Institute for Energy Research

The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.

Most Recent Articles by Institute for Energy Research:

Trump’s Offshore Leasing Plan Could Increase Discoveries

Jan 13, 2018 — Institute for Energy Research

Trump’s Offshore Leasing Plan Could Increase Discoveries

Global discoveries of new conventional oil and natural gas in 2017 totaled only 7 billion barrels of oil equivalence—a level last seen in the 1940s. (See chart below.) According to Rystad Energy, not only did the 2017 total volume of discovered resources decrease, but the resources per field also declined. In 2017, average offshore discoveries held 100 million barrels—down from 150 million barrels in 2012. The reserves replacement ratio reached just 11 percent for oil and natural gas in 2017—the eleventh straight year it was below 100 percent. The last time the reserve replacement ratio reached 100 percent was in 2006. Since 2014, exploration expenditures fell over 60 percent most likely due to low oil prices. Further, the world consumes 79 percent more hydrocarbons than it discovers. The Trump administration’s plan to open up most U.S. offshore areas to oil and gas drilling, however, could help boost investment in the sector by billions of dollars and open up access to billions of barrels of oil.

Oil & Gas Journal

Source: Rystad Energy

Bad Policies Cause Prices to Spike in the Northeast

Jan 11, 2018 — Institute for Energy Research

Bad Policies Cause Prices to Spike in the Northeast
Natural gas prices in some parts of the Northeast increased by 60 to 70 times their recent rates because there is insufficient pipeline capacity in the region during periods of high demand spurred by cold weather. The recent cold weather system stressed the market as much as the polar vortex of 2014. Natural gas is increasingly being used in the Northeast for both heat and electricity, providing over half of the electricity in the region. To make matters worse, the region has shuttered coal-fired and nuclear power plants that provide reliable power. Due to bad policy, annual residential electricity rates in the Northeast average about 19 or 20 cents per kilowatt hour, compared with the national average of 12 to 13 cents. But due to the cold front experienced during the first week of January along with the so-called bomb cyclone, electricity prices rose 126 percent to $273.23 a megawatt-hour and natural gas prices rose to $87.47 per million British thermal unit on January 4.

Source: Bloomberg

Source: Forbes

Regulation and Economic Growth

Jan 9, 2018 — Institute for Energy Research

Regulation and Economic Growth
A recent New York Times article reported on some U.S. businesses that are getting increasing investment in light of the Trump Administration’s deregulatory efforts. Although the claims are broad, the article specifically mentions the rollback of Obama-era regulations on the coal industry as an example.

Economist Paul Krugman—whose own column is carried by the NYT—was aghast. On Twitter, Krugman linked to the article and claimed that “There is no evidence—none—that regulation actually deters investment.” He then went on to argue the exact opposite, namely that climate change regulations in particular would promote business investment (in renewables and conservation projects).

Study: Electric Vehicle Charging Could Present Grid Challenges

Jan 5, 2018 — Institute for Energy Research

Study: Electric Vehicle Charging Could Present Grid Challenges

According to a new study by Wood Mackenzie, Americans should be cautious about electric vehicles (EVs) and their rate of adoption into the marketplace because they can be disruptive to the electric grid. Because electric cars have less driving range on a charge than the equivalent gasoline-powered vehicle has on a tank of gas, their batteries must be recharged fairly frequently. A recent study found that simultaneous charging of just 60,000 electric vehicles could threaten the Texas grid. Based on a 100-kilowatt EV battery with a five-minute charge time, which could potentially be the standard for EVs in three or four years according to Wood Mackenzie, demand from 60,000 cars charging at once would equate to 70 gigawatts; this is equal to the current peak demand of the Electric Reliability Council of Texas (ERCOT).1

U.S. Oil and Natural Gas Exports Soar

Jan 5, 2018 — Institute for Energy Research

U.S. Oil and Natural Gas Exports Soar
The United States is becoming a major oil and natural gas exporter. Canada and Mexico are purchasing natural gas shipped by pipeline from the United States and Cheniere Energy is shipping liquefied natural gas (LNG) from its Sabine Pass export terminal to Europe, Asia and South America. Since 2015, when the ban on crude oil exports was lifted by Congress, U.S. oil companies have been exporting crude oil and are continuing to export petroleum products to areas around the world. China has become a regular recipient of U.S. oil and natural gas and in the first ten months of 2017 was the second largest importer of U.S. crude oil. The boom is due to U.S. ingenuity in applying horizontal drilling and hydraulic fracturing to extract oil and natural gas from shale rock, making the United States the largest oil and gas producer in the world and lowering energy prices for consumers.

DOI Proposal Will Put American Energy Resources to Work for the American People

Jan 5, 2018 — Institute for Energy Research

Outer Continental Shelf (OCS) to energy exploration
WASHINGTON —The Institute for Energy Research supports the Department of the Interior’s proposal to open vast expanses of the Outer Continental Shelf (OCS) to energy exploration. IER President Thomas J. Pyle has issued the following statement:

“The United States has at its feet stores of energy resources that could potentially remake world markets. The leadership of this administration is now moving us closer than we’ve ever been before to realizing our enormous energy production potential. Whereas the previous administration sought to keep resources out of our reach, President Trump and Secretary Zinke are putting our resources to work for us.”


