Oil: Gasoline Gets Expensive Again

The financial collapse of September 2008 took the wind out of oil’s bullish run from $10 per barrel in the late 1990s to over $140 in mid-2008. But as the US economy regains its footing (even the housing sector by late 2011), gasoline is shooting back up toward $4 per gallon. Prices recently climbed back above $3 per gallon – meaning that Americans are again sending over $1 billion per day for overseas imports to serve our oil addiction.  It’s time for our country to embrace the bicycle and more walking – but I’ll leave more on that for another post. I see gasoline increasing toward $3.25+ on $100 oil due to an inability of non-OPEC producers to increase supply that matches higher demand, particularly from China. And most OPEC nations seem reluctant to increase output levels while prices rise.

Coal: Historic Highs on Their Way

China and India are becoming huge net importers of coal and this development will tighten the global coal market significantly. South African, Indonesian, and Australian exports will be maxed out, sending importers on the lookout for coal from the US and elsewhere. Supply increases take time so the tight global market will likely push spot market coal prices above $150/ton, potentially challenging mid-2008 levels above $175/ton.

Natural Gas: Rising from the Bottom

Natural gas prices in the US have remained relatively low even during the recent 18-month run-up in oil prices, a departure from the usual price link between oil and natural gas. This divergence in price is due to recent growth in natural gas supply based on new drilling techniques that use potent chemical mixes to extract shale gas formerly too difficult to retrieve. Unless the extraction techniques are slowed on water pollution concerns, this drilling is poised to keep a lid on natural gas prices and thus help natural gas keep market share it took from coal in 2009. I see natural gas rising from the bottom ~$4 per MMBtu lately but staying mostly restrained below $7 (still significantly below the summer 2008 high ~$10).

Solar: The Boom Continues

2010 is turning into another record year for solar. Globally, solar installations grew more than 100% to ~16 GW. This occurred in a year many analysts were fretting for solar due to accelerated cuts in German subsidies. But Germany still grew tremendously thanks to lower solar costs and the country remains almost half of the global market. German officials are considering more accelerated subsidy cuts in 2011 to slow their overheated market greater than 7 GW this year, causing some analysts to worry again. But I see next year playing out in a similar way to 2010, with another record year ahead as the global solar market passes 20 GW.

I expect German subsidy reductions will help solar consumers everywhere enjoy 10-15% price reductions for solar PV panels, bringing them below $1.50 per Watt. The strong recent profits of many solar producers such as First Solar, Trina, Suntech, Yingli Green Energy, JA Solar, and Jinko show that most producers can handle a price drop of this magnitude. Such a low price for modules and panels would send solar electricity prices below 30 cents per kWh for residential, below 20 cents per kWh for commercial, and ~15 cents per kWh for industrial. This is a price that can now compete without subsidies in islands and remote applications that don’t yet have access to a grid (a market that includes over a billion people). And sufficient subsidies in growing solar markets such as the US, China, India and Italy are poised to take up the slack from German demand stagnation until larger grid parity is achieved in 2012-15.

Wind

After record growth in 2009, 2010 has been a tough year for the wind industry. Low natural gas prices and the lack of new projects signed during the Great Recession has dramatically slowed wind power installation in the US and most of the world. Though China wind growth continues unabated due to its white-hot electricity demand growth and may have just passed the US as the global leader of wind power capacity. But the stagnant overall market this past year means that wind turbine prices are lower and getting more competitive with fossil fuel-fired electricity. Look for wind turbine prices below $1.45 per Watt and total cost including installation below $2 per Watt onshore. The offshore market has higher installation costs that are offset by more consistent winds and close proximity to demand centers (cities). Offshore wind can begin to take growing market share in 2011.

Efficient Renewables Closing the Gap with Fossil Fuels

As described above, I see solar and wind power prices further converging with fossil fuel prices in 2011. Therefore renewable subsidies can be lowered in cash-strapped countries without risking market collapse. Increasingly efficient lighting (such as CFLs and LEDs) and other appliances will open up solar and wind resources to the masses, especially when complemented by efficient active transport by bicycle along growing greenways and bike lanes. The key potential game changer for oil and other commodity prices would be a significant weakening or strengthening of the dollar, either stoking higher prices in the US or taming the increase, respectively.

The energy system is in for big change during 2011. Investment in efficiency and renewables will pay off for early adopters as cleantech moves from niche market to more mainstream source.

