Hill+Knowlton Strategies

Overhead High Voltage (HV) cabling has long been the subject of debate and argument. It was at one such debate that I met Mike, business development director at Costain, and we talked about the rationale behind undergrounding HV cables in tunnels. Mike very kindly offered to show me the current undergrounding operations that Costain and partners are building under the streets of our Capital for National Grid and so it was that I spent a very interesting afternoon in North London.

Willesden Junction is not a place I knew in London and after emerging from the Bakerloo line it became immediately clear why. It is a curious mix of light industrial, train and transport depots and some residential streets, but that made it the perfect starting off point for the 7.2km 3m diameter tunnel that would end up somewhere near St John’s Wood and meet a 13km 4m diameter tunnel that had begun in Hackney.

Map of tunnels at Visitor Centre

The excellent visitor centre, which was about to be raided by the second school visit of the day, contained some fantastic visualisations of the tunnelling work including this real time drilling chart and full size mock up of the tunnel.

Tunnel Mock-up at Visitor Centre

But where the school tour ended was where our tour began and after donning the correct personal protective equipment and having our safety and orientation training, we went on site to witness the production line efficiency of a tunnel boring team, only days from reaching the target ‘breaking through’ point.

Accompanying us was Richard, who made sure we were safe during our visit and after first looking at the impressive muck conveyor belt, which carries tonnes of London clay vertically up the massive main shaft, we then descended the 50 metres or so to the floor of the shaft.

Main shaft to access tunnel

There we caught our train, one of several that continuously run between the tunnel boring machine (TBM) and the main shaft to ferry the precast concrete rings that make up the walls of the tunnel and the tonnes of clay back in the other direction and of course the people that work on this project. These trains take about 20 minutes to travel to the face and run like clockwork to ensure that they pass each other at the correct spot to ensure the TBM is constantly supplied.

Tunnel Boring Machine

The TBM has a crew of about ten, who work with production line-like efficiency. The process of fitting a 1.2m ring of concrete would take longer to describe than it would take to do, so here’s a two minute video showing some of the process (note: the camera shake when the blocks go in place gives you an idea of how big they are!).

TBM in action

It is an impressive thing to watch, and I genuinely felt privileged to have been able to join Mike and the team to watch this tunnel being built in order to futureproof London’s electricity supply. It is an ambitious project and indicative of the sort of large infrastructure investment the UK needs to make as part of the upgrade to our electricity grid, but also to support growth and investment in our construction and engineering industries. It will certainly bring some reality to my next conversation about undergrounding HV cables.

Much of the focus on yesterday’s IEA World Energy Outlook was on the US’ increasing access to oil and gas reserves derived from fracking. At the FT, Guy Chazan and Ed Crooks focused on how the shale ‘revolution’ will redraw our energy landscape but noted that regulation threatens the sector’s growth. Fiona Harvey at the Guardian warned that the US becoming the world’s biggest oil producer by 2017 could lead to huge increase in greenhouse gas emissions. Commenting in the Independent, Michael McCarthy suggested that while the findings of this year’s IEA World Energy Outlook may look exciting to economists, they are “distinctly depressing” to anyone concerned about climate change.

Whilst all very interesting, these findings and commentary weren’t hugely surprising. This has been a year where shale and fracking have dominated the energy agenda, alongside carbon reduction targets and energy interdependence. But one theme I thought striking in the IEA’s 2012 report that we haven’t heard much on was water and the challenges brought by the energy industry’s increasing thirst.

Today, the energy sector accounts for 15% of the world’s total water use. The IEA predicts that power generation and biofuels output underpin an 85% increase in the amount of water consumed through to 2035. This growth comes in an increasingly water-constrained future.

The report indicated that water use could become increasingly challenging for unconventional gas development and power generation in parts of China and the US, India’s water‐intensive coal‐fired plants, Canadian oil sands production and maintaining reservoir pressures to support oil output in Iraq.

Water is used for resource extraction (oil, gas, coal, biomass etc.), energy conversion (refining and processing), transportation and power generation. In a review of the associated literature the Belfer Center notes that water, like energy, is a commodity but with very different characteristics. Water is almost always local where energy tends to be more of a global sector.

Constraints on water availability are becoming a crucial consideration affecting the reliability of existing operations within the energy sector, which the IEA warns will introduce additional costs. In the power sector for example, technological developments have enabled advanced cooling systems to operate with less water, but this benefit comes at additional cost and reduced plant efficiency.

