Power Surge 14.7

Volume 14 Issue 7
December 5, 2022 – December 11, 2022
Andrew Ji ‘25 | Wilder Crosier ‘25 | Cameron Farid ‘26

UK tries to shore up energy supply with US deal

December 7, 2022 | CNN | Hanna Ziady

As Europe looks to replace Russian energy and fight high fuel prices resulting from the invasion of Ukraine, the United Kingdom recently struck a deal with the United States to increase LNG (liquified natural gas) imports to the country. The deal is titled “UK-US Energy Security and Affordability Partnership” and, in this partnership, the US plans to export at least 9-10 billion cubic meters of LNG to the UK over the next year, over double that exported in 2021. Other components of the deal include collaboration on energy efficiency and alternate sources, like renewables and nuclear power. Earlier this year, a similar deal was struck with the European Union and United States, where the US would also increase LNG shipments to EU countries. As expected, the United States became the world’s largest LNG exporter in the first half of 2022, according to the US Energy Information Administration.

These deals have not been met positively by all. Kremlin spokesman Dmitry Peskov, for example, criticized increased European reliance on US energy, claiming that “now, when the Europeans are losing billions of euros every day, Washington is already earning these billions of dollars.” - CF

Keystone pipeline shut after 14,000-barrel oil spill in Kansas

December 9, 2022 | Reuters | Brijesh Patel, Rod Patel, Nia Williams

A massive onshore oil leak in rural Kansas last Wednesday spilled over 14,000 barrels of crude oil, the largest onshore spill in the United States since a 20,000 barrel spill in October 2013. Its operator, Canada’s TC Energy, shut down the pipeline at about 8 p.m. CT, with the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) ordering the pipeline to stay closed until the federal regulator authorizes a restart. The leak took place near Washington, Kansas, a small town, and 20 miles south of Steele City, Nebraska, and threatens to affect US inventories at a storage hub and two oil refinery centers.

The controversial keystone pipeline has now suffered seven spills since its opening June 2010, with the largest previous spill in December 2017 when 6,600 barrels spilled in South Dakota. This spill, however, may face a longer shutdown than the typical two weeks since it involves a creek nearby, which risks permeating the leak through the local ecosystem. With an immediate shutdown and no hard timeline on when it will reopen, Western Canada Select (WCS) oil will likely be discounted, adding to an already heavy discount given the low demand for Canadian oil. WCS for December delivery traded $33.50 below West Texas Intermediate (WTI), a benchmark for US oil prices, compared with Wednesday’s price of $27.50 below the benchmark. - AJ

Attacks on Pacific north-west power stations raise fears for US electric grid

December 11, 2022 | The Guardian | Dani Anguiano

With over the 450,000 miles of sprawling transmission lines across the country, the U.S. power grid provides millions of Americans with their electricity needs. Recently, a string of six attacks on power stations in the Northwest have highlighted both the importance and the vulnerabilities of the grid. On December 3, two similar attacks were launched on power stations in North Carolina, leaving 40,000 residents without electricity. The perpetrators are unknown, but experts believe domestic extremist groups are behind the terrorism. The Department of Homeland security released a report early this year warning that these groups have created “credible, specific plans to attack electricity infrastructure since at least 2020.” The recent impacts of the attacks shed light on the physical vulnerabilities of the grid as well as the real threat of these attacks. –WC

Power Surge 14.6

Volume 14 Issue 6
November 12, 2022 – December 4, 2022
Andrew Ji ‘25 | Wilder Crosier ‘25 | Cameron Farid ‘26

G7 Coalition agrees to $60 per barrel price cap for Russian oil

December 3, 2022 | Reuters | Jan Strupczewski

The G7 and Australia on Friday said that they had reached an agreement to cap the price of Russian seaborne crude oil at $60 per barrel, after the lone holdout in the EU, Poland, expressed support for the price cap despite it being higher than desired. After the finalization of the agreement over the weekend, the coalition announced that the cap would take effect on Monday “or very soon thereafter,” with the goal of the price cap being to reduce Russian income from selling crude oil, while preventing a global surge in prices. The US Treasury Secretary, Janet Yellen, stated that the cap would benefit low and middle income nations that have seen the highest spikes in energy and food prices, while the chair of the Russian lower house foreign affairs committee said that the EU was jeopardizing its own energy security.

There are mechanisms attached to the agreement to ensure that it stays updated, with it being reviewed every two months and updated to stay “at least 5% below market rate”. The previous draft version of the deal had not included the price adjustment mechanism, and asked for a price cap of $65-70. US officials stated that the deal was “unprecedented” and demonstrated the surprising resolve of the group to oppose Putin’s ongoing invasion of Ukraine. - AJ

Gas Prices Are Dropping: Here’s How Much Lower They Might Go

December 2, 2022 | The Wall Street Journal | Joseph De Avila

As of December 2, 2022, the average cost of regular unleaded gasoline in the US was $3.43, near prices before Russia’s invasion of Ukraine, an event that sparked an energy crisis across the world. After paying over $5 per gallon in June of this year, consumers can benefit from this well needed break. Some industry leaders, like Patrick De Haan, head of petroleum analysis at GasBuddy, expect prices to continue dropping toward $3 by the end of the year, a potential holiday treat for Americans. There are several factors driving this price drop, including decreased fuel demand due to economic concerns, increased US refining capacity, and a lack of Chinese demand due to COVID lockdowns. However, that’s not to say this drop is guaranteed, or that prices will remain low. The Russian oil price cap from Europe and the US, a more rapid reopening of the Chinese economy, or another cut in production by OPEC countries all have the potential to send fuel prices back up for Americans. Additionally, fuel costs typically rise seasonally starting in February, which may make this grace period for consumers short lived. -CF

The New Battleships in Europe’s Energy War Are in Short Supply

December 1, 2022 | The Wall Street Journal | Carol Ryan

As Europe tangles with their Russian-induced energy crisis, many EU countries are relying more on liquid natural gas (LNG) for their power needs this winter. To improve their imports of LNG, countries have been eagerly chartering floating storage and regasification units, known as FSRUs. These versatile ships convert natural gas from cold slush into its usable gaseous state. Historically, FSRUs have appealed to developing countries because they are cheaper than onshore gas terminals. In the past year, day-rates for use have doubled for FSRUs as Europe gobbles up the vessels. Twenty-one of the fifty FSRUs currently in use today are installed or headed to the EU. Germany has chartered six units and the Netherlands is currently installing two as both countries continue to struggle with the Kremlin’s choice to shut off pipelines. While the maritime imports of LNG may cushion gas prices in the EU, the hike in price for regasification units  unfortunately forces developing nations to rely more heavily on dirty forms of energy. –WC