Onwards in the Sustainable Energy Transition-

Dennis Markatos-Soriano

Wind Tech Advances Quicker Than Fossil Energy Tech

Many fossil energy advocates who ignore the harmful global warming effects of burning oil and natural gas pretend like technological change will allow us to increase our use of these fuels forever. But the reality is that US oil reserves and production have fallen more than 15% and 20%, respectively, since the early 1990s. And at some point within the next decade or so a similar trend will likely constrain the natural gas market even though EIA estimates of its reserves have climbed ~50% since 1993. Over the same time period, the estimate of wind power potential has climbed more than 3.5 times what the Pacific Northwest Laboratory estimated in 1993. This shows that wind technology during the period has advanced much quicker than exploration and production technology for oil and natural gas. A major improvement comes from taller wind turbines today, since wind is stronger at 80 meters than at 50 meters above the ground.

The Biggest Changes

The main sources of growth for US wind power potential came in the Great Plains, which was already known to be the heart of our resource. Texas, long the largest wind power producing state, is now estimated to be the top state for wind potential after passing the Dakotas and Kansas. In fact, it is estimated that Texas can produce from wind 15X the amount of power it consumes from all electric sources today. Another twenty states can also produce so much wind power that they could become major exporters of this electricity to other states around the country. The estimate excluded wind potential in parks, urban areas and over water — so this is a major underestimate once you consider the offshore wind potential we have off the Atlantic and Pacific coasts. Even so, the 37,000 TWh per year (~365 quadrillion Btus) listed in their onshore wind power estimate is more energy than that contained in our oil and natural gas reserves combined.

Solar Energy Potential Even Larger

The estimate of solar energy potential is more than 100X that of wind power, at over 2,000 TW. So, the issue for renewable energy isn’t any lack of supply. The challenge is for us is to continue cost reductions for wind and solar to make them cheaper than their fossil energy competitors. The year 2010 could be a breakthrough period in that regard as prices for wind turbines and solar modules fall toward grid parity.

Renewables Dominance Will Take Over a Decade

Even when wind and solar are more economical, it will take some time for them to grow from their current base of ~2% of US electricity. Manufacturers of solar modules and wind turbines will have to ramp up global production capacity from current levels of ~10 GW and ~40 GW, respectively, to at least 50 GW each before these sources of electricity can take significant market share from natural gas, oil, and coal. And we will need to continue to improve energy storage capabilities and economics along with our development of a smart grid that can adjust to the intermittency of wind and sunshine for this transition to renewables to take place smoothly over the next 10-25 years.

Now we know there is plenty of renewable energy available to keep us warm, lighted, and wired throughout the 21st century once we have moved on from our dependence on fossil fuels. Let’s make 2010 a huge step in this monumental project!

Onwards in the Sustainable Energy Transition-

Dennis Markatos-Soriano

Global Growth Shines

The global wind power market also grew at an astounding rate — clocking a 37.5% growth rate in its annual market (37 GW vs. 27 GW in 2008). China’s annual growth became the biggest in the world at 13 GW, which makes sense due to their larger electricity demand growth. At the end of 2009, China became the 3rd largest wind energy producer after the US and Germany (35.1 GW, 25.8 GW, and 25.1 GW). China will become the 2nd biggest wind producer in 2010 and may challenge the US by 2011.

The global solar market didn’t grow as quickly due to the collapse of its top market of 2008 — Spain (~50% of the world market that year). But Germany rode to the rescue and extended its lead as the biggest solar power producer in the world (it may have passed 8 GW). Germans took advantage of a 40+% decrease in solar module prices and had record growth (becoming ~50% of the global market themselves).

In the US

As I wrote last year, wind was already replacing oil-fired electricity in 2008. In 2009, wind took some market share from the most polluting power source, coal. In the years ahead, wind and solar can provide for new electricity demand growth and then begin to take significant bites out of the market for the leading electricity sources, coal and natural gas.

At 35 GW, wind now produces ~2% of US electricity demand. At almost 2 GW, solar produces ~.1% of US electricity demand. Biomass and geothermal produce ~1.5% and hydro almost 7%. The big three power sources today are nuclear (~20%), natural gas (~23%), and coal (~45%). When you look at particular states, it is exciting to see that wind power already provides three states with more than 20% of their power needs (Wyoming, Iowa, and North Dakota). By 2023, wind could provide 20% of the whole country’s electricity and solar another 12.5% (based on growth rates of 17.6% per year for wind – half the recent rate – and 40.4% for solar – a slight pickup from the last few years).

