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Energy Briefs: Oil / Wood / Ethanol

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Crude oil inventories at Cushing, Oklahoma, hub down 32% over the past two months

Crude oil inventories at Cushing, Oklahoma, the primary crude oil storage location in the United States, decreased 13 million barrels (32%) over the past two months. On March 21, Cushing inventories were less than 29 million barrels, more than 20 million barrels lower than a year ago and the lowest level since early 2012. Cushing is the delivery location for the New York Mercantile Exchange (Nymex) West Texas Intermediate (WTI) crude oil futures contract.
The recent drawdown of stocks at Cushing resulted from three factors:
The startup of TransCanada’s Cushing Marketlink pipeline, which is now moving crude oil from Cushing to the U.S. Gulf Coast
Sustained high crude oil runs at refineries in Petroleum Administration for Defense Districts (PADD) 2 (Midwest) and 3 (Gulf Coast), which are partially supplied from Cushing
Expanded pipeline infrastructure and railroad shipments that have made it possible for crude oil to bypass Cushing storage and move directly to refining centers in PADDs 1 (East Coast), 3 (Gulf Coast), and 5 (West Coast)
Despite the considerable decline in Cushing inventories, crude oil stocks remain above the top of the 2005-08 range. Over the past several years, much of the crude oil production growth from tight oil formations in the Midcontinent was delivered to Cushing storage. Because takeaway capacity from Cushing storage was insufficient, inventories there rose. Currently, Cushing inventories have fallen to levels that reflect current market conditions, and although they are reduced, the levels remain consistent with crude oil supply requirements to meet regional refinery demand.

Back To Wood

The U.S. Energy Information Administration’s new “Today in Energy” brief looks at how more U.S. households are relying on wood at their primary heating source.
“In total, about 2.5 million households (2.1%) across the country use wood as the main fuel for home heating, up from 1.9 million households (1.7%) in 2005. An additional 9 million households (7.7%) use wood as a secondary heating fuel. This combination of main and secondary heating accounts for about 500 trillion British thermal units (Btu) of wood consumption per year in the residential sector, or about the same as propane consumption and slightly less than fuel oil consumption.”—EIA’s Today in Energy.

 Midwest  Ethanol Industry files to take LCFS fight to United States Supreme Court

(March 20, 2014) WASHINGTON — Following the January decision by the Ninth U.S. Circuit Court of Appeals to deny rehearing en banc in the litigation regarding California’s Low Carbon Fuel Standard (LCFS), the Renewable Fuels Association (RFA) and Growth Energy have petitioned the U.S. Supreme Court for certiorari to make a final determination relating to what they call, the constitutionally flawed LCFS.
“California, through adoption of the LCFS, has violated the most basic, structural features of interstate federalism. LCFS not only discriminates against out-of-state commerce, but it seeks to regulate conduct in other States in direct contravention of our constitutional structure and at the direct expense of Midwestern farmers and ethanol producers.”
RFA and Growth Energy moved forward with a Supreme Court challenge after a divided panel of the Ninth Circuit Court of Appeals reversed a District Court (O’Neill, J.) finding that the California LCFS discriminates against interstate commerce and constitutes extraterritorial regulation in violation of the Commerce Clause. By its own admission, California’s Low Carbon Fuel Standard (“LCFS”) seeks to regulate greenhouse gas (“GHG”) emissions occurring in other states by rewarding and punishing industrial and agricultural activity taking place outside California. And it bases the size of these rewards and penalties on whether production took place in “California” or in the “Midwest”—systematically favoring California. The Constitution denies states such authority they say.

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