Coal Cap on China?

As we all know, China is major producer and consumer of coal. According to the Wall Street Journal, the demand for coal in China has gone up 10% and it's share of the global coal consumption has already tripled. Zhang Guobao, head of China's National Energy Administration, doesn't approve of this, therefore calling for a cap somewhere between 3.6 million tons and 3.8 million tons. China is currently consume over 4 million tons. They predict that China will run out of coal in 28 years, but they aren't sure about it since it's really difficult to compute. For a country that depends on coal fro 70% of their energy, this could be a major problem,

This will have a big effect in their economy. Many small oil producing businesses are going to feel the pressure. China is also trying to lower inflation at the moment. I feel that if this policy does get approved, this will cause the price of coal to rise. The loss of job and prices to go up is the last thing China wants. 

Further Disgrace for BP

                It now appears that  BP had many advance warning signs in the days and weeks leading up to the fateful explosion on the oil rig that lead to the events that have so firmly shaped the future of the energy industry.  There were multiple events in time leading up to the distaster that hinted that things were not perfectly well at all. Among these oversights were the fact that BP ignored tests which said that the bottom of the well was not able to hold under current pressure.

                One can only wonder what impact this further disgrace for BP will have on the energy industry. Obviously even more blatant errors by BP will lead to further government regulations, as the article notes. What will the effects be on oil and stock prices? Only time will tell, yet it seems that this can not have a positive connotation for the industry.

http://online.wsj.com/article/SB10001424052748704648604575620511160070900.html?mod=WSJ_Energy_leftHeadlines

Oil Companies Increase Capital Investment

        The future value or expected value of crude oil is expected to remain high. The price of a barrel has been as high as $146 in July of 2008, but is expected to hold more of a conservative estimate at $70 to $80 per barrel for the next three years. Due to this expected retention or stability in price level major global oil companies are beginning to invest at increased rates to expand production. Essentially, there is a belief that the usually volatile oil market will remain relatively stabilized leading to increased investment in exploration and production.

        Several big name companies that are seen in this new trend of investment are Exxon Mobil Corp., XTO Energy Inc., and recently Chevron Corp. Each of these companies have begun to build up excess liquidity in an effort to expand into growing oil production. Even BHP Corp. is expected to increase its holdings in research and development. Basically, all the major players in the oil industry have shifted their investment outlook to increased expansion and production. This move was made in an attempt to keep the relative stability of the oil industry constant for the coming years.

        What does this mean for the energy industry you may be asking yourself. Simply, there has been a shift in the trend of investment. Regardless of recent economic turmoil there seems to be a new perspective on investment. The major oil companies believe that the recent stability in the financial system will give them the opportunity to secure their investment projects. Oil companies are the first major players to begin re-investing in expansion and exploratory projects. Now it is only a matter of time before other lagging parts of the energy industry begin to re-invest in expansion.

- By: Timothy D. Vallario
- Source: Wednesday, November 17, 2010 - VOL. CCLVI NO. 118, B9A - "Oil Companies to Spend More Money", By Isabel Ordonez

Gulf Spill Linked to BP's Lack of 'Discipline'

- Rianna Das

According to an article from the Wall Street Journal, a team of technical experts have found the BP oil spill was mainly due to BP's lack of consideration of risk and their lack of operating discipline. This panel of experts was assembled by the Interior Secretary, Ken Salazar, to examine the BP oil spill more closely. This same panel also criticized the regulators and the industry as a whole. The team also found a lot of bad decisions on BP's part that lead to spill, along with a few technical problems that likely contributed as well. It also identified problems, such as BP's lack of management discipline and their lack of onboard expertise and clearly defined responsibilities. The goal of this report was to provide the government with a better understanding of what caused the BP oil spill. It will work to provide better regulation in the future and strengthen standards of offshore drilling.

I think this was an important report for the government to order. It is important to understand what specifically caused the BP oil spill. This is because if the government understands what caused the spill, they can work to prevent it in the future. As stated in the article, the goal of the report was to just this. Also, it is important so that other companies can learn from the mistakes of BP and can understand how to prevent an oil spill.

