The determinants of supply and demand in the United States energy industry are best broken down by an explanation of the policies and acts that drive them. Based on 29 major policies and international treaties between the United States and foreign governments, it is apparent that the main relationship between supply and demand centers around: emerging technologies, supply expectations, anticipation of a crisis, and the availability of the major types of energy (Petroleum, Coal/ Geothermal, Natural Gases, Biomass, Nuclear Power, Hydro/Wind/Solar Power, and other renewable resources.)
Within the three Energy Policy Acts passed in the last fifteen years, the increase in United States population had driven up the demand for the current US resources to its peak level. Following the Kyoto Protocol, a global initiative to reduce Greenhouse Emissions, the United States has implemented international treaties, subsidies and incentives, and caps on production as part of Barack Obama's "Cap and Trade" program. This has driven the prices for the oil industry and geothermal electricity production costs up substantially. The caps refer to emission limits factories must abide by in order to minimize negative social externalities. Since reducing production drives up prices and reduces demand in theory, this would have been cost effective for many United States natural gas suppliers and biomass users. However, the United States consumes over 72 quadrillion BTU's (British Thermal Unites) of electricity, geothermal, and petroleum energies a year. In historical cases, higher prices drives demand for a commodity downwards. In the international disputes of the 21st century, supply of coal and petroleum has dropped with the sway of political ties between countries.
Obama's "Cap and Trade" program has addressed this unorthodox relationship between supply and demand by incentivizing the energy industry. The average cost of nonrenewable barrels of energy resources is $75 a barrel according to the United States Department of Energy. The rush to improve renewable resource quality and supply has led to the application of over 11,962 patents for 24 emerging technologies in just the last ten years. The intricate energy industry of the United States is becoming citizen focused, and efficiency is the bottom line of most corporate charters.
In case of a supply crisis, the USDE has Strategic Petroleum Reserves located throughout Texas and Louisiana. These hold a combined 726.6 million barrels of oil with 4.4 million accessible on any given day in case of a crisis. Since market prices center around $75 a barrel, that brings the United States' private supply of nonrenewable energy resource value up to $54,495,000,000.
Despite a lot of criticism by social media and the public, the United States government is very prepared for any type of future energy crisis. I was surprised that the amount of energy consumption after the Baby Boomers is so high, ranking the US 8th in the world for energy consumption. I am also a bit surprised that through researching various corporation claiming to be "green", many of them still statistically have trouble reducing harmful emissions. My sources for these statistics are:
http://www.sapphireenergy.com
http://www.energy.gov
http://www.eia.gov/finance/performanceprofiles/
http://www.ecoworld.com/energy-fuels/world-energy-consumption-the-good-bad-and-btus.html
Question: Anyone know if the government has set benchmarks or "percentages" that a corporation must abide by when attempting to reduce its emissions?
ReplyDeleteUnder the Clean Air Act of 1970, companies that produce chemical waste through fumigation must adhere to the New Source Performance Standards Act. There are over 247 Air Quality Control Regions in the United States and also state and provincial laws to follow. Each individual case is different, here is some more information on the topic:
ReplyDeletehttp://www.epa.gov/lawsregs/
I think you touched upon several important topics when examining the supply & demand of the energy industry. You started off great with discussing the policies that are implemented and that have changed how the energy industry operates. These acts are vitally important to energy companies.
ReplyDeleteBesides political influences, the selection of other factors that can determine the supply & demand of energy companies were emerging technologies and anticipated crises.
Another point I want to highlight is your inclusion of the Kyoto protocol and other efforts from the government to regulate natural resources for energy. I'm sure you will all be including these in some way or another into your final paper, so it's good that you're becoming familiar with it now!
Finally, touching upon the comment above me, in addition to companies, certain countries may have different benchmarks in comparison to others that you may want to research into. But otherwise, job well done! This was a very good overview of what the energy industry needs to take into account when looking at the economics of their business!