The US Energy Information Administration predicts US demand growth for electricity at a rate of 1% per year through 2035. I personally think that rate is higher than necessary as electricity demand growth has fallen every decade since the 1950s and it only grew .4% per year in the ’00s. Increased efficiency efforts can help electricity demand stay flat or even fall, as Google presents in its Clean Energy 2030 Plan.

Trends in Europe as a Glimpse at Our Future?

Europe installed over 10 GW of wind power capacity in 2009. The continent now gets ~9% of its electricity from wind and wind was the top source of of new electrical capacity at 39%. Solar power was third at 16% after natural gas which supplied 26%. Adding hydro and biomass, renewable energy provided 61% of new capacity. Meanwhile, coal is on the decline, as over 3 GW were decommissioned. The US can accomplish this same feat of most new demand coming from renewables in 2010 and beyond.

Price Curves Favorable for Wind & Solar

The prices of wind and solar should continue to drop in 2010, as opposed to an increase in the price of oil, natural gas, and coal. This trend should help maintain swift growth from these sources and make them the new energy titans within a few more years.

The Human Toll of Fossil Fuels

As I discussed a few months back, our addiction to fossil fuels has a serious human toll (on top of inducing global warming and hurting air quality). The tragic blast at a Connecticut power plant that killed at least five people today is a grim reminder of this. Our transition to an efficient reliance on renewable energy will help to reduce such accidents in the future.

Nuclear & “Clean Coal” Not a Near-term Remedy

While Obama has been trumpeting nuclear and “clean coal” as a necessary bridge to a renewable energy future that he thinks is decades away, renewables are actually better situated to provide for us. It takes ten years to commission and build a new nuclear power plant. And carbon sequestration coal is not market-ready yet. In contrast, wind and solar are growing quickly, proven technologies, and falling in cost. Here’s to further record growth for wind and solar in 2010 — finally putting to rest any doubts that they can lead us to a new climate-friendly energy future.

Onwards in the Sustainable Energy Transition-

Dennis Markatos-Soriano

ECGA-US DOT Partnership Begins (From left: US DOT Assistant Secretary for Policy Polly Trottenberg, Deputy Secretary John Porcari, ECGA Mid-Atlantic Trail Coordinator Mike Oliva, and Executive Director Dennis Markatos-Soriano - photo by Jack Wells)

This week, our East Coast Greenway began to move from a solely grassroots initiative to a project also backed by the most important transportation institution in the country. We have great relationships with many of the state Departments of Transportation (DOTs), but achieving federal partnership interest will effect a huge leap in our ability to make our route safe and accessible to all.

It all started last week when our Mid-Atlantic Trail Coordinator Mike Oliva emailed a note to US DOT Deputy Secretary John Porcari. The note congratulated the Deputy Secretary on his appointment by Obama and mentioned that we would love to discuss our project with him. Deputy Secretary Porcari served as Secretary of the Maryland DOT before his federal appointment, so he had familiarity with our project and even worked with our Boardmember David Dionne in the state.

Porcari emailed us back the next day with an interest to meet. He saw the potential of the DOT supporting the East Coast Greenway as a pilot for establishing an interstate trail network nationwide. This past Monday, I got a call during a work trip in Rhode Island that the meeting was set for the next day, from 2:45-3:15 in the afternoon. The meeting grew to include Assistant Secretary of Policy, Polly Trottenberg, as well as DOT Chief Economist, Jack Wells.

Mike Oliva and I raced down to Washington Tuesday morning in our suits, enjoying the East Coast Greenway signs along The Mall on our way to the DOT West Building, 1200 New Jersey Avenue, SE. Once in the building, we were escorted up to the Deputy Secretary’s conference room.

Since Porcari had familiarity with sections of the East Coast Greenway in Maryland and of our overarching vision, he asked for an update on our progress and then we jumped into a brainstorming session on how the US DOT can get involved to ensure success for the project. This was inspiring. Obama had clearly hired a great crop of transportation leaders. They understand our transportation system must play its role in reducing carbon dioxide and other emissions, lowering our expensive dependence on foreign oil, and decreasing obesity rates that are hurting our people’s health.

