It is that time of year again,” Trick or Treat” and it can be difficult at times to discern the trick or the treat. This is true in the energy sector. As reported previously, the trick since March has been to bolster the price of oil after it dropped below $20 dollars a barrel for a short time this spring due to the covid-19 pandemic.
OPEC + but predominately Saudi Arabia and Russia recognize that at $60 a barrel pre-pandemic price is a treat to the US shale oil producers. Thus the trick is to keep oil at around $40 where the Russians and the Saudis are profitable. Yet even with some of their cartel partners over producing and tricking the quota system OPEC+ has successfully stabilized price in their favor as the price of oil seesaws back and forth at approximately $40.
Almost daily investors, ignoring the control of the tricksters, seek any market news to support rising oil prices as a forthcoming treat so US shale oil producers can start pumping oil again. However the lower cost of oil becomes a treat, reducing gasoline prices in the US to around two dollar something a gallon.
On the natural gas front, New Englanders say no to gas pipelines from Northeast Pennsylvania Marcellus gas wells, vowing “you can’t trick us”. Conversely is it a treat this winter, the same thrifty folks will import heating oil along with liquefied natural gas from Brazil and possibly Russia? In the Mid - Atlantic States there is consorted opposition to proposed gas pipelines. Led often by the Sierra Club, who claim the trick of environmental catastrophe and peril, and simultaneously call for funding donations from the concerned; one could ask “Trick or Treat”. On October 16th temporary stay was imposed on the Mountain Valley Pipeline stopping the303 mile pipeline through West Virginia and Virginia that would carry Marcellus and Utica Shale gas to other markets.
Yet out west, as reported by Reuters, the Keystone XL pipeline moves forward. “Keystone XL is already playing a critical role in contributing to North America’s economic recovery,” said Richard Prior, president, of Keystone XL Pipeline. “The selection of our U.S. construction contractors for 2021 is an important next step in employing thousands more American union workers. TC Energy has signed a project labor agreement with four major American unions and created a $10 million Green Jobs Training Fund, and is offering equity ownership to indigenous communities. This is in addition to more than $90 million being spent in the U.S. to date for local and Indigenous services by TC Energy and the company’s various contractors and suppliers. Again is this trick or treat.
Or how about the communities in Farmersville and Rush New York where proposed massive wind and solar projects are not welcomed. According to the Financial Times …”Jeanne and John Morelli have long grasped the benefits of renewable energy. A geothermal heat pump warms their house in the woods. Solar panels are fastened to the roof of their barn. Mr. Morelli, an emeritus professor of environmental engineering, still teaches a course on corporate social responsibility. Yet the couple has also placed scarlet signs reading “No massive solar power plant” at the edge of their property. They are protesting against Horseshoe Solar, a photovoltaic project whose 600,000 panels would cover fields usually lush with corn and soybeans in the Morellis’ picturesque town of Rush in upstate New York.” Who can say, “trick or treat”?
For the sake of comparison a 1,000 Megawatt solar installation will cover over 5,000 acres. That is an area the size of two Goddard State Parks. The new 1,034 MW natural gas plant in Sunbury, PA, built by Panda Power has a footprint of 19 acres. Solar and wind are not winning all hearts.
It can be said much depends on one’s perspective and political persuasion as to what is considered tricks and treats. The presidential election this coming Tuesday has both candidates expounding and promoting energy policies that play to their core supporters and constituencies. It is important to recognize that whether the country goes red, blue or green the abundant natural gas resources of our part of Pennsylvania will be an essential component of the nation’s energy future, perhaps being both trick and treat.