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EPRINC studies energy economics and policy issue with special emphasis on oil, natural gas and petroleum product markets. We provide objective and technical analysis on a wide range of energy issues.

Chart of the Week

Regulatory Credit Contribution to Tesla’s Automotive Gross Profits

The sale of regulatory credits represents about 10-30% of Tesla’s gross profits in the automotive segment, and in FY2023 was equivalent to a $990 premium on every vehicle sold. In the first three quarters of 2024, regulatory credits have already provided over $2 billion in revenue to Tesla.

On November 7, 2024, EPRINC Distinguished Fellow Ash Shastri penned this piece, entitled “Novak Statement on Ukraine Gas Transit Agreement”. The paper covers the geopolitical and strategic implications for the EU and Britain specifically of the timing of the Russian Deputy Prime Minister’s statement that Russia is ready to supply natural gas to Europe through Ukraine.

On November 1, 2024, the Energy Policy Research hosted the second installment of the popular Electricity Series Workshops, entitled “Challenges in Meeting Surging U.S. Power Demand.”

The purpose of the workshop series is to develop a careful understanding of the growing risks to the resiliency of the US electric power system, the forces driving rising power demand and electricity prices, and proposals for cost-effective regulatory reforms that can bolster the long-term viability of the U.S. electric power system. A background discussion paper can be found here.

This virtual workshop featured presentations on the rising demand for power (from data centers, EVs, manufacturing) and some perspectives on the lost opportunities should electricity become much more expensive and much less reliable. The agenda for the workshop is here.

The presentations given at this workshop can be found attached at the bottom of this post.

Background Materials:

The first meeting in this series (on August 2, 2024) looked at risks to the power sector with presentations by Thomas Popik (Foundation for Resilient Societies), Isaac Orr (formerly of the American Experiment), Michelle Foss (Rice) and Max Pyziur (EPRINC). These presentations can be found here.

The Energy Policy Research Foundation has initiated its Electric Power Vision 2030 project, which is detailed further in this document. Alongside internal research into electric power demand and the effects of electrification on energy policy and US economics, the project also includes a series of workshops. The first workshop took place on August 2, 2024 and included presentations from a panel of very knowledgable speakers: Max Pyziur (Energy Policy Research Foundation), Michelle Foss (Rice University Baker Institute), Isaac Orr (Always On Energy Research) and Thomas Popik (Foundation for Resilient Societies). Those presentations can be found attached to this post.

The Biden Administration’s recent tightening of the Corporate Average Fuel Economy (CAFE) Standards will force car manufacturers to rapidly increase EV sales to be in compliance. If left in place, such standards will cause a rapid transition from a gasoline-based vehicle fleet to a battery-based vehicle fleet.

To examine the effects of such a transition in energy economies, the Energy Policy Research has conducted an analysis of the CAFE rules implications on potential wait times at charging stations over the next 25 years. This briefing gives an overview of this topic and provides historical context, a discussion of key regulatory tools, a formal analysis of potential wait times in the absence of sufficient charging facilities, and concludes with a set of recommendations for policymakers.

The Energy Policy Research Foundation has published this interactive chart as a result of their research into the IEA critical minerals data.

This chart compares the change in demand, Growth %, for critical minerals from the Stated Policies Scenario (STEPS) to the Sustainable Development Scenario  (SDS) for 2030 and 2040, with a base year of 2020.
For example, the growth % from STEPS to SDS for nickel increases 89% from 2030 to 2040, from 210% to 299%. Meaning, If SDS is adopted instead of STEPS, nickel demand will grow by 210% by 2030 from 2020 levels (100%). By 2040, nickel would increase by 299%, an 89% change from 2030.
A feature of this chart is that individual bars may be clicked to reveal specific tonnage data for each mineral.

Michael Lynch, Energy Policy Research Foundation Distinguished Fellow and President of Strategic Energy & Economic Research, has published a short piece in Forbes entitled “Vermont’s Attack On Big Oil Is Pandering Not Climate Policy“. In this piece, he examines Vermont’s decision to pass a bill intended to charge oil companies for the damage climate change has caused and the implications of that decison.

EPRINC Director of Research Programs Max Pyziur was featured in a story in Scripps News written by John Mone. In the piece, Pyziur provides commentary on the IEA’s predictions of an imminent glut in oil production capacity in its recent report.

One of Pyziur’s quotes is below:

Max Pyziur, the research director for the Energy Policy Research Foundation, said, “Electrical generation from intermittent resources such as solar and wind, I see that as being very difficult to commission. Consequently, you’re going to continue to need to rely on oil and gas and coal for the duration.”

The article can be found here.

