Oil & Energy

How Oil Industry Fared Under Last Nine US Presidents

Published

3 years ago

November 1, 2020

With the 2020 Presidential Election looming, and with many claims and counterclaims about a president’s impact on the oil industry, I thought it might be of interest to review the history of U.S. oil production and consumption over the past 50 years. Here are the highlights from each president’s term in office.
Richard Nixon was inaugurated as the 37th president on January 20, 1969. When President Nixon took office, U.S. oil production was nearing a peak after over 100 years of increasing production. Imports made up 10% of U.S. consumption. In 1970, U.S. oil production reached 9.6 million barrels per day (BPD) and began a long, steady decline.
Richard Nixon began his second term on January 20, 1973. U.S. oil production had declined to 9.2 million BPD while consumption had increased by 3 million BPD from the first year of Nixon’s first term. As a result, oil imports would more than double during Nixon’s presidency, and American citizens would learn the danger of the dependence on imports with the OPEC oil embargo of 1973.
Gerald Ford was inaugurated as the 38th president on August 9, 1974 after Nixon resigned in disgrace. During President Ford’s term in office, domestic oil production continued to decline. U.S. oil consumption and imports continued to grow, and both were at all-time highs during Ford’s last year in office.
Jimmy Carter was inaugurated as the 39th president on January 20, 1977. Recent trends in consumption, production, and imports all reversed themselves during President Carter’s term. Consumption fell by 2%, U.S. production increased by 6%, and imports, after initially rising to record highs during his first year in office, were a fraction of a percentage lower at the end of his term than during Ford’s last year in office. Factors beyond Carter’s control, such as the Iranian Revolution and the Iran–Iraq War, heavily influenced the oil markets.
Ronald Reagan was inaugurated as the 40th president on January 20, 1981. Oil consumption continued to decline during most of President Reagan’s first term, and oil production crept back to levels that had not been seen in a decade. Oil imports fell by 35% during his first term.
Ronald Reagan began his second term on January 21, 1985. The trends from his first term all reversed themselves, as consumption rose 10%, domestic production fell by 8%, and oil imports increased by 49%.
George H. W. Bush was inaugurated as the 41st president on January 20, 1989. Consumption fell slightly during his term, but domestic production fell even more, down 12%. Imports increased by 19%, back above 6 million BPD for the first time since the 1970s.
Bill Clinton was inaugurated as the 42nd president on January 20, 1993. During his first term, consumption increased by another 7%, domestic production fell by 10%, and imports increased by another 23%, exceeding 7 million bpd for the first time in U.S. history.
Bill Clinton began his second term on January 20, 1997. His second term trends were almost identical to those of his first term. Consumption rose by another 8%, domestic production fell by another 10%, and imports increased by an additional 21%. Consumption and oil imports were at all-time highs, and production had fallen 40% from the 1970 production peak.
George W. Bush was inaugurated as the 43rd president on January 20, 2001. During his first term, consumption climbed above 20 million BPD for the first time in the nation’s history. Imports also reached new highs, above 10 million BPD. Domestic production continued to fall.
George W. Bush began his second term on January 20, 2005. During Bush’s second term, consumption began to decline as the nation entered a recession and oil prices reached record highs. Imports fell back to below 10 million BPD. The decline in domestic production continued, albeit at a slower rate of decline than during his first term. This marked the first trickle of oil production from hydraulic fracturing, which would make a major impact during the terms of the next two presidents. During Bush’s last year in office, the level of imports reached just over 50% of U.S. consumption.
Barack Obama was inaugurated as the 44th president on January 20, 2009. The economic sluggishness initially continued, but the impact of hydraulic fracturing began to be felt in President Obama’s first year in office. In a reversal of the long decline that began in 1970, crude oil production would rise all four years of Obama’s first term.
President Obama began his second term on January 21, 2013. The fracking boom caused oil production to accelerate until 2015. But then overproduction led OPEC to initiate a price war that ultimately crashed prices and production. Production began to decline in 2015, but 2016, the last year of Obama’s second term, was the first year of his presidency that annual oil production declined.
Between 2009 and 2015 oil production had increased by 4.4 million BPD. This was the fastest increase in oil production in U.S. history, and marked the largest increase in oil production during a single term of any president. If natural gas liquids (NGLs) are included, the gains during Obama’s first seven years were 6 million BPD. U.S. net imports of finished products like gasoline turned into net exports during Obama’s second term, and next imports of finished products plus crude oil fell by over 6 million BPD.
Donald Trump was inaugurated as the 45th president on January 20, 2017. Oil production had declined during President Obama’s last year in office as the average annual price of West Texas Intermediate (WTI) fell to $43.34/bbl. But in 2017 that rose to $50.79/bbl, and then to $65.20/bbl in 2018. Oil production followed prices higher. During the first three years of President Trump’s first term, annual U.S. oil production gained 3.4 million BPD. Net imports of crude oil and finished products turned into net exports in late 2019. U.S. oil production eclipsed the previous 1970 peak (although if you include NGLs, that peak was eclipsed in 2013).
But then the Covid-19 pandemic crushed oil demand. Now, less than a month before the election, U.S. oil production is at 10.5 million BPD, a significant decline from the 12.2 million BPD of 2019.
The net impact of the past 50 years of U.S. Presidents was a long, slow decline of oil production that was only reversed when the hydraulic fracturing revolution began.
U.S. oil production didn’t fall under Bush and rise under Obama based on the policies of these presidents. Production behaved according to policies that had been put in place years earlier, and in accordance with the behavior of oil prices in previous years. Jimmy Carter experienced a rise in oil production because the Alaska Pipeline, approved by Nixon, was completed while Carter was in office. Obama and Trump experienced a rise in oil production following years of climbing oil prices, which led to a fracking boom.
Presidents publicly fretted for decades about the loss of energy independence for the U.S. They tried many different approaches to solving this problem, from serious intervention in the energy markets to letting the free market solve the problem. Many billions of dollars were spent on programs with the intent of eliminating dependence on foreign oil.
Yet in 1969, Americans depended on oil imports for 10% of their consumption, and in 2008 that number had risen to over 50% of consumption. That trend was only reversed when fracking caused U.S. oil production to surge.
Thus, a president may have some impact on U.S. oil production, but it is mostly a factor of influences well beyond their control.
Culled from Oil Price International, London.

