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:

Wind Generation Fails in Midwest Due to Weather Events: Polar Vortex and El Niño

Mar 14, 2019 — Institute for Energy Research

Weather has a major effect on the productivity of wind turbines. Both the Polar Vortex and El Niño have reduced the output of wind turbines in the Midwest. During the polar vortex, wind turbines automatically shut off in the extreme cold because the low temperatures take a toll on various parts of a turbine, from electrical cabinets to the gearbox, the generator, lubricants and steel components, which can become brittle if the temperature drops low enough.  Coal and natural gas plants had to ramp up production to meet the shortfall and keep the lights on. Also affecting the productivity of wind turbines is El Niño that brought calm winds to the Midwest, reducing wind output by 14 percent despite having added new turbines to the region. American electricity consumers, who expect their electricity to be available at the touch of a switch, should be very cautious about policies to mandate 100-percent renewable energy sources that are dependent on natural weather events.

The Outrageous Cost of the Green New Deal

Mar 10, 2019 — Institute for Energy Research

The Outrageous Cost of the Green New DealBoth fans and foes of the so-called Green New Deal (GND) agree that it is a wildly ambitious set of proposals, which—by design—will involve the federal government spending boatloads of money. In fact, the GND is so expensive that Rep. Ocasio-Cortez has cited the inflationary doctrine of Modern Monetary Theory (MMT) to deflect the issue; we don’t need to worry about the cost, so the argument goes, because the Federal Reserve can create an unlimited number of dollars.

Even so, more sober-minded policymakers, as well as the general public, should be aware of just how ludicrously expensive the GND really is. A recent analysis by the American Action Forum puts the initial 10-year cost at a staggering $93 trillion. Although the reader might understandably assume that this is an inflated figure designed to discredit the GND, it actually rests on a few conservative assumptions. The figure of $93 trillion is admittedly absurd, but that’s only because the planks of the GND are absurdly expensive. The American Action Forum estimate is entirely fair.

India Using Coal to Achieve Universal Household Electrification

Feb 26, 2019 — Institute for Energy Research

India Using Coal to Achieve Universal Household ElectrificationThe Indian Government is on its way to achieving the goal of universal household electrification through the opening of 52 new coal mines since Narendra Modi’s government came to power in May 2014. Structural reform and the elimination of red tape and cumbersome procedures have been key to the progress. Nearly 20,000 villages in India and 24.8 million families have received power connections as a result. The 52 new coal mines reflect an 86 percent increase over the 28 mines it added in the five-year period between 2009 and 2014. The new mines added 164 million metric tons to India’s annual coal production capacity, increasing capacity by 113 percent over 2009-2014 additions. India generates 57 percent of its electricity from coal. The new mines have made electrification possible since India could meet the additional electricity demand of 5 to 6 percent through coal-fired electricity generation.


MMT and the Green New Deal

Feb 24, 2019 — Institute for Energy Research

One of the most interesting aspects of the “Green New Deal” is that its progressive proponents hardly mention taxes at all—even as some Republican economists continue to champion a carbon tax. Faced with the political defeat of the Waxman-Markey “cap and trade” bill, as well as the failed carbon tax initiatives in Washington State, it seems that Rep. Alexandria Ocasio-Cortez and the other Green New Deal supporters are just going to accentuate the positive. In other words, they are going to focus on all the goodies contained in their proposals—such as a trillion dollars in spending projects—while downplaying taxes and regulations.

2018 Oil and Gas Lease Sales Generated Record Revenue of $1.1 Billion

Feb 21, 2019 — Institute for Energy Research

2018 Oil and Gas Lease Sales Generated Record Revenue of $1.1 BillionThe Bureau of Land Management (BLM) generated $1.1 billion from oil and gas lease sales in calendar year 2018, nearly tripling what had been the agency’s previous record high of $408 billion in 2008. Bonus bids from the 28 oil and gas lease sales totaled $1,151,109,064 based on preliminary figures. A bonus bid is a one-time payment in exchange for exclusive access to explore for hydrocarbons on a parcel and grants an exclusive lease for a set period of time. A total of 1,412 parcels, covering almost 1.5 million acres, were leased. The lease sales generated nearly as much revenue as the BLM’s $1.1 billion budget for 2018.

Energy Statism: Wartime to Carter to Cortez

Feb 20, 2019 — Institute for Energy Research

Energy Statism: Wartime to Carter to CortezCentralized planning of the energy sector, now at the forefront of political debate with the “Green New Deal,” has a century-old tradition in the United States.

It began with the United States Fuel Administration (USFA) in World War I, which formed a model for more extensive price and allocation regulation during World War II by the Petroleum Administration for War (PAW). After an abbreviated return to federalization during the Korean Conflict by the Petroleum Administration of Defense (PAD), special wartime planning with energy would not reemerge (such as during the Vietnam War).