EPRINC has just published a complete revision of its Gasoline Blending Primer. This expanded version of the Primer concisely explains the evolution of gasoline production and formulation from early efforts to meet rising performance standards to recent blends required by more rigorous pollution regulations and biofuel mandates.
In the process, finished gasoline that was once a simple combination of a few refined petroleum components usable across a wide geographic space has evolved to many formulations that have become increasingly complex adjusted for the requirements of different regulatory jurisdictions,” commented Max Pyziur, EPRINC’s Research Director. “This is a formidable achievement, but it comes with increasing costs.”
The Primer is updated with discussions of current policy considerations and issues. It is available here.

We’re excited to present to you our latest video on global LNG terminal capacity. The animation delves into the significance of LNG for securing and diversifying energy supplies, while also highlighting its positive impact on the US trade balance.

This video is part of the Foundation’s ongoing animation series on critical topics in energy security and energy transition.

EPRINC Distinguished Fellow Michael Lynch has published another piece in Forbes, entitled “Oil Companies Should Listen To Activists—But Skeptically“. Click the link to read the full article on the Forbes website! A PDF of the piece can be found here.

In an interview with Kevin Killough for Just the News, EPRINC’s Max Pyziur discusses the formidable efficiency gains that have been made by data centers helping to deliver increasing loads while questions remain as to their future electricity demand growth. The article, “America’s electricity grid is stressed, and new data centers may put even bigger demands on it“, was published February 18, 2024.

On Tuesday, December 5 2023, Energy Policy Research hosted a workshop called: “Pathways to Net Zero: Electric Power and EVs”. The workshop consisted of two panels to address the central tasks necessary to proceed with an energy transition that relies upon a rapid electrification of the national economy. We expect our attendees to participate in the discussion. Experts that are undertaking assessments on operational risks to the national grid from EPA energy mandates and the acceleration in power demand for EVs and other electrification proposals participated, as well as representatives from the automotive industry.

Our existing assessments on “Net Zero” have outlined cost risks, technology constraints, and regulatory obstacles for a rapid build out of the electric grid, including power requirements to meet demand from the expansion of EVs. Sound policy will require a careful understanding of the challenges ahead.

An agenda from the workshop is here, and some of the presentations that were given at the workshop can be found below.

EPRINC Trustee Larry Goldstein was quoted in two separate articles, one by CNBC and one by the New York Times, on the topics of the recent acquisitions by oil majors ExxonMobil and Chevron. Links to the articles are below:

CNBC – Why Exxon and Chevron are doubling down on fossil fuel energy with big acquisitions by Cat Clifford

Larry Goldstein (larryg@eprinc.org) is an internationally recognized authority on petroleum markets, and has extensive advisory relationships with energy companies, research institutes, and government agencies. He is a former president of the Petroleum Industry Research Foundation (PIRINC) now the Energy Policy Research Foundation (EPRINC), its successor organization, and continues to be on EPRINC’s Board of Trustees. He was a founder and president of the PIRA Energy Group, a major energy consulting firm that was acquired by S&P Global in 2016.

On Monday October 23, 2o23, RealClear Energy published an article titled “Streamline the Regulatory Process to Expedite U.S. LNG Exports”, coauthored by EPRINC President Lucian Pugliaresi and President & CEO of The USLNG Association (“LNG Allies”) Fred Hutchison. In the article, they make a strong case against “the current slow pace of the Department of Energy’s U.S. LNG export authorizations to countries with which the U.S. does not have a free trade agreement (FTA) that includes natural gas—which, by the way, includes all of Europe, including the United Kingdom and Türkiye.” They argue that “U.S. LNG exports are making substantial contributions to U.S. trade balances and domestic employment and bolstering the energy security of our allies. The disruption of pipeline gas shipments to Europe following the Russian invasion of Ukraine was a severe blow to European economic growth and security.”

 

The full article can be found on the RealClear Energy website, here.

On October 23, EPRINC Director of Energy Transition Research Batt Odgerel presented at the American Energy Transition Forum. His presentation, titled “Understanding the Cost, Risk, and Scale Challenge of the Net Zero Transition”, can be found here.

According to the American Energy Transition Forum’s website:

“The American Energy Transition Forum will explore the tools and technologies which will propel this decarbonization journey. The event will gather like-minded stakeholders from the public, business, scientific and innovation sectors. The event will tackle various decarbonization pathways, such as expansion of renewable energy production, carbon capture and storage technology, hydrogen, ammonia and advanced biofuels. Although one of the ultimate goals seems to be fossil fuel substitution with renewables, such sources of energy as LNG cannot be left out as part of successful energy transition. In addition to energy resources, such important areas as climate-tech investments, digitized solutions for energy transition acceleration, energy efficiency and many more topics crucial to the decarbonization journey will be addressed at the event.”

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