Posted on October 22, 2013 by Paul Trau

The U.S. Census Bureau announced in August in its U.S. International Trade in Goods and Services Report for June 2013 that the petroleum deficit had fallen to its lowest level ($17.4 billion) since August 2009 ($17.9 billion).1 This decline was the result not only of declining imports but also of an increase in exports. The petroleum trade deficit was reported to be down $34 billion dollars, year over year, through June. The use of new technology and techniques to extract natural gas and other petroleum products has allowed the U.S. to go from being a net importer of refined petroleum to being a net exporter. What impact will this new technology have on U.S. economic growth in the years to come?

According to an August 18, 2013, Financial Times article, “the value of petroleum and coal exports more than doubled from $51.5 billion in the year to June 2010 to $110.2 billion in the year to June 2013.” To look deeper into the role the U.S. will play in the future in the global energy markets, we constructed a combined energy trade category using U.S. Census Bureau’s trade data by North American Industry Classification System (NAICS), among other sources.2 Chart 1 shows just how much the balance in energy related trade has changed since 2002 by quarter.

Based on this total energy trade category, the United States imported about 10 times more petroleum related products than it exported in 2002, as indicated by the bars in the chart. This ratio of imports to exports grew to as high as 14 in the fourth quarter of 2005. The lines in the chart show that this happened while exports and imports grew by relatively the same ratio compared with 2002. However by 2006:Q4, this relationship started to change. Even with the sharp decline in both imports and exports during the recession in 2008, the ratio of imports to exports continued to decline. The latest data for 2013:Q2 indicate that the U.S. is exporting about 12 times more energy related products than it did in 2002, bringing the import to export ratio down to 2.8. This represents a 360% reduction in the trade deficit for these combined categories, with almost all of that achieved in the past six years.

According to the U.S. Energy Information Administration (EIA), the U.S. is one of the world’s leading producers of crude oil and petroleum products. Table 1 below shows the total value of exports and imports by NAICS classification and their share by category for calendar years 2002 and 2012.

Although the deficit did grow from 2002 to 2012, in 2002 crude petroleum and natural gas accounted for almost 85% of the total trade deficit, while petroleum refinery products accounted for about 70% of exports. Also in 2002, coal was the only product of the four NAICS classifications that made a positive contribution to the trade balance.3 By 2012, crude petroleum accounted for almost the entire energy-related trade deficit, while the contribution to the deficit from liquid natural gas had fallen to just 0.3%. In addition, petroleum refinery products’ positive contribution to the trade balance jumped past coal’s to reach 81% of the total energy-related export products.

So far in 2013 the picture has improved even more. The following charts show just how much faster the exports of each of these energy-related products have grown relative to imports to the degree that three of the four categories shown here had a positive contribution to the trade balance in Q2 2013 evidenced by the exports to imports ratio of less than one. In fact, in Q2 2013 the U.S. exported three times more liquefied natural gas than it imported. In addition, the exports of petroleum refinery products have grown by an astonishing 1,380% since 2002.

Coal exports, which had grown 1,000% by 2011, around 700%have slowed more recently, likely reflecting slowing economic growth in China and falling prices in Asian markets.4 As the chart 6 suggests, U.S. energy exports and the pace of emerging market growth have gone hand in hand in the past.

Given the somewhat slower global growth expectations for this year and next, it is reasonable to assume that U.S. energy exports are being somewhat limited, by the global slowdown of emerging economies, in particular, implying that the U.S. trade deficit reduction might otherwise have been even greater this year.

For January through June 2013, the petroleum trade deficit was reported to be down $34 billion dollars, year over year. If we include coal and refined petroleum products, the trade deficit decline was somewhat smaller at $31 billion, when adjusted for inflation, mostly due to a slowing global demand for coal. However, this trend is expected to reverse itself in the near future, according to the EIA International Energy Outlook for 2013. The EIA forecasts that global demand for all types of energy will continue to grow at an annual rate of 1.5% for the next 30 years; and that, by 2015, the world’s demand for energy will increase by 9.1% compared with 2010 and an additional 10.1% by the year 2020.5 Also, by 2015, global demand for natural gas and coal is expected to increase by 9.3% over 2010 levels and an additional 9.5% by 2020. All of this is good news for the U.S. trade balance, because most of the growth in demand is expected to come from other countries. Based on EIA’s 2013 projections, non-OEDC countries will account for 86% of the total increase in energy consumption between 2015 and 2040.

