Oil prices to escalate

This weekend saw what might be one of the largest game changers in oil markets for some time.  With several drones attacking Saudi Arabia/Aramco’s oil processing nerve center, it is estimated that this will reduce their output in the immediate by 50%.  The targets that were struck by themselves contribute to almost 10% of the daily world output.  The attack was not insignificant, and the timing certainly was strategic as the leadership is fairly new at Armco (the nationalized oil company).

The “who done it” question may take some time and intelligence to unfold as the complicated relationships between various terrorist and clan groups cloud who all the actors are. At this point Yemen has been noted as the launch point, though Iran is suspect in providing tech and and the machinery at the very least. With Saudi Arabia and Iran both being OPEC members, this is just another twist as the resulting price spike in worldwide crude (possibly higher than $100 a barrel) will be in contrast to the expectation this past summer that Iran would plummet  world crude prices to around $35 a barrel if selling quantity to China.

So with the leaves nearly off the trees and temperatures dipping below freezing in parts of Alaska, how does this war news from the Middle East effect us?  When the markets open today (in other parts of the world) crude may be up by as much as 10% right off the bat.  When U.S. markets open they will be responsive and it might be that this early week we see some increases in refined petrol products “at the pump”, so to speak.  With heating oil season coming into its primetime of demand for residential purchases, this may be the time to fill up.  Some folks like to wait until the snow flies, yet by then you may see a double digit decimal rise in the prices (if not triple digit).

World markets adjust over time to a new equilibrium as damage is assessed in an incident such as Saudi Arabia has experienced this weekend (and when major nations account for changes in their reserves).   Yet with disrupting events springing up more frequently, such as attacks on tankers and flaring of world tensions this past summer,  it is hard to know when we have “leveled out” in terms of market supply being assessed.  ——AN———

Fires, wind, and getting out of your home

This week is beginning with tragedy for folks in the Willow area.  Due to record heat this summer, a severe drought, and forceful winds there were over 50 homes that were incinerated on the weekend. There isn’t much that can be done about the tinder conditions of the surrounding environment, but people can get involved, get educated on the local conditions and provide input.  One place to prepare with information is the the Local Emergency Planning Commission  for Matanuska-Susitna borough meeting this Wednesday (August 21) at  7pm.   The location is the Central Mat-Su Public Safety Building, Station 6-1 located at 101 W. Swanson Avenue, Wasilla.

Another place to get information on disaster response for your family is the district Cooperative Extension office (https://www.uaf.edu/ces/districts/matsu/).  There are a couple of publications  I’ve authored such as What to Do Before, During and After a Natural Disaster in Alaska (SAL-00009) and Emergency Preparedness for Alaskans: Wildfires (SAL-00202) which I wish I would have had on hand to learn from prior to evacuating from the Miller’s Reach Big Lake Fire in 1995.  Similar to local musher Martin Buser at the time of the Miller Road fire, this weekend Iditarod musher Wade Marrs in the Hidden Hills subdivisionpacked up his kennel, dogs and gear. Wade drenched his house exterior with as much water as he could and left  full water tanks surrounding the home and kennel.  Martin, facing similar circumstances almost a quarter century ago, got into the local firehouse, busted through the door large garage door, and borrowed a firetruck to wet his place down!  (That was the talk of Meadow Lakes/Big Lake for some time after the disaster).

At the time of the Miller’s Reach fire I didn’t know of an emergency preparedness, or “bug out”  kit.  In fact with my wife down the road, our air barely visible with smoke and hot ember flying into our neighbor’s yard, I stayed behind as long as I could to pack up by pickup with all we had at the time (all that it was for having just been married for a year at the time).  I even pulled and threw in the brand new drip oil stove we had just installed the fall prior after getting it shipped down via courier from Sampson’s hardware in Fairbanks.

Now, taking your home furnace with you in an evacuation is more than is suggested in the Extension Emergency Preparedness Checklist (SAL-00007)!  Having seven days of supplies is what is called for in Alaska (but it doesn’t call for pulling your  home heating device – there are better energy implements for lighting, heating and cooking to take with you which I cover in the just completed Alaska Emergency and Disaster Homeowner’s Handbook.  The handbook goes over ways to prep your home and property (with tried and true methods such as the Firewise program). It then covers considerations for when you get back to your place and want to get it back in shape and to return to normalcy.  This was a collaborative effort with the University of Hawaii and Alaska, Fairbanks Marine Advisory Programs as well as  State farm Insurance.  It will be available very soon (keep an eye on the blog for obtaining a copy). ——AN——–

When the lights go out in Britain

This past Saturday, somehow the major gas generator and wind generator system went off line within minutes of each other in the UK.   It was the protection system on the national grid transmission system from one generator going down at around 5pm which then caused  another major generator to go off line due to the original loss of demand. (The power station in Little Barford -southeastern part of England- failed, and then the Horsea off-shore wind farm failed).  It left many folks stranded throughout the country, and a continuing backlogged travel system though it was only for 15 minutes. The results will last for sometime. It has left many folks stranded and a backlogged travel system though the two generation systems were only down for 15 minutes.

