Why are oil and gas prices currently so low?

Currently, we have been having the lowest gas prices since 2009 with the gallon of gas just above $2; but why are the prices so low?

The oil prices started to drop halfway through 2015, and now the decline is shaper than before. There are a number of related factors leading to this drop, but one of the most common is that supply is exceeding demand. It is not a secret than the U.S has been stocking up its production of oil. According to the OPEC cartel which consist of 13 different countries report that Iran, one of the seven largest oil producers in the world, will be increasing its oil production despites of the low prices and demand.

Crude oil has dropped in value o around $32 a barrel on Wednesday according to the New York Times. The low cost of crude oil has driven down not only gasoline prices but the cost of “diesel, heating oil, and natural gas” as well, according to the Times.

What Fracking is?

 

“Fracking is shorthand for hydraulic fracturing; a type of drilling that has been used commercially for 65 years.”

Otherwise, known as hydraulic fracturing, has been in use since 1940’s. Fracking is a drilling technique used for extracting oil or natural gas from deep underground.  Today, the combination of advanced hydraulic fracturing and horizontal drilling, employing cutting-edge technologies, is mostly responsible for surging U.S oil and natural gas production.

How does this process work?

This process involves safely tapping shale and other tight-rock formations by drilling a mile or more below the surface before gradually turning horizontal and continuing several thousand feet more. Thus, a single surface site can accommodate a number of wells. Once the well is drilled, cased and cemented, small perforations are made in the horizontal portion of the good pipe, through which a typical mixture of water, sand and additives are pumped at high pressure to create micro-fractures in the rock that are held open by the grains of sand. Additives play a number of roles, including helping to reduce friction and prevent pipe corrosion, which is turn help, protect the environment and boost well efficiency.

Is it role in contributing to current oil and gas prices?

Hydraulic Fracturing has helped boost the rate at which oil and gas can be extracted from wells, specifically in the United States. Increasing the currently available supply is one way that fracking helps to lower the oil prices on a local scale. This is particularly true here in the U.S since oil does not have a strong local market in the U.S. Fracking lowers the cost of oil to the extent that it allows real supply to expand. However, there are limits on the extent to which fracking can be used to increase supply. Oil is scarce and hydraulic fracturing is more expensive and complicated than traditional oil extraction. Unfortunately, the success of fracking will eventually not be as beneficial unless technological changes make the technique less costly.

In a long time, fracking could potentially speed up the rate at which oil prices climb. When natural oil supplies approach depletion, the lack of supplies will require the prices to be higher. It is unlikely that the world will ever run out of oil but once the prices go high enough, substitutes for it will be absolutely necessary and its production won’t be lucrative.

 

References:

http://www.what-is-fracking.com/what-is-hydraulic-fracturing/

http://www.livescience.com/34464-what-is-fracking.html

http://www.investopedia.com/ask/answers/013015/how-does-fracking-affect-oil-prices.asp

http://www.thestreet.com/story/13394038/1/the-basics-on-why-oil-prices-are-so-low-and-what-it-means.html

Unfortunately, I was not able to be present in our first Brainstorming session as a group, however after class I talked to my groupmates and we discuss what they had come up during class for our final project. For the project we discussed the following three (3) ideas to be developed as out final experiment:

1. Chemical Energy (Animal Waste)
2. Thermal Energy ( Inflate Balloon with bottle in water)
3. Hydro Energy (Waterwheel Electrically)

Along this blog, I will discuss in brief what each of these three (3) options consist off, and further along during the time in class, we will select one to develop in-depth as our final experiment.

1. Chemical Energy ( Animal Waste)

What’s Biomass?

Biomass fuels come from things that once lived: wood products, dried vegetation, crop residues, aquatic plants and even garbage. It is known as “natural materials”. Plants used up a lot of the sun’s energy to make their own food (photosynthesis). They stored the food in the plants in the form of chemical energy. As the plants died, the energy is trapped in the residue. This trapped energy is usually released by burning and can be converted into biomass energy.

How is biomass converted into energy?

Energy from the sun is transferred and stored in plants. When the plants are cut or die, wood chips, straw, and another plant matter is delivered to the bunker

-This is burned to heat water in a boiler to release heat energy (steam).

-The energy/power from the steam is directed to turbines with pipes

-The steam turns a number of blades in the turbine and generators, which are made of coils and magnets.

2. Thermal Energy ( Inflate Balloon with bottle in water)

The matter is made up of particles or molecules. These molecules move constantly. A rise of temperature of matter makes the particles vibrate faster. Thermal energy is what we call energy that comes from the temperature of matter. The hotter the substance, the more its molecules vibrate, and, therefore, the higher it’s thermal energy.

The picture below shows an example of this process “If we want to boil the water in these two beakers, we must increase their temperatures to 100°C. You will notice that will take longer to boil the water in the large beaker than the water in the small beaker. This is because the large beaker contains more water and needs more heat energy to reach 100°C.”