Oil & Energy

NSCDC’s Anti-Vandal Squad Uncovers Artisanal Refinery In Rivers Community

Published

1 week ago

April 15, 2024

The Tide

The Anti-Vandal Squad of the Nigeria Security and Civil Defence Corps (NSCDC), Rivers State Command, has uncovered yet another local refinery situated at Adobi-Akwa settlement in Etche Local Government Area of Rivers State.
The State Commandant, Basil Igwebueze, disclosed this while speaking to journalists shortly after the tour of the Illegal site.
Represented by the Head, Anti-Vandal Squad, CSC Peters Ibiso, Igwebueze said the squad made the discovery following a tipp off, expressing regret that no arrest was made as the boys fled the site upon sighting the squad.
The cammandant’s representative took the newsmen across a tick forest of about 6-7 kilometers from the main town.
The team sighted where the pipeline vandals tapped into the Well Head of yet to be ascertained multinational company, connected their galvanised pipes to several cooking pots, heat up the crude to produce Automotive Gas Oil (AGO).
In his words, “Upon receiving a tip-off, the Anti-Vandal operatives swung into action to uncover this illegal oil bunkering site. They were in this forest for two days having cordoned the area, unfortunately, the perpetrators upon sighting our men took to their heels, but investigation is still ongoing to effect the arrests of such defiant elements”.
The Anti-Vandal Unit Head further narrated the operation techniques of the operators of local illegal refineries from the point of extraction of crude through vandalism of oil pipelines to cooking in various ovens where the content is subjected to high temperature and transmitted through pipes to reservoirs for storage and onward trans- loading to buyers.
While insisting that the command would not relent in the fight against illegal dealings in petroleum products, he urged the public to have more trust in the NSCDC by providing actionable intelligence that would enhance possible arrest of economic saboteurs in the State.
“Our commitment to continuously work in tandem with the prosecutorial mandate of the corps in order to rid the State of economic saboteurs remains unchanged. We value our informants and most especially the intelligence driven tip-off received from time to time.
“It is also our duty to ensure that our source of information are not disclosed so as to protect our informants. It is therefore our delight that the public will continue to have confidence and trust in us as we together protect the nation’s critical national assets and infrastructure from dare devil vandals”, he stated.