Through the first two quarters of 2013, the U.S. economy is thought to have grown by just $227.2 billion compared with the first half of last year, while energy trade accounted for a $31 billion reduction in the trade deficit for the same period. This means that through the first half of 2013, while the total U.S. economy is estimated to have grown by just 1.5%, the increase in energy exports accounted for 13.6% of total growth in this period by significantly reducing the trade deficit.

Since 2008, the global demand for energy has continued to increase; it is presently expected to grow by 1.2% in 2013 compared with just 0.7% in 2012. This projected increase in global demand for energy should contribute further to economic growth in the U.S. through additional reductions in the trade deficit.

Footnotes:
1. The petroleum products aggregated in the end-use commodity classification system include virtually the same energy related products as those aggregated in the Standard International Trade Classification (SITC). The end-use petroleum products, however, include some products such as ethane, butane, benzene, and toluene which are included in “Manufactured Goods” in the SITC.
2. The “Total Energy Trade” category contains the following NAICS series: Crude Petroleum and Natural Gas (211111), Liquid Natural Gas (211112), Coal (excluding Anthracite) and Petroleum Gases (212112), and Petroleum Refinery Products (324110).
3. Coal (excluding Anthracite) and petroleum gases will be referred to as coal throughout the remainder of the article.
4. Chen, Sarah. “China Coal Prices Fall to a Four-Year Low Amid Economic Slowdown” Bloomberg.com, Bloomberg News, 29 July 2013. Web. 28 Aug. 2013.
5. EIA Energy classifications are defined as liquids, natural gas, coal, nuclear and other.

U.S. Auto Industry Continues to Improve in Line with the Automotive Outlook Symposium Consensus Forecast

Posted on June 13, 2013 by Paul Traub

The Federal Reserve Bank of Chicago held its 20th annual Automotive Outlook Symposium (AOS) on May 30–31, 2013, at its Detroit Branch. Just a few days following the conference, light vehicle sales (i.e., car and light truck sales) for May were reported to be 15.2 million units at a seasonally adjusted annual rate. This selling rate was 9.6% higher than May 2012’s selling rate and was consistent with the AOS consensus forecast for 2013. As in past years, certain AOS participants were asked to submit their forecasts of gross domestic product (GDP) and related items, including, of course, light vehicles sales, ahead of the gathering. William Strauss, senior economist and economic advisor for the Federal Reserve Bank of Chicago, hosted the event and presented the consensus outlook. Table 1 shows the median forecast for some of the items.

Could natural gas fuel commercial flights of the future?

http://www.midwestenergynews.com/2013/08/26/could-natural-gas-fuel-commercial-flights-of-the-future/

Posted on 08/26/2013 by EnergyWire

An artist’s rendering of Boeing’s “SUGAR Freeze” LNG-fueled aircraft concept. (Image via Boeing)

©2013 E&E Publishing, LLC
Republished with permission
By Blake Sobczak
Ever since he was 6 years old, Jon Gibbs has been fascinated with aircraft.
But while toy planes seemed pretty cool to him as a kid, Gibbs now thinks he’s onto something more significant, and literally cooler: cryogenic aircraft fueled by liquefied natural gas.
Unlike conventional, oil-based jet fuel, super-cooled LNG is condensed from simple methane gas and sells for a fraction of the price.
Gibbs thinks the cleaner-burning fuel could be the biggest innovation to hit aviation since the development of the jet engine more than a half-century ago. And the aircraft designer, former Boeing employee and recent Massachusetts Institute of Technology graduate hopes he can lead an industry shift toward LNG through his new company.

Gibbs’ inspiration came from a chemistry course in 2009, on the cusp of the U.S. shale drilling renaissance that sent nationwide gas prices plummeting. He teamed up with a few other MIT students to study alternative aviation fuels, and initially assumed hydrogen would be most promising.
LNG proved him wrong, he said.
“The results were so good for LNG; that’s when I sort of went crazy,” he recalled. “It would open up a market that would save at least $100 billion in fuel over the next 50 years.”