Just to give an idea of what a national outage effects (as this one was throughout England and Wales), imagine what you are doing around 5pm.  The demand is generally high then as many are cooking, commuting home or on telecommunications services.  So lights in stores were out, sliding automatic doors trapped people in and out of buildings, some fuel stations without generators could not allow folks to pump gas, people had to de-board trains that were stopped in their tracks, people in subways in tunnels had to walk out of the underground areas (with the light of their cell phones in some cases, etc….. If you go to the Daily Mail (https://www.dailymail.co.uk) they have visuals and videos from people at the scenes to show many of these areas that were effected.

Officially the word is that this rare event is not a product of cyber terrorism.  Yet there are political results, as unlike the U.S. where there are over a dozen major ‘grids’, England has a single, united one and with the Brexit possibility of of not tying with other countries/partners on power distribution some, some UK residents are worried about their electrical stability.  Think what would happen where you reside if the power went down around rush hour…AN——

 

 

What if crude prices drop?

Since November of 2018 oil on the Brent crude market has been holding its own within the range of $40-60 a barrel.  This has helped individual consumers obviously on transportation and heating costs, yet for the State it had meant less revenues from the higher ~$80 price spot (earlier that fall).  The rise and fall of oil prices can be a double edged sword for the average Alaskan, depending on how much they rely on state government for services, wages, contracts, etc… Today the spot price is $58 per barrel.

One of the big stories this summer that came out this week is that China may buy oil from Iran.  That would mean ignoring U.S. led economic sanctions on Iran. With growing tensions involving negating nuclear agreements, a struggling economy in Iran, minor conflicts this summer in the straits of Hormuz with oil tankers and a tariff row between the U.S. and China there may very well be a geopolitical hit to the petrol market.  A $30 drop per barrel of oil is possible.

Such a drop to $28 at today’s prices would cut in at least half the cost of oil which may have homeowners who are going into a heating season happy, yet for the state government of Alaska it would be a hard blow to the Alaska budget. No doubt, that in turn would turn into a more intense scrap over what to do with the PFD, reserves, potential taxes, etc….   Though OPEC members may react in a way to counter balance Iran’s actions, it may not just be driven by trying to adjust the price of oil but could also play on other current conflicts in the region.  Iran selling oil to China amidst the current embargo may bring more than just a temporary sticker shock on crude, but could realign diplomatic politics as well as the energy industry, in the short term at least. ——-AN———

Getting it Strait(s)…..

Most Alaskans are familiar with our Bering Straits.  As the gateway between Russia and the United States, this 50 mile opening has been getting increasing attention to the fact that access to the Northern passage (west over Russia to Europe) and the Northwest Passage (east over Canada to Greenland) will have to go through here.  At just about the same latitude as Fairbanks, there has been concern that north of the Straits search and rescue as well as oil pollution recovery will be somewhat difficult as traffic increases.  Why would shipping increase through this area?

For one thing it will cut the time for East Asian shippers in half if they go through the Northern passage to Central Europe compared to the current most popular routing. That means less transportation fuel for goods delivery cut, less wages due to shorter trips, and possibly more security.  Although the Northwest Passage may not be ready for another dozen years to bring merchant ships through on a regular basis, the Northern Passage is prepared. And it will possibly be safer than going to through the Straits of Hormuz (where East Asian goods now go to get to Europe, by and large).

While the focus this past week was on sabotage of oil tankers going through the Straights (with a direct and immediate effect of raising price of that energy source by 4% on the commodities market), there will most likely be increase costs for all ships going through the passage regardless of cargo.  Just the markets driving up the price of (bunker) fuel oil will increase the cost of transportation as well as most likely a hike in insurance rates and escort protection.  Whether the attacks on the two oil tankers last week in the Straits were propagated by Iran or not, shipping management companies may well be re-evaluating their risks to see which straits are safer as well as most cost effective.  ——–AN——

 

 

 

Where’s the gas??

There have been attempts to get natural gas down to markets off the North Slope for over a half century. Barrow has gotten gas from fields about 30 miles northward to some of its communities so that (along with a subsidy) generated electricity is supplied to residential homes at a cost per kilowatt hour that is comparable with South Central Alaska. The issue has often been how to transport the commodity to markets with good sized populations so that pipeline routes have been gone over for over for years, 9 digit dollar investments have been forwarded by the state toward gas treatment and compression technology, and railroad/trucking systems have been studied.

The markets for gas have been expanding in Fairbanks and over the last half decade arrangements have been made for deliveries to Pacific Rim nations who want a cleaner fuel for heating and electrical production. Yesterday the announcement came that Exxon Mobil and BP oil will be throwing in around $20 million dollars toward moving gas.  It is estimated that the entire project will take $43 billion.   The two corporations, along with Conoco-Phillips  have historically spent $500 million in trying to get the natural gas liquified (LNG) to market.  There has been a holding off on major investments by the companies as of recent up to this point- yet they each still have land leases up on the slope in reserve.

