Notable Posts

Noteworthy news, analysis, and viewpoints from around the web

More investment: the one thing we still need in order to get to a low-carbon economy

( The global clean energy industry has plenty of reasons to feel good these days.

First, there was last month’s historic COP 21 Paris climate agreement , forged by 195 countries , which eclipsed most people’s expectations in its breadth and scope toward achieving a low-carbon economy. Then, the U.S. Congress approved a five-year extension of wind and solar federal tax credits — a step that Bloomberg New Energy Finance estimates will spur an additional US$73 billion in investment and nearly 40,000 megawatts of new wind and solar projects by 2020.

Things Have Changed: Low Oil Prices a Threat to the U.S. Economy

(The Fuse) Low oil prices are threatening the U.S. economy. Yes, you read that right. The downside of becoming a “global energy superpower” is that with lower prices come economic pain.

The effects of oil prices on the U.S. economy aren’t as straightforward as they used to be. In the past, high oil prices have helped induce economic recessions, most recently in 2008, while low prices were a significant windfall to consumers. That still holds true to a certain degree. Motorists and energy-intensive industries are seeing significant cost savings from weaker prices, and price volatility and high levels still threaten economic growth.

Shale Bubble Creates Financial Risks, But Fallout Will Be Contained

(The Fuse) Cheap credit, irrational exuberance, an overvalued industry, banks taking on too much debt, assets losing value quickly. It all seems like a recipe for disaster, and that’s what’s happened in the shale oil sector over the past several years. As news coverage links the recent stock market tumbles to the sharp decline in oil prices , there have been comparisons between the collapsing oil price and the housing crisis that brought down the U.S. economy in 2007-08.

What Low Oil Prices Mean for Electric Vehicles

(The Fuse) Oil prices declined more than 70 percent over the past 15 months, recently closing below $30 a barrel for the first time in 12 years. Consequently, over the same period, gasoline prices plummeted from $3.14 a gallon in October of 2014, and now hover around just $2.00.

Low prices, which are expected to persist through at least 2016 according to the U.S. Energy Information Administration , propelled automakers to a record year in which they sold 17.5 million cars and light trucks. Over half of all vehicles sold in 2015 were either light trucks or SUVs, and while low fuel prices may nudge consumers toward such vehicles, it is less obvious how a sustained low-price environment will affect the growing market for electric vehicles.

How to Make Sense of Plummeting Global Markets

(NY Times) If you look only at the global economy, and what leading forecasters think it will do in 2016, things look to be in a reasonably solid state. The world economy will grow 3.4 percent this year, economists at the International Monetary Fund projected this week , up from 3.1 percent in 2015. Private sector forecasters mostly have similar expectations.

If you look only at global financial markets , it’s Ack! Run for the hills! The sky is falling!

The $50 Million Competition to Remake the American City

The $50 Million Competition to Remake the American City

(Wired) In the next 30 years, the American population will rise by 70 million people. This being the future, those people will love ordering stuff online even more than people do now, which will prompt a 45 percent rise in freight volume . The nation’s roads, already crumbling because Congress likes bickering more than legislating, will be home to 65 percent more trucks.

That’s just one of the ways a report, released earlier this year by the US Department of Transportation, says a growing population will strain an already overloaded highway system. Eager to avert some of these problems and get people thinking about the mobility of tomorrow, today the DOT is launching the Smart City Challenge, a contest that invites American cities to take advantage of new technologies that could change how we move.

Can lower oil prices cause a recession?

( Donald Luskin writes in the Wall Street Journal:

The global economy is slipping into recession. The evidence is showing up in all the usual ways: slowing output growth, slumping purchasing-manager indexes, widening credit spreads, declining corporate earnings, falling inflation expectations, receding capital investment and rising inventories. But this is a most unusual recession– the first one ever caused by falling oil prices.

Boom or Gloom?

(NY Times) Whether the winner of the 2016 presidential election emphasizes optimism or pessimism, he or she will face some sobering economic developments.