How soon?

Gibbs thinks LNG could fuel 5 percent of new planes by 2035 — much faster than Boeing’s forecasts.
The researcher-turned-entrepreneur spun off his tiny company, Savion Aerospace, while applying for the MIT Clean Energy Prize in 2011 with a few other colleagues. (The name Savion tacks an “S” for “super” onto “avion,” the French word for plane.)
Gibbs readily admits his company isn’t exactly poised to go public.
“We were probably worth about $10 when we incorporated in 2011,” he joked.
For now, Savion is still caught in what Gibbs calls “grant land”: trying to find enough funding to prove the concept works.
Aircraft manufacturers face enormous pressure to get it right the first time when rolling out any new model, from both a safety and financial perspective. Battery troubles temporarily grounded Boeing’s entire fleet of new 787 Dreamliner planes earlier this year (Greenwire, Feb. 22). The investment risk of switching en masse to an all-new fuel like LNG would be enormous without enough real-world test flights backing up the technology.
Gibbs said he has identified a “niche market” customer interested in his plan, which involves designing a specialized airframe for LNG aircraft. He intends to use an existing engine design to cut down on research and development costs and regulatory delays.
And while his company may not be large, its core idea has gained traction across the globe.
“Based on my industry contacts, there is some serious interest among experts working for the major aircraft manufacturers,” said Graham Dorrington, an English aeronautical engineer who lectures at RMIT University in Melbourne, Australia. “But it may take some time for that interest to gain deeper and wider industry acceptance.”
Dorrington supervised a team of RMIT students who earned second place for their LNG concept in Airbus’ “Fly Your Ideas” international design competition in June. He said he sees vast potential for the odorless, colorless liquid to replace kerosene as a jet fuel.
“If LNG is not considered alongside alternative drop-in solutions as a future aviation fuel in the near future, then the whole aviation industry must have become complacent or entrenched,” Dorrington said in a recent email exchange.
Concerns about industry foot-dragging drove Gibbs to start Savion and try to break free from what he sees as an endless cycle of research without action.
“When I left Boeing [in 2008], people were concerned about the price of jet fuel,” Gibbs said, noting that designers and manufacturers must “fight this war” between the cost of fuel and the cost for traveling.
“Building a new plane and new infrastructure is difficult conceptually — it’s hard to think about,” Gibbs said. “But it’s actually cheaper than the alternative” of staying with kerosene.

Chilling effect

Passengers often complain that planes’ cabins are kept too cold.
But they would really need to pile on the fleece airline blankets if they sat too close to LNG storage tanks, which must keep their super-cooled cargo at about minus 260 degrees Fahrenheit.
Of course, no one is suggesting trying to squeeze an LNG tanker into an empty seat with extra legroom.
But experts think LNG tanks could fit in unused space in the fuselage, the main, typically cylindrical body section of an aircraft.
Ron Kawai, an aerospace engineer with Boeing Research & Technology in Huntington Beach, Calif., said he sees potential for a “blended wing body” design, which can store large volumes of LNG in the transition area between the center body of a plane and its wings.
In some ways, Kawai’s concept mirrors dual-fuel natural gas/gasoline vehicles that have cropped up in the automotive sector as a way to transition toward natural gas (EnergyWire, Aug. 9).
LNG has already enjoyed limited success in long-haul trucking, where the dense fuel can replace costlier diesel (EnergyWire, June 28).
Planes have the added challenge of getting off the ground safely and efficiently. But LNG’s subfreezing properties could actually be an advantage if paired with another future technology, Kawai said in an interview this week.
Boeing has also researched the possibility of so-called superconductors, a nascent technology that would reduce electricity losses in an airplane’s internal circuitry. The efficiency improvements could make electric and hybrid-electric planes competitive with their conventionally fueled counterparts.
But such superconducting systems would need to be kept at extremely low temperatures — about minus 280 F — to work efficiently.
“If you already have LNG, then the cryogenic temperature is low enough for high-temperature superconducting materials. … There could be some synergistic [effect],” Kawai said.