The water industry itself is energy-intensive, consuming electricity for desalination, pumping, and treatment of wastewater. So the question of energy and water’s relationship comes full circle.

With all this in mind, perhaps we should be looking at water’s impact on future energy supply a little more closely.

In the last week of August, the biannual Offshore Northern Seas conference took place in Stavanger, Norway. This year’s record attendance is testament to the boom in the North Sea market and the optimism of recent years’ major discoveries, but the boom also brings about challenges.

By Ola Bosterud and Henrik Arnestad Salthe

This year, almost 60,000 guests visited the trade show and conference at ONS – almost 10,000 more than in 2010. The visitors came from 109 different nations, and a total of 1,264 companies participated in the exhibition.

The atmosphere at this year’s ONS was extremely different compared with two years ago: gone are the somberness and talks about the oil and gas industry as a sunset industry. The recession depression has been replaced with eager chitchat about new discoveries and new business opportunities. The good mood is also penetrating the rest of Norwegian society, making Norway the odd one out in a world where recession and fossil fuel skepticism reigns. Even though a very large part of the Norwegian public is positive about the industry, there is still a strong anti-petroleum sentiment in parts of the public, especially on the far left of the political spectrum.

"Ocean Vanguard" - one of the drilling rigs that have been working on the Johan Sverdrup discovery. (Photo: HARALD PETTERSEN / STATOIL)

Massive discoveries
The reason for the change in mood is obviously the new discoveries made on the Norwegian Continental Shelf over the last couple of years. This includes the amazing Johan Sverdrup field, which was found in the most mature parts of the North Sea through applying new exploration models in pre-drilled areas. The field is expected to hold between 1,700 and 3,300 million barrels of oil, but the discovery is still being delineated and appraised to find out more about the total resources in place. Statistics Norway now predict record high investment levels in the Norwegian oil and gas industry over the next year, and their predictions for 2013, NOK 204 billion, are now the highest predictions ever, since Statistics Norway started predicting investment levels in 1985.

Even though everything is looking bright, history has taught us that the oil industry is a volatile industry. The slogan for this year’s ONS conference was Energy Paradoxes, and there are several paradoxes on the Norwegian Continental Shelf that the Norwegian industry needs to handle and that the international energy industry often finds puzzling:

• The public is very much pro-environment, and Norway has several strong E-NGO’s. At the same time, society is totally dependent of income from the oil sector
• Major discoveries have been made, but the industry still wants to open controversial areas to gain new acreage, to prevent the expected production drop after 2020
• The tax level for the oil industry is massive, but special tax breaks have fuelled a massive growth in the industry, resulting in tripling the number of E&P companies since 2000, from around 15 companies to close to 50 companies now prequalified for holding licenses.
• The Norwegian Continental Shelf is seen as mature, but major discoveries are still being made, and there are still large frontier areas that have not been thoroughly explored.
• Norway has steered clear of most of the Curse of Hydrocarbons, even though the population is small and hydrocarbons is a major driver in the economy.
• Norway has one of the world’s largest sovereign wealth funds, financed by income from the oil and gas industry. At the same time, the sovereign wealth fund’s investments in industrial players and oil companies have been controversial.

Trust is key
The industry is full of paradoxes, and the list could go on and on. What is true about all these paradoxes is that they need to be handled in the right way to win out both in the local and global competition for resources. In our view, the right way to do that is to be transparent about these paradoxes: about the challenges they present, as well as their opportunities. The oil and gas industry is dependent on the trust of their stakeholders. The only way to attain this is to earn that trust through being transparent and open, and communicating based on the facts.

About the authors:

Ola Bøsterud heads the energy and industrials practice in Gambit H+K in Norway. He has a long track record as Head of communications in various oil and gas related companies like  Petroleum Geo-Services, oil service company Aibel,  and Total Norge .

Henrik Arnestad Salthe is part of the energy practice group in Gambit H+K Norway, and works at the comapny’s Stavanger office. Before joining Gambit Hill+Knowlton Strategies, Henrik worked for several years as an oil and gas editor for various trade magazines and websites in Norway.

We are witnessing an energy revolution, Walter Russell Mead, professor at Bard College and editor-at-large of The American Interest, recently proclaimed in a series of blog posts (parts one, two, three, and four); a revolution “much bigger, and more consequential than the Arab Spring;” a revolution, moreover, that will result in “a powerful boost to American power.” Mead sees a “new age of abundance for fossil fuels” in the making which proves peak-oil theories wrong and renders chatter about American decline irrelevant. Due to now extractable resources in tar sands oil in Canada and shale oil & gas in the U.S. the “center of gravity of the global energy picture is shifting from the Middle East to … North America.” This energy revolution will consequentially bring about a new American century.