The first is the acceleration of corporate mergers. Why does this phenomenon matter? As Robert Litan, the chief economic adviser to Patent Properties Inc., explained last summer in the Wall Street Journal, it’s important because when big companies swallow up others, it signals that acquiring companies have essentially outsourced their ideas rather than growing internally.

Oil price plunge isn’t all good news for the economy

Oil price plunge isn't all good news for the economy

(CNBC) The recent plunge in oil prices should be — mostly — good for the U.S. economy.

Cheaper fuel brings big savings for consumers and businesses — several hundred billion dollars since prices crashed from more than $100 a barrel to less than $30. Gasoline, diesel and heating oil make up about two-thirds of the roughly 20 million barrels of oil consumed in the U.S. every day.
Lower oil prices are also helping cut the U.S. trade deficit by slashing the cost of imported oil. And they’ve brought lower operating costs for shippers and other transportation companies, which helps boost profits and hold the line on the cost of travel and moving goods.

All in, the sustained drop in crude prices should add roughly half a percent to U.S. GDP, according to the Dallas Fed.

NOAA Model Finds Renewable Energy Could be Deployed in the U.S. Without Storage

NOAA Model Finds Renewable Energy Could be Deployed in the U.S. Without Storage

(IEEE Spectrum) The majority of the United States’s electricity needs could be met with renewable energy by 2030—without new advances in energy storage or cost increases. That’s the finding of a new study conducted by researchers from the National Oceanic and Atmospheric Administration (NOAA). The key will be having sufficient transmission lines spanning the contiguous U.S., so that energy can be deployed from where it’s generated to the places where its needed.

The Oil Conundrum

(The Economist) OIL traders are paying unusual attention to Kharg, a small island 25km (16 miles) off the coast of Iran. On its lee side, identifiable to orbiting satellites by the transponders on their decks, are half a dozen or so huge oil tankers that have been anchored there for months. Farther down Iran’s Persian Gulf coast is another flotilla of similarly vast vessels. They contain up to 50m barrels of Iranian crude—just what a world awash with oil could do without.

Why you should worry about cheap oil

(CNN) Millions of Americans are laughing their way to the gas station. But should they be?

Sure, the stunning crash in oil prices below $30 a barrel seems great for consumers because it’s driven gas at the pump below $2 a gallon . And the thinking is that it should help boost the U.S. economy, with people spending their gas savings.

But cheap oil is also causing mayhem in global stock markets . The Dow is off to its worst start to a year ever. The financial headlines at the start of 2016 are downright scary. With that backdrop, any euphoria over low oil prices is questionable. Here’s why:

Who’s Afraid of Cheap Oil?

(The Economist) Along with bank runs and market crashes, oil shocks have rare power to set monsters loose. Starting with the Arab oil embargo of 1973, people have learnt that sudden surges in the price of oil cause economic havoc. Conversely, when the price slumps because of a glut, as in 1986, it has done the world a power of good. The rule of thumb is that a 10% fall in oil prices boosts growth by 0.1-0.5 percentage points.

This Time, Cheaper Oil Does Little for the U.S. Economy

This Time, Cheaper Oil Does Little for the U.S. Economy

(NY Times) It has been a truism of the American economy for decades: When oil prices rise, the economy suffers; when they fall, growth improves.

But the decline of oil prices over the last two years has failed to deliver the usual economic benefits.

As oil prices have fallen to levels not seen since 2003 — sagging below $27 a barrel on Wednesday before rebounding to about $30 on Thursday — many experts now say they do not expect lower prices to bolster the domestic economy significantly in 2016.

How Energy Efficiency Can Help Manage the Duck Curve

(Greentech Media) Distributed generation is changing the load shape of the grid. Increasingly, the traditional afternoon peak is being replaced by an afternoon valley, when solar generation is at its highest. The valley period is in turn followed by a steep and problematic peak in the late afternoon, as power from solar generation decreases, people return home from work and school, and residential loads increase.

Saudi Arabia Will Be the Big Loser from the Plunge In Oil Prices

(Time) The country relies on oil for about 80% of budget revenue.

