Daily Energy Report
US power generation by source, China’s refining sector amid recovery, Berkeley’s gas ban, OFAC on Russian oil, gas exploration in East Med, oil market in H2 2023, and more
CHART OF THE DAY: Coal Down, Gas Up!
Figure (1) above shows the changes in the sources for power generation in the US between 2013 and 2022 and compares these sources between the two years. The chart reveals that coal use sharply declined during that period, while the use of natural gas and renewable energy increased markedly. There was virtually no change in the use of other sources
EOA’s Main Takeaway:
Oil is rarely used in power generation in the US. Therefore, even if renewable energy doubled or tripled in the future, this will have no impact on oil demand. (The same applies to OCED countries, India, and China)
Coal lost its market share mainly due to the shale revolution which made gas abundant and cheap. Also, the impact of government policies against coal cannot be ignored.
Total generation was virtually flat, meaning that the decline in coal use was met by increases in natural gas and renewables. However, there was an uptick in generation in 2022 which was met by renewable energy, mostly wind.
The switch from coal to natural gas in the US played a significant role in reducing or mitigating the growth of CO2 emissions.
One of the most important developments in the energy markets in 2022 was the unprecedented increase in substitution among energy sources around the world. Even in the US, as LNG prices reached a record high, some regions like the northeast, resorted to the use of oil because solar and wind energy failed to deliver. For more details on this subject, we encourage readers to check our report: US Winter Storm Increases Oil-Fired Power Generation.
Renewable energy has little to show despite the massive investments made in the last 10 years. The US spent $591.5 billion on clean energy between 2013 and 2021, according to Statista.
STORY OF THE DAY
BP plc's chief economist, Spencer Dale, said today that the oil market is likely to tighten in the second half of this year following the OPEC+ voluntary output cuts announced earlier this month, Reuters reported.
Another report by Devdiscourse quoted Dale as saying that Western countries are "delighted" that India has been snapping up Russian oil, saying the aim of Western sanctions has been to keep Russia's oil in the market while restricting Moscow's revenues.