That, in a nutshell, is Mead’s bold thesis at which I will have a closer look in this first installment of my e-Ideas series. And just to state the obvious: the series is going to evolve around discourses, books, and studies, i.e. the impact of energy trends and innovations on society and politics adn vice versa, rather than technological innovations of which I would only have very limited understanding.

Mead’s energy revolution is driven by unconventional oil and gas resources that recently have become technically and economically extractable and/or have been discovered. These resources make Canada and the U.S. “each richer in oil than Iraq, Iran and Saudi Arabia combined.” Israel and China also have such resources and will profit accordingly.

According to Mead this new fossil fuel reality has four major consequences:

1. New Geopolitical Fundamentals
The energy revolution will substantially shift the fundamentals of geopolitics by creating “winners and losers”; namely the U.S., Canada, Israel, and China as winners, and Russia, the Middle East, and petro states such as Venezuela as losers. The economically most advanced countries of the West will become less dependent on energy imports from autocratic regimes and unstable regions such as the Middle East, Mead argues, and can shift political attention and military resources to other areas. Shale oil will also make China more independent from imports and therefore less aggressive in its drive to secure energy resources overseas. Russia, on the other hand, will lose leverage because Europe will have alternative sources of supply. The Middle East will lose its prominence on the world stage, because its resources are not as relevant any more.

2. A New American Century
This geopolitical shift will stabilize the liberal global order, stimulate global economic growth, and allow the potential rivalry between the U.S. and China to become ever more cooperative. Because energy was critical to the first American century, Mead continues, and since the energy abundance that propelled the U.S. to global leadership is back, a new American century is in the making. A less Middle East-centric foreign policy will allow the U.S. to become more of the benevolent hegemon it has been after World War II, securing the liberal capitalist global order, rather than fighting wars in the sands Iraq.

3. The Reincarnation of the American Dream
The new fossil fuel resources in the U.S. will dramatically alter the domestic situation as well, Mead claims. For the first time in decades, new well-paying blue-collar jobs are created, a second coming of the American Dream. Demand for skilled labor will change the immigration debate. Manufacturing may return to the U.S. because cheap energy will be a major competitive advantage. A new geography of power will alter politics: A shift to the Mississippi-Ohio-Missouri river system and the Midwest, where most of the new resources are located, will strengthen a pragmatic moderately conservative ideology and weaken liberals and ultraconservatives. And more of American prosperity will actually remain in the U.S., because less energy imports will significantly cut the trade deficit.

4. A Cleaner Planet
Somewhat counter-intuitive, Mead claims that the new abundance of fossil fuels will also help protect the climate and strengthen environmentalism. In his final, and most polemic, blog post he argues that cheap shale gas will accelerate the switch from coal to gas, resulting in less carbon emissions. The newly accumulated wealth will help fund more environmental initiatives. And until these resources are dried up later in the twenty-first century, the wind and solar industries can mature, become more competitive and more reliable. This will all help the transition to a cleaner, low-carbon economy.

Mead’s argument is conclusive and well thought through, even if his polemic against green energy seems widely overstated. He somewhat underestimates, however, the political risks that come with the production of unconventional oil &  gas. Hydraulic fracturing increasingly becomes a major concern not only for environmentalists in the U.S., while in Europe this extraction technology is stigmatizing as dirty and risky. The same is true for Canadian oil sands. Consequentially, American pundits such as Thomas Friedman, the NY Times columnist, are much more skeptical of a golden age of gas in the U.S. While its economic and geopolitical benefits are obvious in the short term, Friedman states in an opinion piece, the shale gas boom may delay renewable energy production. “That would be reckless,” he writes because in light of recent droughts in the U.S., climate change becomes ever more apparent, and dangerous. A warning, Fatih Birol, chief economist of the International Energy Agency, already voiced earlier this year, reacting to the EU’s labeling of natural gas as “green energy”.

But Friedman pushes further and specifically targets unconventional gas. “Extracting it can be very dirty,” he writes, essentially demanding a life cycle analysis of all energy sources. While he concludes with proposing a carbon tax, which in his eyes will level the playing field for renewables and also allow raising more taxes to tackle the U.S. federal budget deficit, his article that has been duly refuted from conservative side, shows that unconventional gas is highly politicized.