Oil prices stand at the intersection of geopolitics and the global economy. When prices fall as far and as fast as they have over the past two years–dropping some $85 a barrel–shock waves are felt around the world.

Vladimir Putin’s outsize personality means that Russia could be highly vulnerable to low oil prices. But while the country’s economy will certainly take a hit, the impact will be greater in the Middle East, especially in an anxious and isolated Saudi Arabia.

Cheap Oil Is Good for Consumers, So Why Is It Slamming Stocks?

(NBC) Wall Street is drowning in oil.

Stocks are having their worst start to a year in history in part because of a rapid plunge in the price of oil. The price of crude is down 28 percent this year already, which in turn has dragged down energy company shares in the Standard & Poor’s 500 index by 13 percent, which has helped pull the overall index down 9 percent.

This even though low oil prices — and the cheap prices for gasoline and other fuels that result — are wonderful for consumers and many companies.

Want People to Embrace Efficiency Technology? Make It Sexy

(Huffington Post) Why don’t energy efficiency technologies and strategies get people as excited as a Tesla roadster? On the face of it, duh. It’s the brains of it that make this a headscratcher.

An American Council for an Energy Efficient Economy (ACEEE) ranked the U.S. among the least energy efficient of the world’s largest economies-13th out of 16-in its most recent international scorecard.

Energy Costs Put Consumer Prices in Reverse, Keep Inflation at Bay

(NBC) U.S. consumer prices fell in December and recorded the smallest annual increase in seven years, reflecting a big drop in energy prices.

Consumer prices slipped 0.1 percent last month after a flat reading in November, the Labor Department reported Wednesday. For the entire year, overall inflation was up just 0.7 percent, even smaller than a 0.8 percent rise in 2014. Both years were heavily influenced by plunging energy prices. It was the weakest annual increase since a 0.1 percent rise in 2008.

The secret to making New York City’s old homes energy-efficient

(Crain’s New York ) Most neighborhoods in New York City have a characteristic housing type—brownstones in Park Slope and Bedford-Stuyvesant, semi-attached two-family bricks in Ridgewood, single-family wood-frames in Flatbush. When neighborhoods were originally developed, a builder would buy blocks of land and repeat the same construction over and over.

This repetition helps define an area and adds to the beauty of the city. But it also presents an opportunity to overcome one of today’s most pressing energy challenges.

IMF: Oil price collapse is a drag on global economy

Oil price collapse is a drag on global economy: IMF

(Economic Times) Lower crude prices would normally stimulate some demand in countries where it is a key household and business cost, and spur more economic activity, the Fund said in its updated outlook on the world economy.

However, it said, after a 70 per cent fall in prices over 18 months, other factors have dampened the expected gains from that decline.

Why cheap oil is not an economic blessing

(Washington Post) There are two different flavors of “supply side” economics. One that dates to President Ronald Reagan argues that if you cut taxes on the wealthy, they’ll work harder and invest more of their larger after-tax income. The benefits will “trickle down” to both the unwashed masses and to the Treasury.

Why the falling oil price may not lead to boom

(The Guardian) There was a time when Blue Monday meant a song by New Order. These days it is the third Monday in January, allegedly the most depressing day of the year.

Whether there is any scientific basis for this claim is debatable, but for what it’s worth the argument is that people feel miserable because Christmas is over, the credit card bills are arriving, it’s dark when you go to work in the morning and it’s dark when you head home.

The Problem With Rooftop Solar That Nobody Is Talking About

(Mother Jones) To understand his hang-up, you need a bit of Electricity 101. If you have solar panels on your roof, the electrons they produce flow across the electric grid like water, following a path of least resistance. As they whiz around, electrons are impossible to track and look identical, whether they’re coming from solar panels, a coal plant, or whatever. But there is value in keeping tabs on the renewable ones, so energy wonks came up with renewable energy credits (RECs) , a tradable financial instrument that corresponds to a certain amount of energy produced by a certain renewable source like solar or wind.