Soviet roots

Storing complex, cryogenic fuel chambers on an airplane may sound like science fiction. But LNG was already used as a jet fuel in the Soviet Union three decades ago.
Russian aerospace and defense giant Tupolev tested LNG-fueled aircraft as an offshoot of hydrogen-powered aviation experiments that began in the 1970s.
The program fizzled out for a number of reasons, not the least of which was the collapse of the Soviet Union in 1991.
Now LNG has enjoyed a revival of sorts, buoyed by booming U.S. gas production that is forecast to continue for several decades (EnergyWire, July 26). The idea has drawn interest from giants such as Boeing, Lockheed Martin and NASA.
Boeing’s Subsonic Ultra Green Aircraft Research (SUGAR) team modeled a futuristic “SUGAR Freeze” LNG-fueled aircraft under NASA’s N+4 Advanced Concept Development program last year.
The team’s May 2012 report listed some of the pros and cons of using LNG as a future fuel for the 2040-2050 time range, comparing it to other technologies such as hydrogen and hybrid battery-gas turbines. The report cautioned that it would be “premature” to conclude that any of the concepts will make their way into Boeing’s commercial lineup, but Marty Bradley, Boeing Research & Technology’s principal investigator for the SUGAR team, said LNG stood out as a promising option.
LNG “seems like it’s definitely feasible,” Bradley said in an interview Monday. “Its efficiency is greater [than conventional fuel], you’re able to clean up the greenhouse gas emissions, and you get a cleaner-burning fuel, as well,” with less sulfur and particulate content.
The major hurdles, Bradley said, relate to infrastructure and regulations. How could airports, already pressed for space, accommodate LNG storage tanks or on-site liquefaction facilities and pipelines?
Bradley said he is confident that such practical problems can be solved, especially if natural gas weaves its way into the market through the U.S. military or other specialized customers.
U.S. airplane manufacturer Aviat Aircraft Inc. even unveiled an a small, piston-powered plane capable of running on a combination of aviation gasoline and natural gas late last month.
That model runs on LNG’s less-dense cousin, compressed natural gas. CNG requires heavy, high-pressure storage tanks that make it infeasible for commercial jetliners.
“In general aviation, they can do a lot of neat things with these alternatives much more easily than we can,” Bradley said.
Although Aviat’s alt-fuel prototype uses a separate technology than LNG, “it gets people used to using natural gas in aviation, so there’s some value in it,” he said.

Fire, water and other hurdles

Gibbs acknowledged that there are still some technical and safety hurdles for LNG to overcome.
For one, any new aircraft design would have to undergo about five to seven years of testing from the Federal Aviation Administration and other agencies.
LNG is also imbued with some unusual properties.
The liquid reacts violently with water, for instance, so it could be more dangerous than conventional jet fuel in the event of a waterborne crash.
On the other hand, LNG evaporates quickly when exposed to ambient temperatures. If a fuel tank were punctured in a land crash, LNG wouldn’t pool dangerously on the ground like kerosene. It could still ignite, although it has a higher ignition temperature than jet fuel.
“[Safety] is definitely one of the key challenges to using one of these fuels in aviation,” said Bradley of Boeing, noting that “we can’t just do it and put it on a commercial jetliner.”
However, “we think we have the technology to make [LNG] have equal safety on par with jet fuel, which is quite hazardous in itself,” Bradley added.
As he awaits word on funding, Gibbs can find comfort in the fact that the barriers to LNG come more from curable safety concerns than from technological flaws. In the meantime, he thinks the economic advantages — up to 50 percent fuel savings after factoring in infrastructure costs, he estimates — will speak for themselves.
“Natural gas in this country has its own pricing that’s immune from OPEC — and it’s clean,” he said. “I think we’re in a good position.”

the Art of 12

Thursday, October 24, 2013

Detroit Filing For Bankruptcy? Is The CENTRAL BANK [Fed] Gearing Up For Privatizing ALL USA?!

$18bn question: Is Detroit eligible for bankruptcy?

Federal Reserve Bank of Chicago

Detroit Branch http://michiganeconomy.chicagofedblogs.org/

The Energy Industry’s Positive Contribution to the U.S. Economy