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The Top Energy Stories of 2012

top-energy-stories-20122012 was a year of many ups and downs for the energy industry.  For every positive development like the steady growth of renewable energies and a second straight year of carbon emission reductions nationwide, there was something unfortunate to counter like extreme weather devastation and soaring gas prices.  One thing’s for certain: if 2012 taught us anything, it’s that the energy industry is in a massive transitional phase, with many changes that will affect the world for generations to come.

So without further adieu, and in no particular order, here are the news stories that caught our eye the most this year.

Mother Nature’s Fury

Extreme weather was a major detriment to the energy industry in 2012.  No other storm continues to affect the country as much as Superstorm Sandy, plunging its way into the east coast in late October and knocking out power for over 8.5 million homes and businesses across 16 states.  The storm was an abrupt wake-up call to the country on the vulnerability of our existing power grid and how our dependence on energy is staggering.  Since 1995, the country has invested less than the depreciative value of our electrical grid, and seeing the aftermath of Sandy has invigorated the conversation once again to prevent our infrastructure from dire inefficiencies.

In the instance of “a tale of two utilities”, the Potomac Electric Power Company (PEPCO) was able to triumph amid duress, while the Long Island Power Authority (LIPA) not only watched several high-profile executives resign in the process, but they are now facing legal repercussions for their inaction in Sandy’s wake.

Hurricane Isaac also wreaked havoc on the Louisiana peninsula before Labor Day, causing an immediate spike in gas prices before the unofficial end of summer.  Since the storm caused many Gulf Coast refineries to suspend operations, limited supply spurred the inflated gas prices.

Drought also plagued some of the country, most notably in the summer months.  Millstone Power Station in Connecticut was forced to close one of its two reactors from drought conditions for some time, while plants through the Great Plains requested additional permits to refill their cooling ponds throughout the summer season as well.

Concept of American Self-Energy Independence Becoming a Reality

American self-energy independence goes hand in hand with another major story of 2012, being the emergence of natural gas on the American energy industry.  For the first time in decades, natural gas energy and coal energy tied atop the list of US energy producers for 2012 at 32 percent each.  With natural gas booming and the coal industry in decline from stringent EPA emissions regulations, this trend is slated to continue moving forward.

Conversation regarding energy independence peaked during the Presidential debates in October, as President Obama and ex-Governor Romney traded barbs about who was more willing to eliminate our reliance on foreign energy resources like Saudi Arabian oil.  While the concept of complete self-reliance is far from guaranteed, early EIA estimates project increased domestic oil/natural gas production combined with lower gasoline consumption will cut our dependence on foreign resources up to 25% in the next ten years.

Here a Frack, There a Frack, Everywhere a Frack Frack

With recoverable supplies of natural gas exceeding 90 years of current demand and the potential for tens of thousands of new drilling jobs in tow, potential industry growth of yesteryear for natural gas became tangible in 2012.

Manufacturing and transportation companies have begun to pursue natural gas as a more affordable fuel source.  As of now, liquefied natural gas (LNG) costs approximately 25% less than ordinary gasoline, and is nearly 50% cheaper than diesel. (p.s. it burns about 31% cleaner than gas engines, too)  Companies like Royal Dutch Shell and Waste Management have made huge strides in 2012 to bring LNG to the forefront of their long-term plans.

It could be argued that no other state has benefitted from fracking as much as North Dakota, which boasts the lowest unemployment rate in the country. (3.1%) 370 drilling permits were submitted in October alone, up tenfold from five years ago.

Simply put, natural gas is in it for the long haul, folks.

Keystone XL Pipeline Delayed, to be Addressed Again in ‘13

The biggest news that emerged about the potential Keystone XL pipeline this year was the lack of news altogether.  President Obama rejected the Keystone XL application for a presidential permit in January, citing concerns over the environmentally-sensitive Sandhills region in Nebraska as something that would need to be revised for future talks.  The project is far from dead, however, as Obama did approve the project’s southern portion, extending from Oklahoma to Texas.  Initial reports state Obama will also address the pipeline in the first quarter of 2013.

Renewable Energies Continue to Prosper, US Carbon Emissions Down…

Renewable energies had a very productive year in 2012.  The Federal Energy Regulatory Commission (FERC) released a report in October stating that wind, solar, and hydropower energy comprised 46% of all of the new energy generation projects in the country this year.

The US military has played a huge role in the development of renewable energy prosperity.  In 2009, President Obama signed an executive order titled the “Federal Leadership in Environmental, Energy, and Economic Performance,” requiring the military to reduce their energy footprint by 30% in the immediate future.  Since then, hundreds of approved military initiatives have emerged, including a 10 megawatt ocean thermal energy (OTEC) plant slated to begin operations in 2013 at Pearl Harbor, Hawaii, the installation of two new wind turbines at the Cape Cod Air Force Base cutting their energy costs in half, and an $80 million efficiency project at Tinker Air Force Base that’s slated to be finished in 2015.

US solar energy installations had a record year in 2012.  The Solar Energy Industries Association (SEIA) projected approximately 3,200 megawatts of new installations for 2012, demolishing the previous annual record of approximately 1,900 megawatts in 2011.

Wind energy shared similar success as well.  Although there are strong concerns regarding the future of the industry in lieu of sizable tax exemptions expiring with the approaching “fiscal cliff,” wind energy remains the fastest-growing American renewable energy source for electrical generation for the last ten years.  If all things remain the same moving forward, the US Department of Energy projects wind energy could encompass 20% of all US energy generation by 2030.

For the second year in a row, the US saw a decrease in our carbon footprint based on the US Energy Information Administration’s Annual Energy Outlook 2013 Early Release Report.  Developments in renewable energies coupled with sizable regulations on fuel economy in the automotive industry have created progress that is projected to continue in the years ahead.

…but Global Forecasts Remain Gloomy

No country is an energy ‘island,’” stated the International Energy Agency (IEA) in their World Energy Outlook (WEO) report in November.  Despite progress being made in the US, the combination of increased carbon emissions from China, India, and numerous developing countries will entirely offset US reductions for the next few years and then some.  Although the WEO report states that over 140 countries have agreed to fight climate change, their efforts have not been aggressive enough to achieve keeping climate change below 2 degrees (still don’t remember where the degree symbol is on Word) Celsius, which is the goal agreed upon by the UN Copenhagen Accord in 2009.

What’s worse is the IEA believes within the next five years the amount of coal burned around the globe annually will increase by an additional 1.2 billion metric tons – an amount roughly the same as the consumption of the US and Russia combined.  Unfortunately, the Doha Energy Conference that took place earlier this month in Qatar also accomplished very little to ease worried minds regarding climate change.

Kristopher Settle
Energy Curtailment Specialists, Inc.

Kris can be found on Twitter and Google+.

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