Natural Gas Moratorium in New York Due to Lack of Gas Pipelines

Feb 18, 2019 — Institute for Energy Research

Residents of Westchester, New York, just north of New York City, are finding that they are being deprived of an abundant and affordable energy source in the United States—natural gas—purely because of their politicians. First, Governor Cuomo banned hydraulic fracking in the state, which would have helped produce natural gas from the state’s own deposits of shale gas, but his administration is also denying permits for pipelines, which, if they had been approved, would have brought inexpensive supplies of natural gas from neighboring Pennsylvania. Due to the lack of natural gas availability, Con Edison had to impose a moratorium on new firm service in southern Westchester, no longer accepting applications for new service beginning March 15. This means that effective that date, residents in that area can no longer switch from oil to natural gas and businesses cannot obtain natural gas service for new construction projects.

Utilities Call for Americans to Conserve Energy as Frigid Weather Exhausts Supplies

Feb 12, 2019 — Institute for Energy Research

Utilities Call for Americans to Conserve Energy as Frigid Weather Exhausts Supplies
Last month, the polar vortex brought below-zero temperatures to the Midwest and Great Plains. Over 220 million Americans experienced below-freezing temperatures across the lower-48 states, and about 26 million people were living with temperatures at or below -20 degrees. Despite the large amount of wind power in the Midwest, coal and natural gas provided about 80 percent of the electricity needed to keep the power and heat on, according to the Midcontinent Independent System Operator, which manages that grid. However, utility companies in parts of the Upper Midwest had to ask customers to turn down their thermostats to ensure that there was enough natural gas to meet demand. During the extreme cold, the Midcontinent Independent System Operator declared a “maximum generation event,” calling on idle power plants from Minnesota to Louisiana to meet demand.

CanaPux: An Innovative Way to Ship Canadian Oil Sands

Feb 5, 2019 — Institute for Energy Research

CanaPux: An Innovative Way to Ship Canadian Oil SandsDue to Canadian oil sands being transportation-constrained, Canadian crude prices had traded at a steep discount to U.S. oil, reaching a record difference of more than $51 a barrel in October 2018. But that gap recently narrowed to less than $7—the lowest since March 2009—due to a production cut of 8.7 percent that the Alberta government imposed on oil producers to lift depressed prices. The cut began on January 1 and is to last for one year.

Don’t Be Tricked By Economists on the Carbon Tax

Feb 3, 2019 — Institute for Energy Research

In response to the recent pro-carbon tax letter to the Wall Street Journal signed by dozens of prominent economists, Tyler Cowen objected strongly to the “citizen dividend” aspect. Although Cowen is sympathetic to a carbon tax per se, he was alarmed that the economists in the WSJ were misleading readers:

Arguably [the lump-sum citizen dividend of carbon tax receipts] makes the policy seem less important, and mainly about the dividend, in a slightly cynical, Chavez-like sort of way. Furthermore, it tries to make a carbon tax a free lunch, which it is not, no matter how great the longer-term gains. I don’t believe ineconomists tricking people , even though I will admit tricking people can be useful. The tricking is somebody else’s job!

China Will Build Wind and Solar Only If Their Price Is Less Than Coal

Jan 24, 2019 — Institute for Energy Research

China recently put the brakes on solar and wind energy, indicating that it will no longer approve wind and solar power projects unless they can compete with coal power prices. In late May 2018, China issued “2018 Solar PV Power Generation Notice,” imposing caps on solar energy and reducing feed-in tariffs on those projects. More recently, China’s National Development and Reform Commission and the National Energy Administration provided a series of conditions under which new solar and wind projects would be approved through the end of 2020. Conditions include that the price must match or undercut the national coal benchmark and that the projects must show that the grid can handle their output. In 2017, 12 percent of wind generation and 6 percent of solar generation was curtailed due to lack of transmission capacity.

Economists Mislead on Carbon Tax

Jan 19, 2019 — Institute for Energy Research

We live in strange times indeed when an environmental reporter for the New York Times writes that we should stop pushing for a carbon tax, just a few weeks before dozens of distinguished economists sign a letter to the Wall Street Journal calling for a carbon tax. Yet despite the prestige behind the impressive list of signers, the economists mislead the American public on several key points.

Flaws with a “Green New Deal,” Part 2 of 2

Jan 17, 2019 — Institute for Energy Research

Flaws with a Green New Deal,
One of the hottest topics in policy wonk circles is the “Green New Deal,” spearheaded by the rising star of the progressive Left, Alexandria Ocasio-Cortez. In my previous post, I explained that the entire premise of a current New Deal—whether green, red, or blue—was flawed. Even on standard Keynesian terms, it makes no sense to embark on a $1 trillion government spending program with official unemployment below 4 percent and the Fed raising rates to rein in price inflation. Worse, historically the actual New Deal under Franklin Roosevelt prolonged the nation’s suffering, making the Great Depression linger for a decade. Finally, I pointed out that the supporters of a Green New Deal weren’t merely interested in mitigating climate change: they quite openly announce that they will use the plan as a vehicle for transforming society according to the standard progressive wish list.