They want to know what stretches of the East Coast Greenway would especially benefit from federal attention. They are also interested in highlighting instances of Stimulus funds improving and extending the East Coast Greenway. While our federal designation as a Millennial Trail under Clinton was a great start (thank you Advisory Board member Jeff Olson), we are excited that current DOT leaders sound ready to step up in a more active way. A safe and accessible East Coast Greenway that enhances the livability of our eastern communities is within our grasp. By 2012, we can make our whole corridor either greenway or bike lanes and sharrow-marked route so that everyone from children to the elderly can enjoy it for daily commutes, a relaxing walk in the woods, and long-distance travel.

Porcari, Trottenberg, and Wells all agreed that we have to engage more than the DOT. We need the active partnership of our leaders in Congress and the Department of Interior as well (so look out for blog posts in the months ahead on other trips to Washington). Combining the power of our growing grassroots with stakeholders from the local to the federal level will drive strong progress in the months ahead.

Together, we can build an Eisenhower Interstate System 2.0 – one that integrates safe, healthy and green transportation into America’s mix and helps drive a strong economic recovery in the years ahead.

Bicyclists ready for a greenway

Thank you for reading the Sustainable Energy Transition (SET) blogs and being involved in our initiatives over the past 13 months!  The experience I gained working on SET efforts has been essential for me as I stayed abreast of recent changes in our energy system and their effects on climate change. After ~35,000 visits, more than 250 blogs, and scores of endorsements for our campaigns – I have found an amazing opportunity that I can’t pass up. I will be the next Executive Director of the East Coast Greenway Alliance (ECGA).

A Tangible Project to Reduce Emissions and Drive Economic Recovery

I’ve been writing about the importance of addressing climate change and oil supply insecurity for years now. Finally, I found a project to commit the next several years to do just that. I will still blog every now and then on developments in solar, wind, and energy efficiency, but my focus will be building relationships with allies up and down the east coast to deploy a bike/ped corridor that gives people a local and long-distance option for green travel that lowers transportation costs and thus supports American economic recovery.

Building on a Solid Foundation

The ECGA was founded in 1991 by 10 committed cyclists who had a vision of a bikeway/trail to connect cities up and down the East Coast. Within a few years, a growing nonprofit emerged from this interest under the leadership of co-founder Karen Votava. Karen, the other seven that came on staff, and scores of committed volunteers transformed the ECG from an idea into 600+ miles of greenway that now make up 21% of the eventual trail. A number of people have already biked this urban sister to the Appalachian trail, as on-road portions are mapped out connecting the current greenways.

It is now my task to build on the solid foundation laid out by the ECGA and its 5,000 members. By 2025, I aim for a complete off-road greenway to be a commuting and recreational path for millions of people from Florida to Maine.

We’ll Need Your Help

By 2015, we plan to have a smooth ride available for travelers from New York City to Wilmington, Delaware. And by 2020, the path from Washington, DC, to Boston should be accessible to all – while still making tremendous progress on our trail sections to the South and North of this route. To meet our ambitious goals of trail growth, we will need you to support the East Coast Greenway Alliance as a member or an ally.

Please check out our ECGA daily blog, twitter stream, and facebook page which will go live in September to keep our members and the public up-to-date on progress. If you like SET and care about global warming and the American economy, you’ll love the East Coast Greenway.

Let’s complete it together!

The Climate Ride initiative started last September with over 100 riders. This year, the ridership has more than doubled and is perfectly timed (September 26-30) to push the Senate to pass a climate bill like the House’s recent bill, the American Clean Energy & Security Act.

Pablo and Gabrielle are the two riders representing North Carolina, and I have no doubt they will represent my native state well. Pablo has been a great athlete since his childhood in Costa Rica. We played many fun soccer games throughout college and afterward. And they both just finished an impressive triathlon last weekend!

While the Climate Ride is focused on getting federal leaders to act, the ride also raises funds for three climate advocacy groups: Focus the Nation, Rails-to-Trails Conservancy, and Clean Air-Cool Planet. Each rider pays $100 to register for the ride and then aims to raise $2,400 for the cause among friends, family, and fellow climate stewards. Pablo and Gabrielle have raised 70% of their goal, but could use your help to finish it off by September 15th.

To learn more and make a tax-deductible donation, go to their ride website, Latinos por el Planeta, here. And if you like dance parties or auctions, Pablo and Gabrielle are holding an ’80s vs. ’90s dance party and a silent auction in Chapel Hill and Durham, NC, in the coming weeks (see details here).

