If You Build It, Will They Come? The Competitiveness of US LNG in Overseas Markets

The explosion of US shale has brought expectations of great change for US LNG trade, increasing the volume of flexible cargoes available to markets traditionally dominated by long-term contracts between buyers and sellers. However, new supplies from the United States, combined with new production from Australia and elsewhere, have set the LNG market up for a glut that threatens to depress prices. In a new report by the Center on Global Energy Policy, the authors assess the factors influencing the competitiveness of US LNG around the globe, whether capacity will be curtailed in the near to medium term for economic reasons and how competitiveness of US LNG may evolve in the medium term

Making Sense of the Trump Administration's Fuel Economy Standard Rollback

On April 2, 2018, the US Environmental Protection Agency (EPA) announced that planned fuel economy increases for model year 2022–2025 cars and light trucks are too stringent and should be revised. The EPA thus initiated a process to set new standards for 2022–2025, in partnership with the National Highway Transportation Safety Administration (NHTSA). Although the agencies may eventually ease fuel economy standards less than a full rollback of the standards to 2021 levels would imply, for illustrative purposes we assess the implications of a full rollback for gasoline consumption, oil imports, and carbon emissions. Given that the agencies’ 2016 analysis suggests that a full rollback would harm society on balance, we discuss which changes to the 2016 analysis might lead the agencies to conclude that a rollback benefits society. To facilitate discussion of these important public policy issues, this paper makes two points about the EPA’s announcement: Due to the gradual turnover of the on-road vehicle fleet, eliminating the tighter fuel economy standards for 2022–2025 would have small effects on gasoline consumption, greenhouse gas emissions, and oil imports during those years and even out to 2030. However, the ultimate impact of the weaker standards could be greater, especially if they hurt the progress of new technologies and the political momentum for tighter standards in the United States and in other countries over the longer term. Changes in the social cost of carbon, fuel prices, miles traveled, and market shares of light trucks since the 2016 analysis are unlikely to cause the benefits of rolling back the standards to exceed the costs. If the agencies conclude that the benefits of rolling back the standards exceed the costs, the reasoning will likely be based on other factors, such as consumer willingness to pay for fuel-saving technologies or the cost and effectiveness of those technologies

New Realities, New Risks: Rethinking the Strategic Petroleum Reserve

Sweeping changes in US and global oil markets call for a rethink of the Strategic Petroleum Reserve (SPR), an institution born of the first oil shock of 1973 and rooted in a vastly different oil market than today’s. The perceived redundancy of the SPR reflects a mood swing in policymaking circles. Until recently, the SPR enjoyed wholehearted support from Congress and successive administrations as a tool of energy security that helped shield the US economy from the adverse consequences of oil shortages. Admittedly, the SPR had its critics, but those came from a relatively narrow fringe for the most part. Today, the idea that the SPR is too large or even altogether useless has moved to the mainstream and is gaining traction. Fundamental changes have reshaped the global oil market as a whole during the four and a half decades since the creation of the SPR in ways that seem to call into question the traditional calculus of energy security. The debate over the fate of the SPR should not be limited to a binary choice between keeping it whole or cutting it down to size. Rather, it ought to focus on how to best repurpose the SPR to address the myriad new threats facing oil consumers and the global economy. This must include new forms of financing the SPR and the possibility of joint stockpiling with both oil producers and consumers. At a time of uncertainty about future supply and demand and elevated risks to markets and future investment, the very possibility of an uneven energy transition strengthens rather than weakens the case for the SPR. While the evolution of oil markets has led to the emergence of new energy security risks, it has also created new opportunities for innovation in risk management and SPR design. It is essential for the SPR to catch up with the transformation of the global energy landscape, rather than simply disband