What have two years of allowing exports meant for domestic oil markets?

Posted on 09-27-2017

By Max R. Harleman

IDecember 2015, Congress lifted forty-year-old restrictions on the export of crude oil. Some members of Congress supported the decision, arguing that it would boost domestic crude production and lower gasoline prices. Other members opposed lifting the restrictions, contending that it would reduce domestic supply, deepen dependence on foreign oil, and raise gasoline prices. The contradictory nature of the two arguments raises the question: What has been the impact of the first two years of allowing oil exports?

Politicians on both sides of the debate predicted that removing the restrictions would cause producers to sell domestic oil in higher-priced international markets. Both sides were correct. Since lifting the restrictions, the US has exported 644 thousand barrels per day on average, or about 7 percent of domestic supply. This is almost 40 percent more than it exported in 2015. 


Despite Data Use of Impact Fee Remains Unclear

Posted on 09-20-2017

By Nick McClure

Pennsylvania’s much-debated Impact Fee on unconventional gas wells has generated more than $1.2 billion since its enactment in 2012. As its name suggests, the Impact Fee was established by Act 13 to offset the costs of unconventional gas development, such as deteriorated roads and overburdened water sanitation systems. Although Act 13 specifies how Impact Fee revenue should be spent, ambiguities in the law prevent knowing if the spirit of the law is being upheld in practice. 


Because many of the costs of unconventional gas well drilling materialize at the local level, the Impact Fee is designed to bolster local government budgets that may otherwise struggle to cover the additional costs. Approximately 40% of Impact Fee revenues (after distributions to several state agencies) are distributed to municipal governments with unconventional wells in or near their jurisdictions. Of the $1.2 billion collected, approximately $350 million has been distributed to municipal governments. 


Pennsylvania’s Oil and Gas Lease Fund Still Not Reserved for Conservation

Posted on 08-07-2017

By Nick McClure

Pennsylvania policy makers have debated at length a potential severance tax on natural gas, but a more immediate gas-related question faces them: how to manage the revenue from leasing out state lands for natural gas development. In June, the state’s Supreme Court issued a landmark ruling on the state’s role in managing its natural resources. Despite appearances, the ruling did not settle how policy makers must manage the Oil and Gas Lease Fund. 


Established in 1955, the Oil and Gas Lease Fund is the repository for revenue from oil and gas development on state lands. Revenue is received through three streams: rents paid per acre, royalties based on the value of oil and gas extracted, and initial bonus payments paid per lease. Intended to “be used exclusively for conservation, recreation, dams, or flood control,” the fund was managed by the Department of Conservation and Natural Resources until 2009.


Whither Nuclear Power?

Posted on 07-13-2017

By Nick McClure

On May 30th, Exelon, the largest nuclear power plant operator in the U.S., announced it will close its Three Mile Island Generating Station by fall 2019, 15 years before the plant’s current federal operating license is set to expire. After generating a $300 million loss over the past eight years, Three Mile Island joins 14 other U.S. nuclear power plants slated for retirement, since 2013, due to unprofitability. With one quarter of all nuclear plants announcing retirement within a four-year period, the U.S. nuclear power industry is undergoing a seismic shift. 

Nuclear energy, a source of stable, carbon-free baseload power, currently accounts for 20 percent of U.S. electricity generation, but a recent study by MIT’s Center for Energy and Environmental Policy Research estimated that approximately two-thirds of all U.S. nuclear power plants will be unprofitable for the years 2017-2019. This is a troubling sign for an industry in which half of the existing plants operate in deregulated electricity markets. Adding to concerns is the fact that only one new plant has joined the fleet in the past two decades. Beyond the local economic impacts of lost jobs and tax revenue, the decline of nuclear power generation has implications ranging from the volatility of electricity prices to greenhouse gas emissions. 


Is Lake Erie Poised to Become a Hotspot for Wind Power Generation?

Posted on 07-03-2017

By Nancy Jones

Offshore wind turbines may not come to mind when considering electricity generation in the Midwest, but Ohio alone boasts over 300 miles of shoreline along Lake Erie. Innovative developers in the state look to the Great Lakes shoreline to take advantage of the lake’s wind resources. According to a 2014 report by Bloomberg news, this region has the potential to generate 1,000 megawatts of wind energy by 2020, enough to power approximately over 160,000 homes. However, certain barriers exist that may hinder the adoption and scaling of this model in the state’s coastline.  First, state lawmakers are keen to support conventional forms of energy as well as scale back existing renewable energy portfolio standards that support the development of wind energy. Next, the current price for offshore wind energy is not cost competitive with conventional forms of energy, or even other renewables. Lastly, renewable energy standards in the region that in theory should bolster development like this are, in fact, designed to favor cheaper renewables (i.e. solar) over offshore wind and, in some cases, discriminate against renewable electricity produced in other states. 

About the Blog

The GSPIA Energy and Environment blog provides commentary and analysis that furthers understanding of E&E issues of public interest. Its primary contributors are GSPIA faculty and students.

Interested in the writing the for the E&E Blog? See the Format & Style Guide for additional information, click here.


Nick McClure, Managing Editor
Nick is an MPA student at GSPIA. His research and professional interests center on state and local public finance issues related to energy, infrastructure, and the environment. 

Questions about the blog should be directed to Nick at ngmcclure@pitt.edu

Max Harleman, Co-Managing Editor
Max is a PhD student at GSPIA. His research focuses on the governance of energy projects and their associated economic and environmental impacts on communities near development.

Jeremy Weber, Faculty Editor
Jeremy is an associate professor at GSPIA. His research cuts across energy, agriculture, the environment, and well-being. He teaches classes in quantitative methods and energy and environmental policy.

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