It’s great these hundreds of cyclists are translating their love for biking and concern for our Earth’s climate into such a strong statement for political action. Along the route, expert speakers will educate and inspire local communities about global warming and what we can all do to be part of the solution. Then, at the steps of the U.S. Capitol, riders will call on federal leaders to act this Fall so that our country becomes a model in emissions reduction and a center for millions of clean energy jobs that drive a green economic recovery.

Though the current ride from New York City to DC is mainly for experienced cyclists like Pablo and Gabrielle, the East Coast Greenway Alliance plans to make the route accessible to all within a few years

Onwards in the Sustainable Energy Transition and good luck to Pablo and Gabrielle!

US Oil Output 1% Below Last Year

The US EIA weekly petroleum report announced that US oil output fell 1.3% last week to a rate of 5.107 million barrels per day (Mbd). That is 1% below the same week in 2008 and 6.8% lower than the 2009 production peak of 5.48 Mbd hit in mid-April.

How Low Could Oil Output Fall?

US oil output will probably continue to gradually fall since drilling for new wells remains below average on the relatively lower oil prices of 2009. But production will be higher than last year in the period from late August to October — unless we have an unlikely repeat of hurricanes slamming directly into the Gulf of Mexico’s oil production and refining hub. But an interesting question is, “How low could US oil output go?” If the average output decline of .5% per week over the last 15 weeks continued for several weeks, production would be significantly below 5 Mbd by the winter. Such an occurrence could lift prices back to $80 per barrel, especially if current trends continue to our South.

Mexico Oil Output Plummets Further

Mexico’s state-run oil company, PeMex, recently reported its output fell even more in June. Its liquid production was 3.6% below May levels, and 10% below June 2008 (crude was 11% lower). Production is now at the lowest point since the early 1990s and shows little sign of curbing its fall. Output from Mexico’s largest discovered field, Cantarell, continued to nosedive — falling 41% from last June to a production of .604 Mbd. This country that was recently the second largest source of US imports may struggle to export a single barrel by 2015.

With lower output in the US and Mexico (along with depletion in Norway, the UK and Russia), the only way we can keep a lid on our transportation costs in the years ahead is to increase fuel efficiency and implement an active transportation revolution. A bicycle network for local and long-distance travel will be an important step for US planners to take (see the East Coast Greenway vision for a model). And as Fatih Birol of the International Energy Agency says, let’s leave oil before oil leaves us.

Onwards in the Sustainable Energy Transition-

As Michael Oliva of the East Coast Greenway Alliance (ECGA) staff recalled, the ECGA got involved in local bike-ped advocacy efforts years ago to complete the region’s section of a 3,000 mile long greenway route from Key West to Canada. The ECG brought attention and awareness to making all areas surrounding the ECG a safer place to bike and walk. From their work sprang the Westchester-Putnam Biking and Walking Alliance — a group dedicated to making cycling and walking safer in the County.

Their recent accomplishment was the passage of a law that requires all new developments to provide bicycle racks. For every 10 car parking spaces, one bicycle parking space must be provided. Mayor Noam Bramson celebrated the measure as one of many to help lower greenhouse gas emissions and promote public health in his New Rochelle community. Other initiatives include bike parking in public spaces and a growing bike lane infrastructure to increase the safety of riders.

It will take much more work to help a majority of New Rochelle’s ~70,000 residents embrace bicycling and walking as a legitimate means of transportation. But the effort of local citizens (the Biking and Walking Alliance) in collaboration with regional organizations (such as the East Coast Greenway Alliance) is already making great progress and is a model for bike-ped advocacy in other communities.

Here’s to much more progress in New Rochelle that breeds progress here in NYC during the months and years ahead!

Photo by David Tulloch

Unfortunate news just came out of a Robert Wood Johnson Foundation-funded report: Americans are losing the battle against obesity. This problem of growing obesity is related to many of our country’s greatest challenges. Luckily for us, there is a solution that can tackle obesity as well as many related difficulties simultaneously.

Sitting around in our cars, our cubicles, and on our couches is taking its toll. To paraphrase Trust for America’s Health director Jeff Levi: when our waistlines grow, so do our health care costs. The fact that two thirds of Americans are either overweight or obese has contributed significantly to the doubling in health premiums for workers over the last decade — fueling big increases in serious illnesses like heart disease and type 2 diabetes.

Habits that induce and perpetuate obesity don’t just affect health care costs. The same decision to drive instead of walk or bicycle increases the price of oil and gasoline, hurting all our checkbooks and threatening to make the dollar even weaker than it is today. Our addiction to oil for transportation makes the fuel our biggest contributor to global warming, even bigger than coal. And our drive to secure the flow of foreign oil from the Middle East has led us to spend trillions of dollars on military misadventures and undemocratic alliances throughout the region.