Three Cheers for Holiday Lighting!

Dec 27, 2017 — Institute for Energy Research

Three Cheers for Holiday Lighting
Environmentalists critical of electrified America must have mixed emotions this time of the year. It may be the season of good cheer and goodwill toward all, but it is also the time of the most conspicuous energy consumption. America the Beautiful is at her best when billions of strung lights turn darkness into magnificent glory from border to border, from sea to shining sea.

Holiday lighting is a great social offering—a positive externality in the jargon of economics—given by many to all.

While energy doomsayers such as Paul Ehrlich have railed against “garish commercial Christmas displays,” today’s headline grabbers (Grist,Think Progress, where are you?) have not engaged in a public debate over the issue.

It’s Easy for Santa to Move Coal

Dec 21, 2017 — Institute for Energy Research

It’s Easy for Santa to Move Coal
An intriguing recent post at the Energy Institute Blog explains the “cushion in coal markets” that will make them “harder to kill.” As the language suggests, the author (Severin Borenstein) is not a fan of coal. Even so, the analysis is interesting because it shows just how crude much of the climate change policy debate has been. The post concludes that a carbon tax of a particular size, for example, might not reduce US coal production as much as enthusiasts initially believed.

The blog post summarizes academic research by a doctoral student, Louis Preonas. Here is the opening of the post, which sets the context and distills the findings:

Expensive Wind Farm Calls It Quits

Dec 20, 2017 — Institute for Energy Research

Expensive Wind Farm Calls It Quits
Cape Wind, a proposed $2.5 billion wind farm off Cape Cod, Massachusetts, is no longer a viable project. Two New England electric utility companies have ended their contracts to buy its power and the state Energy Facilities Siting Board has declined to extend permits for the project.1 Despite first filing for a commercial license 16 years ago, the project’s feasibility has been in jeopardy since offshore wind is more expensive than onshore wind2, which is fulfilling the state’s Renewable Portfolio Standard along with solar power. Additional obstacles to its completion have included issues regarding ship navigation, marine and bird kills and impacts to the local economy. Opponents to the project included property owners, Native American tribes, commercial fishermen, shippers and local officials, among others.3

Rescinding Clean Power Plan a Positive Step Toward Free Market for Electricity

Dec 13, 2017 — Institute for Energy Research

Free Market for Electricity
The Environmental Protection Agency (EPA) in early October announced it would rescind yet another signature Obama administration policy: the electricity regulation known as the Clean Power Plan (CPP).

As with President Trump’s Paris climate agreement withdrawal announcement earlier in 2017, the CPP decision has been met with acrimony. But producers and consumers of electricity alike—which is to say, all of us—should rejoice to be rid of this deal, which was rotten even on its own terms.

According to a study by NERA Economic Consulting, under the CPP, 23 states could have experienced retail electricity rate increases of 10% to 20%; seven states could have seen rates jump 20% to 30%; and 10 states could have experienced increases of a whopping 30% or more.

IEA’s World Energy Outlook 2017 Foresees a Transformation of the Global Energy System

Dec 10, 2017 — Institute for Energy Research

IEA's World Energy Outlook 2017 Foresees a Transformation of the Global Energy System
The International Energy Agency (IEA) released its World Energy Outlook 2017 in November, providing global energy market projections through 2040. The outlook assumes that governments will stick to the pledges they made on energy, including India and China’s pledges to move away from fossil fuels and the United States’ to reduce its demand for oil through fuel economy improvements for cars and trucks. Despite the pledges, IEA predicts that global energy demand will increase by 30 percent by 2040, which is equivalent to adding another China and India to today’s global energy demand. It predicts that the global economy will grow at an annual average rate of 3.4 percent and that population will expand from 7.4 billion today to more than 9 billion in 2040.

The largest contribution to demand growth—almost 30 percent—comes from India, whose share of global energy use increases to 11 percent by 2040, but below its 18 percent share in the expected global population. Southeast Asia’s energy demand is expected to grow at twice the pace of China, resulting in Asia accounting for two-thirds of global energy growth. The Middle East, Africa and Latin America account for the other one-third.

The IEA sees four major shifts in the global energy system: the rapid deployment and falling costs of clean energy technologies, the growing electrification of energy, the shift to a more services-oriented economy and a cleaner energy mix in China and the resilience of shale gas and tight oil in the United States.

Nature for Nature’s Sake

Dec 10, 2017 — Institute for Energy Research

Nature for Nature's Sake, Alaska's ANWR region
Recently, the Senate Committee on Energy and Natural Resources debated Alaska Senator Lisa Murkowski’sproposalto establish a competitive energy resource leasing and development program within a sliver of the Arctic National Wildlife Refuge (ANWR) known as the 1002 area. In simple terms, the committee deliberated over the question should we drill.

Rather than asking,“Should we drill?” I submit that we ought to reframe the question and instead ask,“Why is a federal government ban on productive economic activity the status quo?”