By: Lady Godknows Ogbulu

Oil & Energy

Oil Fund Withdrawals Suggest Extended Price Rally

Published

1 week ago

April 15, 2024

The Tide

The world’s largest crude oil exchange-traded fund has bled over $2 billion in less than a year. And it i
s not due to investors finding greener pastures elsewhere with other ETFs; it is the siren call of soaring prices that is prompting this mass exodus.
The WisdomTree Brent Crude Oil exchange-traded commodity had assets under management of some $2.5 billion last summer, according to Bloomberg. Now, the publication reports, this is down to $396 million, with withdrawals accelerating over the past few days.
In that, withdrawals seem to be following price trends. Brent earlier this month topped $90 per barrel and, after a short pause earlier this week, is back above that threshold again following the latest Israeli strike on the Gaza Strip amid reports about a possible ceasefire.
While it is true that prices are currently driven higher mainly by geopolitical events, fundamentals are also at play. A growing number of forecasters are updating their predictions for benchmarks this year on expectations of resilient demand and increasingly tighter supply. And investors are following the trend.
Even those who have not sold their ETF holdings in order to invest more directly in the rally are benefitting. That same WisdomTree Brent Crude Oil ETC generated returns of over 13 percent during the first quarter of the year as opposed to an average 8.8% gain in the S&P 500.
The WisdomTree exchange-traded commodity became the world’s largest oil fund at the beginning of last year. The fund saw inflows of over $1 billion, which poured in as the deflation in oil prices that had begun in late 2022 extended into the new year. Now, the trend has reversed and it has reversed strongly.
The WisdomTree Brent Crude Oil ETC is not the only fund seeing outflows. The U.S. Oil Fund, which used to be the world’s biggest oil fund before the WisdomTree inflows last year and is now the world’s biggest oil fund once again, also saw a flurry of investor exits as benchmarks climbed higher.
According to Bloomberg, the fund’s assets under management currently stand at $1.3 billion, down from some $5 billion during the pandemic.
In further evidence that oil makes money, the Middle East is about to become the only region in the world with three trillion-dollar sovereign wealth funds. The Abu Dhabi Investment Authority is worth $993 billion, Bloomberg reported in March, while the Saudi Public Investment Fund and the Kuwait Investment Authority are breathing down its neck.
Meanwhile, investment in transition-related stocks is on the decline, according to data reported by Reuters. The S&P Global Clean Energy Index is down by 10% since the start of the year. In comparison, the S&P 500 Energy Index, which comprises Big Oil names, has gained 16.3%.
The data shows that investors are growing wary of all the promises made by transition advocates as evidence mounts that these were not based on due diligence. Wind and solar stocks suffered a crash last year when this first became clear.
Now, we are witnessing a continued awakening among investors to the challenges and the realistic potential of transition technology and alternative energy sources.
“With conventional energy having its own bull run, I think the alternative funds will struggle for the foreseeable future, and we shall see what the election brings”, the Managing Director of capital markets at Phoenix Capital Group Holdings told Reuters.
The comment summarizes the challenging situation for alternative energy investment and highlights the rebound of interest in oil and gas, much to the chagrin of decision-makers on both sides of the Atlantic.
In both Europe and the U.S., things can get even worse for the transition after the respective elections—in June for European Parliament and in November for U.S. President. It will certainly be an interesting year in energy.
Slav writes for oilprice.