The Promise of Active Transportation

If instead of jumping in the car for short trips, we instead hop on our bicycles or walk – we could save precious dollars, feel better physically, and be good stewards to the natural ecosystems we depend on for clean air, clean water, and a stable climate.

Since changing the infrastructure of a huge country like ours takes time, I will first focus on the change possible over the next decade. Currently ~12% of Americans use active transportation — 9% walk, 1% bike, and 2% take the bus or train. An active transportation shift to 33% of commuters (moving 21% from their cars) by 2020 would lower our consumption of oil by ~2 million barrels of oil per day. This is definitely doable, as more than 50% of commuters in the Netherlands and Sweden enjoy active transportation commutes (and their obesity rates are less than half ours as a result).

Such a move would save Americans over $40 billion every year on their fuel bills (based on current prices above $55/barrel) that we could instead put into paying off our credit card debt and improve the quality of life in our communities. The reduced demand for oil would help keep a lid on gasoline prices for those longer trips to family and friends around holidays. It would also cut our dependence on Middle Eastern oil by more than two thirds. The move would send total US greenhouse gas emissions down ~5% in one fell swoop, getting us close to the 2020 goal passed by the US House of Representatives.

To make this transition to walkable, bikable communities possible, we must have an infrastructure shift to support the necessary sidewalks, bike lanes, and greenways. While some of us in our physical prime can ride through the busy streets of Manhattan or on the sides of country roads, a safer environment is necessary to make active transportation accessible to all Americans.

Greenways, usually paved pathways to facilitate a safe route for non-motorized vehicles and walkers, are already growing in communities throughout the country. And building this new infrastructure can help provide jobs for some of the millions out of work right now. The cost for greenway construction is less than a quarter of the cost of building new roads (at $500,000 or less vs. $2+ million per mile, estimates the Florida DOT) and they require fewer maintenance dollars. So a focus on greenways rather than roadways in future Transportation Bills can help lower current government budget deficits.

And greenways can even be used for long-distance travel as long as we close current gaps along major corridors. For instance, the emerging East Coast Greenway from Key West, Florida, all the way up to the Maine border with Canada needs the support of local, state and federal transportation officials to become a completed urban counterpart to the Appalachian Trail. Such corridors can attract tourism to connected communities and even increase the home prices of people who live alongside it.

Greenways Empower Fitness, Financial Well-being, and Green Travel

The clean energy revolution is often characterized by technological innovations in solar panels, wind turbines, and fuel efficient vehicles. But we can’t forget the great opportunity of utilizing the renewable energy in our muscles to help us travel from home to work and play. In fact, this transition to an active transportation system throughout the country can reduce our obesity rate, lower our health care and fuel costs, free us from our dependence on Middle Eastern oil, and help us achieve the greenhouse gas emissions our Earth so desperately needs to restore balance in our climate.

Let’s make it happen!

Output falling to meet lower demand

The petroleum report showed crude oil inventories fall closer to the average range, with its fifth straight week of significant decline. This slide has been largely driven by lower imports. A drop in US crude output is also helping to restore some balance – production is now ~5% lower (~.3 million barrels per day (Mbd)) than its highs during the Spring.

However, petroleum product inventories remain high. Gasoline increased to high levels as demand remains down 1.3% from last year. Distillates (mainly diesel) and propane also increased last week, with distillate demand down a huge 28.9% from 2008. Continued weak demand has sent crude prices down more than 15% from their early July highs and has gasoline falling back below $2.60 per gallon nationwide after almost touching $2.70 a couple weeks ago. As I wrote last week, it will take a marked drop in output or recovery in demand for prices to hike back up significantly in this prolonged recession.

A similar story for natural gas

The weekly natural gas storage report conveyed a similar story. Low prices have lowered output and induced a greater consumption of natural gas for electricity generation (substituting coal). These shifts are slowly returning inventories to balance, as inventories are now 19% rather than 23% above the historical average. It will take months of suppressed prices (and thus lower output) before the surplus subsides.

Prices to mirror recovery

Economic stability is necessary to bring real balance to fuel inventories and lift natural gas and oil prices. These lower costs can help consumers get their finances back into balance before the age of efficiency and renewables really kicks in a few months from now.

Onwards-