My answer is that this prohibitive norm exists because our public discourse has been permeated by the idea that nonhuman life on earth has intrinsic value and that we as human beings have no moral right to affect it for our benefit.

Closing the Wind PTC Loophole

Dec 3, 2017 — Institute for Energy Research

Closing the Wind PTC Loophole
For the past 25 years, the federal government has coddled the wind industry by lavishing upon it billions of dollars’ worth of subsidies. The most prominent of these subsidies is the Production Tax Credit (PTC), which now costs Americans over $5 billion dollars per year. Embroiled in the current tax debate is a set of provisions that would put an end to the wind PTC—a process that was supposed to be put in place by Congress in 2015, but was prevented by a loophole in the IRS guidance.

ANWR: What’s at Stake?

Nov 30, 2017 — Institute for Energy Research

ANWR: What’s at Stake?
The Arctic National Wildlife Refuge (ANWR) evokes stirring, iconic imagery in our minds: polar bears, glaciers, foraging herds of caribou on wind-swept plains.

The prospect of oil and gas companies entering the region’s landscape leaves many people unsettled and, to no surprise, proposals to open a portion of ANWR for energy exploration have faced fierce opposition.

How the Market Process Regulates Methane Emissions

Nov 28, 2017 — Institute for Energy Research

How the Market Process Regulates Methane Emissions
This past month, the Interior Department proposed delaying the implementation of the Methane and Waste Prevention Rule. The purpose of the rule is to limit the amount of methane that oil and natural gas producers may release or burn off as part of their production on public lands. According to some estimates, the rule would cost $279 million a year and block more than 800,000 jobs by 2020.

The decision to review this costly regulation has been met with the usual animosity in Washington: politicians have drafted a letter condemning the decision and anti-fossil fuel groups are challenging it in the courts. But why are so many people interested in saving a regulation that will have such a negligible impact on reducing carbon emissions?

Cleaned-Up Coal and Clean Air: Facts About Air Quality and Coal-Fired Power Plants

Nov 22, 2017 — Institute for Energy Research

Coal-fired electricity generation is far cleaner today than ever before. The popular misconception that our air quality is getting worse is wrong, as shown by EPA’s air quality data. Modern coal plants, and those retrofitted with modern technologies to reduce pollution, are a success story and are currently providing 30 percent of our electricity. Undoubtedly, pollution emitted by coal-fired power plants will continue to decrease as technology improves.

As COP 23 Convenes, Global Carbon Dioxide Emissions Continue to Rise

Nov 19, 2017 — Institute for Energy Research

The 23rd annual Conference of the Parties (COP 23) is currently meeting in Bonn, Germany, to work on a rulebook for implementing the Paris Agreement. Since many of the Paris pledges remain fairly opaque and the specific policies the countries will take to meet them are vague, a major feature of the conference will be to obtain transparency in measuring, reporting and verifying each country’s greenhouse gas emissions. Since the Paris Agreement does not include sanctions for countries that do not meet their agreed-to targets, peer pressure is the main mechanism for ensuring that governments abide by their commitments. The final rule book is due at the end of 2018 and is subject to approval at the next climate summit in Katowice, Poland.

Why a Carbon Tax Is the Opposite of Tax Reform

Nov 14, 2017 — Institute for Energy Research

Earlier this month I participated in a carbon tax panel discussion before lawmakers and legislative staff members at the Rayburn House Office Building on Capitol Hill. Since the GOP’s tax overhaul is on Washington’s agenda, I explained why a new carbon tax would be the opposite of the standard goals of pro-growth reform of the tax code. To illustrate my point, I used an analogy with the car market that seemed to resonate with the audience, so I’ll summarize my argument here for IER’s readers.

Southeast Asia’s Coal Demand Boom

Nov 8, 2017 — Institute for Energy Research

Southeast Asia's Coal Demand Boom
Because coal is the most affordable technology for electric generation in many parts of the world, coal-fired capacity is still being built. According to the International Energy Agency (IEA) in its Southeast Asia Energy Outlook 2017, almost 100 gigawatts of new coal-fired generating capacity is expected to come online in Southeast Asia by 2040—more than doubling the region’s current coal-fired capacity.1  (See graph below.) The agency expects Southeast Asia and India to account for the majority of the new coal demand as those economies continue to grow and their demand for electricity increases. Despite some countries shuttering coal-fired power plants and cancelling new plants, IEA expects global coal-fired capacity to increase by about 50 percent over today’s levels by 2040.2

Initial Thoughts on the GOP Tax Bill

Nov 3, 2017 — Institute for Energy Research

House Republicans today unveiled their much-anticipated tax bill, which contains the most extensive reform of the tax code since the landmark 1986 overhaul. Although we have not fully digested the details, we can offer some initial observations from the perspective of IER’s focus on free energy markets.

What’s In a Name?

H.R. 1 is aptly titled “The Tax Cuts and Jobs Act.” This is consistent with President Trump’s campaign rhetoric, as well as the familiar theme of conservative and libertarian policymakers that prosperity occurs by unleashing American entrepreneurs and returning resources to the private sector.