Politics may thus derail Mead’s energy revolution, if not managed professionally. A good start would be sound energy policies. As The Economist recently noted, neither presidential candidate appears to have, however, “the vision now required in energy policy.”

In a recently published study, the German National Academy of Sciences, Leopoldina, issued a devastating verdict on the future of biofuels in Germany, the EU, and the rest of the world. If the rationality for using biofuels is a reduction of CO₂-emissions, its researchers argue, life-cycle-analyses (LCAs) of current technologies and processes show that most biofuels are part of the problem rather than part of the solution. Considering all steps in production and use of biofuels, including fertilizers, labor and conversion, the study aggressively questions the reasonableness of EU’s 10 percent by 2020 biofuel goals in transportation. (The relevant EU directives are 2009/28/EC, 2009/29/EC, 2009/30/EC.) The study concludes that none of the existing the biofuel options execpt biogenic waste would sustainably help the climate.

Basically, this is not news. Biofuels have been heavily criticized by NGOs such as Greenpeace in the past, and continue to be a campaign target. In Germany, a country with famoulsy ambitious renewable energy targets, there is, however, in addition to these facts an increasingly solid scientific consensus that biofuels should not play a prominent role in the country’s energy transition. Nobel laureate Hartmut Michel of the Max Planck Institute of Biophysics in Frankfurt told the F.A.Z. in an interview.”I don’t want to support the nonsense of biofuels.” The press is now mostly critizising biofules.

Ultimately the endgame for biofuels in Germany may be looming, because there is no public voice supporting them. The association safeguarding the industry’s interest on the federal level, Bundesverband Bioenergie e.V., issued a statement against the Leopoldina on their website, stressign the role biofuels can play in the transport sector. But was virtually unheard in the debate. And major industrial biofuel players aren’t taking part as well. If the industry does not publicly make the case why biofuels are necessary and beneficial for Germany’s energy transition, the renewable energy future in this country may be without biofuels.

On 22 May 2012, the Government published its draft Energy Bill – you can read my colleague Chris’ analysis of the key points here. The landmark piece of legislation is intended to establish a legislative framework for delivering secure, affordable and low carbon energy. Ahead of its expected introduction this autumn, the Energy and Climate Change Select Committee are currently scrutinising the details of the Bill. As part of this inquiry, yesterday the committee held a public evidence session with key representatives from the energy industry.

The first session comprised of Sara Vaughan, Director of Strategy & Regulation for E.ON UK; Keith Anderson, Chief Corporate Officer of ScottishPower; and Ian Marchant, Chief Executive of SSE. They were followed by Vincent de Rivaz, Chief Executive Officer for EDF Energy; John McElroy, Director of Policy and Public Affairs at RWEnpower; and Sarwjit Sambhi, Managing Director Power Generation at Centrica. Each group were asked the same questions, centred on Part 1, Chapters 1-7 of the draft Bill. The particular focus was Contracts for Difference (CfD), the UK’s investment incentives vis-à-vis other markets, and the proposed Emissions Performance Standard.

KEY POINTS

• Industry must find a common voice: It quickly became apparent that the key industry players have divergent views on what is needed to optimise the UK’s energy market. From whether the Energy Bill is needed at all, to ministers’ role and responsibilities, to the need for capacity mechanisms, some clear differences in position were set out. SEE’s Ian Marchant described himself as being at “one end of the industry”, acknowledging substantial differences of opinions with his competitors. Tim Yeo MP, who chaired the session, stressed that the more industry is able to find agreement, the more likely their views and points will be accepted by Government.

• One thing they do agree on is transparency: If one word stood out in each of the sessions, and by each witness, it was the desire for transparency. Keith Anderson of ScottishPower was particularly forthright in his desire for transparency and the creation of a robust long-term framework to achieve investor confidence, create jobs, and ultimately restart the UK’s economy. Vincent de Rivaz from EDF Energy stated that the Government has a clear responsibility to ensure fairness and transparency.

• The UK is an attractive investment market: Those giving evidence do not believe incentives on renewables lead to excessive return on investment. SEE’s Ian Marchant stated that without market mechanisms, a mixed generation portfolio simply won’t be realised. However, he added that there is not currently enough liquidity in the wholesale electricity market to support CfD mechanisms. RWEnpower’s John McElroy voiced concern for clarity over budgets and how the Government intends to manage the levy control framework.