It is important that oil spills are prevented because of the incredible damage they do to the environment. Oil spills can do irreversible damage to ecosystems and the animals a part of them. The BP oil demonstrated this when the media continuously portrayed images of innocent water fowl drenched in oil.

Sources:

http://online.wsj.com/article/SB10001424052748704312504575619261331344070.html?mod=WSJ_Energy_leftHeadlines

The Pros and Cons to Taxes on Oil

According to a recent WSJ article, Israel is recommending raising tax on oil companies. It's really interesting because this article actually portrays both side of the story.

The U.S debates that it would limit the amount of investment in Israel. Many other governments believe that they aren't carrying out their "contracts that promised a generous tax and royalty regime", but Israel debates that they are not making money from this at all.

I think this is definitely a sticky situation. If the taxes do go up, I think this might also push some companies to invest in renewable energies. Usually they are talking about how theres a need in renewable energy, and now they are talking about how taxing might be expensive issue. In my infomational interview, the lady I had interviewed stated that the European Nation and China are more advanced in promoting energy efficency and renewable energy and that we need some sort of an incentive in the US to "catch up to them." Although this isn't really an incentive, but could this be it? Is it enough of a push?

Halliburton Explores Risky Energy Ventures

                   So far on the blog, I have looked at mostly the attempts of eco-friendly companies to explore energy that is both better for the environment and more sustainable than traditional energy practices. While this is certainly a significant proportion of the energy exploration that is happening among companies, not all businesses are interested in new sources of energy that are environmentally friendly. Indeed, one company Halliburton, which already has a reputation as one of the less environmentally conscience companies, has recently experienced some trouble with the Department of Energy as it explores ventures which may be detrimental to the environment.

                The EPA has subpoenaed Halliburton over its use of “hydraulic fracturing”. This is done by using large amounts of water to open up sources of gas to be extracted. While it may reveal previously inaccessible oil, detractors of this method claim that it may be harmful to drinking water.  The EPA claims that many companies have been unhelpful providing information on this practice.

                It seems as this practice is in contrast to the efforts of many companies to find more responsible methods of extracting energy from the earth. While studies have not been definitively completed to condemn the practice, the secretive nature of the companies in refusing to report to the EPA makes it seem as if there is at least something to hide about this new practice. Yet the companies can not be entirely held to blame, as the race to develop new methods for producing cheap energy have pushed many businesses into questionable practices. What is more important for the industry, pleasing the customer through cheap prices or preserving the world? Only time will tell.      

http://online.wsj.com/article/BT-CO-20101109-715152.html

Entergy Considers Sale of Vermont Nuclear Plant

-Rianna Das

This article is about a company, Entergy, in Vermont that is considering closing their nuclear power plant. This plant is 39 years old and has been recently been facing state resistance over the plant. This resistance is due to the plant having leakages of radioactive material. Through this resistance, the plant still supplies about one third of the state of Vermont's energy. Vermont is one of the few states that relies on nuclear power as a primary energy source. There about 65o employees who work at this nuclear power plant. If this plant were to be resold, the company assures that they would work with the new buyers to keep these employees at work at the same plant.

This article shows the importance in the industry for nuclear power. Nuclear power is a renewable energy option. Its use does not harm the environment, making it sustainable. However, it does have some problems in production. As the article demonstrated, nuclear power plants often have leakage of radioactive material, which can do great damage to the environments around the plants. This means that nuclear power plants face must face a lot of regulation from government. This regulation adds to the expense of the nuclear power, which is already expensive to produce.

Again, this article illustrates that although there is a need for renewable, sustainable, energy, it is not always easy for businesses to give this to their consumers. While it is hard for businesses to invest money in relatively new industry, it is important that they keep doing this. It is important for the environment that businesses keep searching for ways to deliver new types of energy to their consumers at a price they can afford.

Sources:

http://online.wsj.com/article/SB10001424052748703805704575594723506042644.html?mod=WSJ_Energy_leftHeadlines