharges. It’s about regulating the landscape.”

 

The lawsuit filed in the U.S. District Court for the Southern District of Georgia filed on June 28, on behalf of 9 Southeastern states (now 11, including Indiana and North Carolina), received an expedited briefing. Oral arguments were heard on August 12. Morrisey’s office told me they are hopeful for a decision by August 28.

 

North Dakota’s Attorney General Wayne Stenehjem believes the States are entitled to an injunction “because implementation of the Rule will cause immediate and irreparable harm and deprive the States of the opportunity to present the merits of their case prior to this unprecedented jurisdictional over-reach taking effect.”

 

In addition to the 31 states, on July 2, a coalition of a dozen industry groups—from agriculture to manufacturers to mining—filed a complaint against the EPA and ACOE over the WOTUS rule.

 

The goal of the litigations is to delay or defeat the regulations before they go into effect.

 

Morrisey, in a statement, explains: “While the Clean Water Act gave the EPA and Corps authority to regulate ‘navigable waters’—defined as ‘waters of the United States’—Congress made sure that states would retain their constitutional, sovereign responsibility over non-navigable, intrastate lands and waters. The U.S. Supreme Court has twice rejected the agencies’ attempts to expand their authority (in Solid Waste Agency of Northern Cook County v. Army Corps of Engineers and Rapanos v. United States). However, this latest rule written by the two administrative agencies gives them virtually limitless power over these waters.”

 

Rules like WOTUS, and the recently announced Clean Power Plan, are lauded by environmental groups which are the likely impetus for the regulatory overreach. Senator David Vitter (R-LA), Chairman of the Small Business and Entrepreneurship Committee, sent a letter to EPA Administrator Gina McCarthy regarding “reports that the Agency inappropriately coordinated with outside organizations during the WOTUS rulemaking process.” His statement on the matter offers this reprimand: “For decades, the Department of Justice has recommended that federal agencies do not lobby the general public to build political support for policies promoted by the Executive Branch. In 2014, the EPA embarked on an unprecedented public relations campaign, which may have violated anti-lobbying laws, to promote the WOTUS rule by working closely with outside organizations including the Sierra Club and Organizing for Action, which is closely affiliated with President Obama’s 2012 reelection campaign.”

 

Apparently, the EPA—which allowed millions of gallons of toxic waste to spill into the Animas River—and its “far-left environmental allies,” believe the agency can do a better job of protecting waterways, streams and wetlands than the states. A wide majority of states and industry disagree. The coalition hopes the lawsuits—which are expected to be combined into one—will overturn the rule and prove that the EPA has gone beyond its jurisdiction with this expansion of regulatory authority.

 

 

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column. Follow her @EnergyRabbit.