By: Irina Slav

Oil & Energy

CNG Initiative: FG Targets 25,000 Jobs, $2.5bn Investment

Published

1 week ago

April 15, 2024

The Tide

The Programme Director and Chief Executive, Presidential Compressed Natural Gas Initiatives, Michael Oluwagbemi, has announced the Federal Government’s plan to target over 25,000 jobs and $2.5 billion worth of investment by 2027.
Oluwagbemi made this known during the Presidential CNG stakeholders’ engagement workshop held at BOVAS Auto-Gas Filling Stations, Ajibode Bus-Stop, in Ibadan, Oyo State capital, at the weekend.
He stated that the initiative, which was part of palliative measures to ease the burden of the removal of fuel subsidy, would attract enormous investment and job creation as well as impact positively on the lives of Nigerians.
Meanwhile, he called on Nigerians to embrace the new initiatives by the Federal Government as part of palliatives to cushion the effect of the removal of fuel subsidy in the country.
“On October 1, 2023, when the President gave his speech, he announced that the Presidential CNG initiatives are going to be rolled out as part of palliatives on the removal of fuel subsidy.
“One of our major concerns is to make sure that the transition for the transportation sector is a cheaper, safer, and more reliable source of energy.
“In the coming weeks, we are going to be announcing the conversion incentives programme which will enable Nigerians currently using PMS and Diesel fuel vehicles to be able to convert their vehicles at designated places across the country at a discounted price based on certain pre-qualification under the palliative programme of the Federal Government”, he said.
On the value chain of the initiative, Oluwagbemi explained that the Federal Ministry of Finance is acquiring tricycles and buses that would be assembled and manufactured in Nigeria, with more than five automobile firms being activated.
“The value chain of the programme starts with every one of us. From the point of converting your vehicle, you have created the demand for natural gas.
“If your vehicle is converted by technicians and refuelled by autogas workshops across the country, then you are creating jobs for civil engineers and technicians. You’re creating jobs for the upstream in terms of upstream activities associated with oil and gas.
“And in line with the programme, the Federal Ministry of Finance is acquiring a number of tricycles and buses that will be assembled and manufactured in Nigeria. More than five of our automobile firms have been activated. So, you can see that in terms of job creation, the opportunities for Nigerians are enormous.
“The President has said we need to convert one million vehicles by 2027. We need 1,000 conversion shops and we need over 3,000 filing stations just like this. You can imagine the level of investment required for this.
“In order to sustain one million vehicle conversions by 2027, we need 25,000 technicians. So, the job creation potential is an opportunity for job creation in addition to our gross domestic product, $2.5 billion worth of investment to be mobilised in the next four years and of course more than $25 billion added to our GDP”, he said.
Oluwagbemi further called on Nigerians to embrace the new initiatives by the Federal Government as part of palliatives to cushion the effect of the removal of fuel subsidy in the country.
The representative of BOVAS Filling Station, a private investor in the Presidential CNG Initiatives, Temitope Samson, said, “We have worked with the regulators, we are also working with the Presidential Initiatives on CNG to make sure that standard safety is adhered to. We have also worked with the Standard Organisation of Nigeria to ensure that we have a standard accepted internationally.
“Our role is to ensure that there is availability of CNG across the nation, and to also ensure we have enough kits and tanks that are converted for people to use as many as possible, and to ensure safety and to train others so that anywhere they get to, they have very safe conversion”.
Recall that last year, President Bola Tinubu approved the Presidential Compressed Natural Gas initiative(PCNG-i)
This initiative aims to not only introduce more than 11,500 new CNG-enabled vehicles and provide 55,000 CNG conversion kits for existing vehicles that depend on Premium Motor Spirit but also promote local manufacturing, assembly, and job creation.