• But the current period of uncertainty must be resolved as quickly as possible: Concerns over slippage on the timeframe were raised by Sara Vaughan from E.ON UK. The lack of detail in the Bill and a centralisation of decision making power among ministers were perceived as a risk, compounding uncertainty in the market and therefore investor confidence. In the second session, EDF Energy’s Vincent de Rivaz, reiterated the need to maintain momentum and ensure Government sticks to its timetable.

• The counterparty issue must be resolved: The key industry players had previously registered their desire that the Government act as the counterparty so as to ensure CfDs are legally robust, with the power to raise money. However, it was noted that there seems to be hesitation on the Government’s part and potential problems with standards of State Aid set by the EU.

• There is no agreement on emissions performance standards: Dan Byles MP began his question in the second session by suggesting that the first session’s witnesses were in agreement over Emissions Performance Standards, but was quickly caught out by Centrica’s representative, Sarwjit Sambhi, who had attended both. Sambhi agreed with SEE’s Ian Marchant that the standards were unnecessary, but Sara Vaughan thought quite the opposite. John McElroy agreed, noting that gas has a key role in the transition to a low carbon economy, so certainty around emissions performance is vital.

CONCLUSIONS

The current state of the energy market in the UK is one of uncertainty. Until a clear and comprehensive framework is in place investors will remain shy, and if timeframes are not met there is the possibility that confidence will ebb away. To this end, industry believes that the Government must move swiftly in its reforms and be open in its processes. There is much to be clarified and worked through, and as John McElroy noted: the devil is in the detail. One thing is clear – if the industry wishes to see swift reforms they must be forthright on the issues they agree on, presenting a united voice wherever possible.

WHAT THE MEDIA HAVE TO SAY

• The Financial Times (Pilita Clark) - Energy groups attack ill-defined reforms
• The Daily Telegraph (Emily Gosden) – SSE attacks secrecy of nuclear subsidy talks

In the Energy and Industrials team we are partial to some tech prowess, especially if that technology is geared towards saving energy, saving money or looks particularly nifty (remember those Back to the Future self-lacing shoes Mr Chris Pratt lusted after?).

Detailed here you’ll find just a few of the weird, wonderful and stylish energy-saving or sustainable products and gadgets that I find quite snazzy.

Cardboard fun



You might not be able to use it outside, but hopefully cardboard furniture which is 100 per cent recyclable will soon be all the rage. From beds to work seats all you have to do is fold it together and voilà!

Sun in  a jar

Solar-powered lights have always been popular for guiding people up garden paths the world over  but not many people have ventured to using them indoors which is why I like this next product; the Sun Jar. Just sit it on your window sill during the day when you’re at work and then use in the evening when you come in.

Speakers

Personally I love these acoustic iPod speakers which are made from reclaimed wood and old instruments; let’s face it they would look great on anyone’s mantelpiece.

Keeping warm (yes that is a picture of Matt Damon in a ’slanket’)

From my days living in a drafty student house it was either a choice of wearing a blanket around the house at all times or trying to find an inexpensive way to save heat. After exhausting all the usual tips (foil behind radiators, draft protectors on doors) we found the most effective product we used was window insulation glaze. It costs around six pounds and is basically sticky backed plastic for your windows which really does work!

These are only some of the products I have come across recently but it is clear to see that eco and sustainable goods are a growing market with websites dedicated to selling everything from homemade wind turbines to recycled cushions made from plastic.

H&K were fortunate enough to have the opportunity to host a very interesting event by the Confederation of British Industry (CBI)yesterday morning. The event was not only one of the first outings of new Director General, John Cridland, but also featured Secretary of State at the Department for Energy and Climate Change, Chris Huhne MP in one of his first outings since the launch earlier this week of his government’s Carbon Plan. The CBI used this event to share some insights about consumer attitudes toward ‘low carbon economy’ products and initiatives and from a communications perspective the conclusions gave some food for thought. First though some really useful stats from the CBI report entitled ‘Making the Consumer Case for Low Carbon’:

•  Three quarters of the UK’s greenhouse gas emissions are either directly or indirectly attributable to consumer actions (Sustainable Consumption Institute)
• Seven out of ten people feel a sense of responsibility to do something about climate change (Ipsos MORI, March 2010)
• 39% of respondents to Ipsos MORI said that ‘clear evidence of reduced running costs’ would change their purchasing attitudes toward more energy efficient products
• 83% of respondents either strong agreed or tended to agree with the statement that ‘companies have a responsibility to give consumers as much information as they can about the energy efficiency of the products they sell’.
• When asked about which sources of information they trust to provide reliable information about energy efficiency or climate change, 40% said Which? Magazine, 30% Government or Government agencies, 28% scientists, 16% action groups like Greenpeace, 16% manufacturers, 12% trade associations. 9% newspapers, 9% TV and 9% retailers/shops. There were striking differences between different age groups too.