Coal Remains a Dominant Global Fuel in IEA Forecasts

Jan 15, 2019 — Institute for Energy Research

Coal Remains a Dominant Global Fuel in IEA Forecasts
The International Energy Agency (IEA) released their 2018 Coal Market Report last month with forecasts through 2023. Coal accounts for 27 percent of total global energy and 38 percent of global electricity generation—the same market share it held in 1998. In 2017, global coal demand increased by 1 percent and electricity generation from coal increased by around 3 percent. IEA’s coal market report includes IEA’s five-year forecasts for global coal supply, demand, and trade, forecasting that global coal demand will remain fairly stable through 2023 as developing economies increase their coal demand, negating decreases by industrialized countries. IEA expects global coal demand to gradually decline from 27 percent to 25 percent, mainly due to growth in renewables and natural gas.

NERC: Rapid Retirement of Coal and Nuclear Units Could Cause Grid Instability

Jan 14, 2019 — Institute for Energy Research

NERC is responsible for reliability of the electric grid
A December 2018 report by the North American Electric Reliability Corporation (NERC) indicates that acceleration of coal and nuclear plant retirements could result in black outs. NERC is an international nonprofit agency that examines and promotes grid reliability among utility systems in the United States and Canada. The agency released its Generation Retirement Scenario—a 44-page report—that found an aggressive rate of coal-fired and nuclear plant retirements could put the electric grid reliability at risk. Grid reliability is the ability of the system to deliver electricity as it is demanded. If electric utilities are not able to meet demand at any given time, a blackout could result. The retiring coal and nuclear power plants generate electricity 24/7, but wind and solar units that are replacing them produce power only intermittently—only when the wind blows and the sun shines—and natural gas units replacing them may not have sufficient infrastructure to ensure availability of the needed fuel.

Fossil Fuels Dominate U.S. Energy Production, But Receive a Small Percentage of Federal Fuel Subsidi

Jan 10, 2019 — Institute for Energy Research

Fossil Fuels Dominate U.S. Energy Production, But Receive a Small Percentage of Federal Fuel Subsidies
At the request of the Secretary of Energy, the Energy Information Administration (EIA), an independent agency of the U.S. Department of Energy, evaluated the energy-related subsidies that the federal government provided in fiscal year 2016, updating a study that it did for fiscal years 2013 and 2010. Federal subsidies to support non-fossil fuels (renewable energy and nuclear power) in fiscal year 2016 totaled $7.047 billion (in 2016 dollars), while those for fossil fuels totaled $489 million—higher by over a factor of 14, despite much higher production by fossil fuel producers. The EIA noted that those subsidies do not include state and local subsidies, mandates, or incentives that in many cases are quite substantial, especially for renewable energy.

California Mandates Zero-Emission Buses

Jan 8, 2019 — Institute for Energy Research

The California Air Resources Board voted unanimously to require that all new buses be carbon-free by 2029, in essence phasing out purchasing any new gas- or diesel-powered buses by 2029 and requiring only zero-emission buses by 2040. The mandate will eventually take an estimated 14,000 gas-powered buses off the roads. California currently has 153 zero-emission buses, most of which are electric, and hundreds more on order. The long lead time on the rule will enable transit agencies to phase out existing buses over their current lifespan of 10-plus years.

Two Energy Futures

Jan 5, 2019 — Institute for Energy Research

Two Energy Futures
There are two energy futures for America. One is freedom and prosperity. The other is politics, conflict, and waste. As with other goods and services, energy’s availability and affordability will depend on whether natural incentives and economic law are respected or hampered by government policy.

India’s Electricity Demand Expected to Explode as Air Conditioning Proliferates

Jan 3, 2019 — Institute for Energy Research

India's Electricity Demand Expected to Explode as Air Conditioning Proliferates
Growing air conditioning use among India’s 1.3 billion people is one of the country’s biggest energy challenges. India is currently the world’s fastest growing market for air conditioners. By 2050, the International Energy Agency projects it will be the largest. If air conditioning use is not made more efficient, electricity consumption from air conditioning in India is expected to increase by a factor of 30 between 2010 and 2030. To avoid escalating electricity demand, the government is counting on more-efficient air conditioners.

Demand is also increasing in other developing countries where climates tend to be hot and incomes and populations are growing. For example, as China’s middle class emerged between 1992 and 2007, homes with air conditioning in many urban areas went from approximately zero to nearly 100 percent. Developing countries, which consumed less than half the world’s energy in 2000, now account for 58 percent. The International Energy Agency projects that they will account for 67 percent by 2040.

U.S. Is Awash with Natural Gas and More Production Is on Its Way

Dec 27, 2018 — Institute for Energy Research

U.S. Is Awash with Natural Gas and More Production Is on Its Way
The Energy Information Administration recently released its reserves report, noting that proven reserves of natural gas increased 36 percent to 464.3 trillion cubic feet—a record that surpasses the previous high set in 2014. Natural gas production in 2017 increased by almost 3 percent from 2016 production levels—another record high. Most of this natural gas is coming from the Marcellus and Utica shale plays in Pennsylvania and neighboring states. Over a decade ago, companies began combining horizontal drilling techniques with hydraulic fracturing to unlock natural gas from shale rock.