Hurricane Harvey Wallops the Energy Industry

The rain is still falling along the Gulf Coast and the flood waters are still rising, but it’s already clear that Hurricane Harvey has crippled the region’s energy infrastructure. As I wrote last week, many of the country’s oil refineries are located along the coasts of Texas and Louisiana. The latest reports indicate that more than 10% of U.S. refining capacity is now offline because of flooding and closures of shipping channels, roads and railways.

Retail gasoline prices are already starting to show the effects of refinery outages. According to AAA, the nation’s average price for regular unleaded now stands at $2.38 per gallon, up 4 cents from a week ago. Gasoline futures contracts are showing even steeper gains, signaling that drivers can expect prices at the gas station to keep rising in the next few days. Continue reading “Hurricane Harvey Wallops the Energy Industry”

What Hurricane Harvey Means For Gas Prices

Residents living along the western Gulf of Mexico are no doubt carefully monitoring Hurricane Harvey, which is forecast to come ashore somewhere along the Texas coast Friday with flooding rains, powerful winds and damaging storm surges. It’s a dangerous situation for a region that hasn’t seen a hurricane since Ike in 2008.

Motorists throughout the U.S. might want to keep an eye on the storm’s impact, too. Why? Because the western Gulf is home to almost half of the country’s oil refining capacity. If flooding causes power outages or otherwise hobbles refineries, the production of gasoline and other fuels will take a significant hit. Continue reading “What Hurricane Harvey Means For Gas Prices”

Sizing Up Heating Fuel Supplies Ahead of Winter

It’s only August, but it’s not too early to check in on the supply of the heating oil, propane and natural gas that that will start warming homes and businesses in a few short months. Especially since consumers could face notably higher heating costs this coming winter than what they have paid recently.

Like every other product, the price of heating fuel is determined by supply and demand. Demand, of course, depends on the weather, and thus can swing wildly from one winter to the next. Supply, on the other hand, is easy to gauge now. Continue reading “Sizing Up Heating Fuel Supplies Ahead of Winter”

Do Oil Prices Have Room To Fall Further?

Folks hitting the road for July 4th this year won’t have much to complain about at the gas pump.  The day before the holiday, AAA reports that regular unleaded averages a mere $2.23 per gallon nationwide: The lowest price for early July since 2005. (Of course, that nationwide average includes some sharp regional variations. Californians are paying roughly $2.94 per gallon of regular. In South Carolina, the statewide norm is $1.90.) It’s hard to believe that just three years ago, the nationwide average price was $3.68 per gallon.

Of course, drivers can thank the oil market for those savings. The world has been awash in excess crude for more than two years now, and oil prices have plunged during that time. Even with OPEC limiting its oil exports to shrink the supply glut, prices have remained stubbornly low. Benchmark West Texas Intermediate showed some signs of rallying this spring, but topped out at about $53 per barrel in April before retreating below $50 again. In fact, WTI technically entered a bear market when it closed at $42.53 on June 21, marking a 20% decline from its April peak. (A small rebound has taken crude back to about $46.50.) Continue reading “Do Oil Prices Have Room To Fall Further?”

Trump Pulls the U.S. Out of Paris Climate Accord

Now that President Trump has withdrawn the U.S. from the international climate agreement that seeks to limit future greenhouse gas emissions, it’s worth asking a few questions. What exactly did President Obama commit the U.S. to in Paris in 2015? How significant are U.S. emissions relative to the rest of the world’s? And what are U.S. emission levels likely to be now that Washington has left the pact? (President Trump has left open the possibility of rejoining the Paris accord later, but under what terms is unclear.)

Of course, whether to participate in the Paris deal is largely a political question of public policy, and one that arouses strong feelings. I won’t wade into the arguments surrounding Trump’s decision. But energy consumption is really the issue. And that’s a topic where some objective, apolitical analysis is possible. Continue reading “Trump Pulls the U.S. Out of Paris Climate Accord”

Big Picture Trends for the Energy Industry and How Investors Can Profit

I recently teamed up with my colleague Jeff Kosnett to discuss developments in the energy sector, and how they translate into opportunities for investors. Below is a summary of our discussion. At the end of this article is a link to a recording of the conversation, which is free to Kiplinger Alerts subscribers.

Where are oil prices headed?

Markets have been volatile over the last few decades, which is a scary prospect for investors. Continue reading “Big Picture Trends for the Energy Industry and How Investors Can Profit”

A Renaissance for Coal? Or Just a Reprieve?

President Trump’s recent executive order reversing some of his predecessor’s environmental policies has drawn cheers from affected industries and jeers from environmentalists. I take no position on the political debate Trump’s move has set off. But it is possible to map out some of the likely impacts his executive order will have on the energy industry.

Trump the candidate derided President Obama’s regulations that would clamp down on the coal industry and promised to bring back lost coal mining jobs by undoing those regs. In late March, Trump the president signed an executive order seeking to do just that. “My administration is putting an end to the war on coal,” he declared.

So what exactly does Trump’s executive order do? Continue reading “A Renaissance for Coal? Or Just a Reprieve?”

What’s Next for Oil Prices After Last Week’s Tumble?

For much of 2017, oil markets had seemed abnormally calm. Sure, prices gyrated up and down every trading day. But the moves were never very substantial. Between Jan. 18 and last Wednesday, benchmark West Texas Intermediate crude never closed lower than $51.08 per barrel, and never higher than $54.45 per barrel. Then, in a span of a few days last week, WTI dropped to about $48 per barrel.

What happened? And what happens next? Continue reading “What’s Next for Oil Prices After Last Week’s Tumble?”