So what was so interesting from a communications perspective? Well one of the overriding messages that Mr Cridland was sharing with the audience and his members was that they had a challenge to communicate better with consumers if they were to convince them that low carbon products were worth their consideration.

When the leadership of an organisation like the CBI starts to make statements like this it can feel like manna from heaven for a communications specialist, especially when they conclude by saying that this is about more than spin and offering worthy but premium priced alternatives, it is about creating compelling price points and standards that consumers can trust. I couldn’t agree more and so look forward to working with our clients to define compelling low-carbon propositions for consumers. With the launch of the government’s Carbon Plan, policy appears to at last be providing a relatively clear path for more investment by business in the low carbon economy. Let’s hope the joined up approach continues.

I’ll admit it. 

I didn’t want to go. 

Where, I hear you ask? 

Ecobuild. 

Nothing against sustainable construction, mind you.  It’s just I’m not a huge fan of the ExCeL centre, or – and I hate to say it – trade shows in general. 

But….

I was pleasantly surprised. Dare I say it, I even enjoyed myself.

This year’s event was HUGE.  Bigger than I anticipated, even though I did check out the website and peep some of the vendors sites before I went.  There were more than 1,300 exhibitors from the fields of design, construction and what Ecobuild calls “the built environment”.  Still not sure what that is. Seems a bit vague….but I think they mean people who sell and install things for inside your building…floors, toilets, plumbing, windows, etc.

So, why did I enjoy it?

1. I got to know a very cool company – REC Solar.

2.  I was thrilled to see what a huge presence solar was at the show.  Despite concerns around the government’s planned review of feed in tariff policy and what this could mean for the UK solar industry – all the big players were out in force. Go team.

It’s a solar bear…get it?!

3.  I got to get back in touch with my techie roots and play with phase change materials (PCMs for the uninitiated) – check out BASF and DuPont.  There was a great little demo centre called the Cool Workspace, which showed how PCMs can be used to create a more sustainable office environment by storing both heating and cooling, reducing the carbon footprint of buildings by up to 30%.

4.  The people. Yes, that old chestnut.  I was genuinely impressed with the huge range of people that were drawn in.  From the big corporate sales guys, to students, to apprentice builders, to eco-conscious consumers, to, er… models dressed as Canadian mounties (see below).  While most of the attendees were indeed more of the corporate ilk, it was refreshing to see that there was a noticeable representation from a huge range of people. 

As nice as it would be to preserve all the green space left in the world, that’s never going to happen.  Construction and physical development is a reality.  Even here on our little island, we’re expected to increase our population to from 61 million to 70 million in about 15 years.  Whether that growth is sustainable from a resources point of view or not is a different blog post, but that’s a lot of new housing, schools and hospitals. Let’s hope they’re built in a way that takes a lesson from Ecobuild.

Expanding unrest in the Middle East has jolted the oil market, sending crude to $119 a barrel since Egyptians first took to the streets in January. The oil market doesn’t like uncertainty, and nothing could be more uncertain than the volatility spreading to Libya, Africa’s third-largest oil supplier, and Tunisia. Some analysts are even concerned about Saudi Arabia.
Rising oil prices mean rising gasoline prices, which have surged to an average of about $3.13 a gallon at the pump in the U.S. This comes on the cusp of the summer driving season, when prices usually peak as Americans hit the roads.
Some analysts say oil could reach $220 a barrel if Libya and Algeria halt exports. The U.S. Energy Information Administration said Feb. 8 that the monthly average retail price for regular gasoline could exceed $3.50 a gallon during summer 2011. And that was before the Libyan situation developed.
What typically follows these price upticks is a round of Congressional hearings as indignant constituents’ wallets are squeezed.
Surging oil prices usually bring a fresh look at renewables too, so green energy companies should be prepared to seize the moment. Companies involved in alternative fuels such solar and wind can use this time of high oil prices to once again showcase their offerings.
This would also be an opportune time for oil companies to press for Gulf of Mexico drilling permits, long stymied by the ghost of Macondo.
Times of unrest often call for times of new beginnings.