As foreign markets have shorter trade routes due to going through the Bering Straits over to Europe for part of the year now it may be that natural gas will soon have not only a local demand but in addition a terminal for supplying the energy to Asia and beyond… AN——–

There’s no place like Nome…..

Nome was blustery and rainy mid-last week, yet solar was a hot topic during the Bering Straits Energy Summit inNome .  There were federal representatives from the Department of Energy as well as tribal workers who have worked on environmental as well as utility projects.  Most of the big agencies were present as well as Cold Climate Housing Research Center and Alaska Center for Energy and Power.

It was a great  three days.  I and our Bethel agent presented on Tribal Healthy Homes.  We were a part of the event which occurs about every three days by providing a presentation on the health implications of energy efficiency.  We also offered a couple hours of Healthy Home workshops but there were problems at the venue and thus did not hold them once there.  The Nome Museum was originally the venue and is beautiful- worth going to see.

Tribal entities are richer in knowledge and discussion due to the program last week!  —-AN———

 

 

What is the gas used for?

For over a half century, various entities have been trying to get the abundance of natural gas on the North Slope to market.  There have been pipeline routes mapped and various producers waiting for things to be in line before extracting gas that they have under leased land.  A few years ago Governor Parnell secured tens of millions of dollars to look at compressing the gas and then bringing it to market by truck or train cars.  Governor Walker spent much of his career looking at how to get the infrastructure in place to get it down to where the population is.

There has been a natural gas market in Cook Inlet for years yet with the ease of access and extraction there it has not been cost effective to bring down Slope natural gas.  The gas does have monetary value though, even if it is not being used in turbines for electrical generation or space heating.  It has potential value for the day it can be shipped which is great if there is some sort of storage where it is extracted.  Also, it is useful as a mechanism to gerrymander the oil under the surface and force it to extraction areas.   There is also a range of gas quality, and when treated when it comes out of the ground some of it can be stripped from the other extracted materials and used to run rig area equipment/heaters.

So there are other economic considerations as to how to use the gas, and it will be interesting to see in the next few years what becomes commercially available!  AN——–

 

 

 

 

National Extension Energy Specialists joint meeting concludes

Tampa Bay was the venue this year for the NEES joint National Sustainability Summit meeting came to a close Friday with Florida taking the lionshare of presentations.  It is always good to see what other Extension agencies are doing around the country.  The turnout was comparatively good compared to the last meeting in Knoxville.   The other important factor in this meeting is that ANREP (Alaska Natural Resources Extension Professionals) has been working along to have a joint meeting with Energy Extension Specialists and now we have completed our first joint venture.

The work in most states by Energy Specialists varies from teaching on energy efficiency, setting up Master Gardener style cohorts for businesses who want to learn more about electricity and of course in the plains states and southern states there is programing for the Agriculture.   Good ideas were floated and it is refreshing once every two years to see what others are up to under the same land grant umbrella.

“Sustainability” was the flavor of the couple days and electric cars, solar farms with growing space under PV panels, as well as  biochar were topics that were shared with a healthy dose of experience!  AN——-

 

 

 

had a strong presence.

What is frontier/homestead energy?

There are general ways to talk about energy. Railbelt energy refers to the types of power on the Alaska road system from Seward to the Northslope. Off-grid in a large sense speaks to not getting power from an electric utility, whether private or a co-op. Remote camp energy speaks of appliances and fuels that are used seasonally for gold camp, fish camp or possibly a hunting cabin for lighting, some heating and cooking. Some of these applications are used in emergency energy where you have a relatively minimal investment in devices that are for a “maybe” situation and tend to be compact, light and durable for cold temperatures (in an Alaskan application).

Frontier or homestead energy refers to devices and fuels that provide for heating, cooking and lighting but also for doing work. So if you know folks who lived “off-grid” but year round at a minimal level (compared to those who have systems where they annually generate electricity from solar, wind or hydro and sell the electricity to the utility whom they are yet hooked up to). This type of energy usually utilizes batteries per energy storage- which has its own complications. Many of the territory days folks (pre-1959) came up with ways to tweek and combine devices so that they could get things done whether in a trappers frontier cabin or on granted homestead land that they have to prove up on to keep the land. Or it could be someone within an hour’s drive out of one of the major cities who lives just a half mile down a road past the last power pole.

Next Monday (4/15) from 4-5:30 at the Tanana Valley Cooperative Extension office (in the old University Park Elementary School Building will be a presentation/discussion of things that can be used with obtainable fuels to get a home lit up, run a water well, provide heating and operate equipment to make washing and planting work easier. If any questions about the workshop give me a ring (322-2309)—-AN—