Weekly Climate Recap: USA & Oil
This week is pretty fossil fuel focused starting off with the results of fossil fuel. Winter has seemingly come and gone except it never really came? A price comparison between EV and ICE reveals that EV are cheaper. Finally, the USA proves it loves oil!
☃️ What Winter?
In a scary continuation of the exceptionally hot past months, the National Oceanic and Atmospheric Administration (NOAA) has released some stark data. NOAA has revealed that February was the third-warmest in NOAA’s 130 years climate record with this meteorological winter (December 2023 — February 2024) being the warmest on record for the contiguous USA.
This warm winter brought with it some interesting climate events including:
- Western U.S. hit by heavy rain and snow: Atmospheric rivers caused flooding, landslides, and power outages in California. Los Angeles saw its wettest February in decades.
- Record February tornado strikes Upper Midwest: Unusual warmth and a cold front led to tornadoes, including Wisconsin’s first February tornado on record.
- Historic wildfire ravages Texas and Oklahoma: The Smokehouse Creek wildfire engulfed over a million acres, becoming Texas’s largest wildfire on record.
- Great Lakes ice coverage decreases: Persistent winter warmth led to a historic low ice coverage of 2.7% across the Great Lakes on February 11, marking the lowest mid-February ice coverage on record.
Takeaway: What is being called the “lost Winter” may become the norm looking into the future. With February being the warmest February on record and the ninth month in a row that is the hottest on record per EU Copernicus, the reality is that our winters are changing rapidly. This has me worried when we think about reliance on snow pack melting in places like BC for water security and how much we rely on winters to provide for us.
💸 EV vs ICE Cost Comparison
A paper from Atlas Public Policy has compared the total cost of ownership of ICE and EV models to provide an analysis on the costs of ownership. Per the US Bureau of Labour Statistics, transportation accounts for the second largest share of expenditures at ~17%. Since this is so high, looking into the costs of transportation is important to help people save money where possible.
In the spirit of my journalistic integrity, this report was funded by the Natural Resources Defence Council.
The analysis looked at costs for vehicles that included taxes and fees, insurance, fuel, maintenance & repair, vehicle price minus resale value (less tax credits and incentives).
Since an estimated 90% of American households have a car, the savings from purchasing and driving an EV represents money back in the pockets of many Americans. Further, this trend behind EVs being cheaper was shown last year as well in a similar analysis from Atlas Public Policy but this year, the savings increased.
Takeaway: Over the 7 year period in which the analysis looks at, the purchase of an EV can be expected to save buyers thousands of dollars, including up to ten thousand dollars with purchase of a compact sedan. Similar to renewable energy systems on their own, while the sticker price can often be higher, the operating expenses of electric assets are much lower and can yield the consumer savings in the long run.
🛢️ USA! USA! USA! (Loves Producing Oil)
Per the Energy Information Agency here, the United Stated produced more crude oil than any nation in history based on the EIAs International Energy Statistics in 2023, continuing the trend of the US being the number one producer for the past 6 years in a row.
The EIA notes that this record oil production in the US in 2023 of an average of 12.9M barrels per day (which broke the previous US record of 12.3M barrels per day in 2019) is unlikely to be surpassed in the near term as no other country has the production capacity of the US. Saudi Arabia in third recently announced that state-owned Aramco will not be increasing production to 13M b/d by 2027.
The big three of oil production, USA, Russia, and Saudi Arabia, accounted for 40% of global oil production in 2023. Interestingly, the next largest 3 countries of Canada, Iraq, and China combined produced just over what was produced in the US alone.
Takeaway: Despite the progress that the US has made in decarbonization with successes like the Inflation Reduction Act, we must remember that the US is still a fossil fuel powerhouse with production statistics that lead the world. While the US may decarbonize domestically, if exports continue that result in emissions increases abroad, what is the net impact of the US?
What Else is in the News
- EQT Corp, a top U.S. natural gas producer, has agreed to acquire Equitrans Midstream in an all-stock deal valued at about $14 billion to enhance their natural gas margins in a market with low prices. The merger aims to increase efficiency and scale in the volatile industry by adding over 2,000 miles of pipelines to lower production and transportation costs. Despite concerns about debt and operational priorities, EQT sees the deal as a strategic move to become the lowest-cost natural gas producer in the U.S. by gaining control over pipeline expenses and enhancing exposure to global markets, particularly in liquefied natural gas exports.
- The shift in global nickel production towards Indonesia has implications for the West’s energy transition, highlighting the importance of reliable supply chains for essential minerals like nickel used in battery production. The article from Reuters emphasizes the need for strategic planning by Western governments and mining companies to ensure a stable and sustainable supply of critical minerals for the future, especially in the context of increasing global demand for electric vehicles and green energy technologies.
- OPEC and the IEA are currently experiencing their most significant divergence on oil demand since at least 2008, with forecasts for 2024 showing a substantial gap in predictions as covered by Reuters here. The IEA anticipates a slower growth in demand compared to OPEC, reflecting differing views on the energy transition pace and market strength. While the IEA expects a peak in oil demand by 2030 as renewable energy gains ground, OPEC remains skeptical and forecasts ongoing growth beyond 2045. Despite statistical ties in forecast accuracy, analysts lean towards the IEA’s projections, which often get revised upwards due to factors like the rise of electric vehicles impacting demand growth.