The matter is made up of particles or molecules. These molecules move constantly. A rise of temperature of matter makes the particles vibrate faster. Thermal energy is what we call energy that comes from the temperature of matter. The hotter the substance, the more its molecules vibrate, and, therefore, the higher it’s thermal energy.

The picture below shows an example of this process “If we want to boil the water in these two beakers, we must increase their temperatures to 100°C. You will notice that will take longer to boil the water in the large beaker than the water in the small beaker. This is because the large beaker contains more water and needs more heat energy to reach 100°C.

3.Hydro Energy (Waterwheel Electrically)

 This process works by using water to power machinery or make electricity. Water constantly moves through a vast global cycle, evaporating from lakes and oceans, forming clouds, precipitating as rain or snow, and then flowing back down to the ocean. The energy of this water cycle, which is driven by the sun, can be tapped to produce electricity or for mechanical tasks like grinding grain

The picture below shows how this process works:

 

From these three options, we will select one that would best work for our final experiment and then develop it.

 

The president’s Climate Action Plan originally published in June 2013 with the function and “moral obligation to future generations to leave them a planet that is not polluted and damaged. “Over time, we have to encounter serious effects due to climate change. We have come to realized that climate change represents one of our greatest challenges of our times. It establishes a vision for the US government to work to prevent climate change domestically and internationally.

1. Cut Carbon Pollution in America
2. Prepare the United States for the Impacts of Climate Change
3. Lead International Efforts to Combat Global Climate Change and Prepare for its Impacts

In this blog, we will discuss one of each initiative from each of the three key pillars proposed by the Action Plan.

1 In regards of the first pillar (Cut Carbon Pollution in America), this plan includes deploying clean energy by cutting carbon pollution from power plants as power plants. “Are the largest concentrated source of emissions in the United States, together accounting for roughly one-third of all domestic greenhouse gas emissions.” Despite the plan being written and the progress at the state level, there were no federal standards in place to reduce carbon pollution from power plants, although some changes were being made at the state level. Carbon pollution standards for both new and existing power plants are being created by the Environmental Protection Agency.

With abundant clean energy solutions available, and buildings on the leadership of states and local governments, we can make continued progress in reducing power plant pollution to improve public health and the environment while supplying the reliable power needed for economic growth. In order to accomplish these goals, President Obama is issuing a Presidential Memorandum directing the Environmental Protection Agency to work expeditiously to complete carbon pollution standards for both new and existing power plantsFollowing with the second pillar (Prepare the United States for the Impacts of Climate Change), “ During the president’s first term, the United States more than doubled generation of electricity from the wind, solar, and geothermal sources.” To ensure America’s continued leadership position in clean energy, President Obama has set a goal to double renewable electricity generation once again in 2020. The plan includes protecting our economy and natural resources in many ways including protecting our economy and natural promoting resilience in the health sector, conserving land and water resources, and identifying vulnerabilities of key sectors to climate change. . “In order to meet this ambitious target, the Administration is announcing a number of new efforts in the following key areas:  Accelerating Clean Energy Permitting, Expanding and Modernizing the Electric Grid.” Promoting resilience in the health sector means providing guidance on affordable measures to ensure that our medical systems are resilient to climate impacts, collaboration with partner agencies to share best practices among federal health facilities, and training public health professionals and community leaders to prepare their communities for the health consequences of climate change.

2.Following with the second pillar (Prepare the United States for the Impacts of Climate Change), “ During the president’s first term, the United States more than the double generation of electricity from the wind, solar, and geothermal sources.” To ensure America’s continued leadership position in clean energy, President Obama has set a goal to double renewable electricity generation once again in 2020. The plan includes protecting our economy and natural resources in many ways including protecting our economy and natural promoting resilience in the health sector, conserving land and water resources, and identifying vulnerabilities of key sectors to climate change. . “In order to meet this ambitious target, the Administration is announcing a number of new efforts in the following key areas: Accelerating Clean Energy Permitting, Expanding and Modernizing the Electric Grid.” Promoting resilience in the health sector means providing guidance on affordable measures to ensure that our medical systems are resilient to climate impacts, collaboration with partner agencies to share best practices among federal health facilities, and training public health professionals and community leaders to prepare their communities for the health consequences of climate change.

3. Continuing with the third pillar (Lead International Efforts to Combat Global Climate Change and Prepare for its Impacts) this plan main goal is to attempt to work with other countries to take action to address climate change. This is accomplished in many different ways such as:

-Enhancing multilateral Engagement with Major Economics

-Expanding Bilateral Cooperation with Major Emerging Economics

– Combatting Short-lived Climate Pollutants

– Reducing Emission from Deforestation and Forest Degradation

And also including Expanding clean energy use and cutting energy waste which can be sub-divided by:

-Financing and regulatory support for renewable and clean energy projects

– Actions to promote fuel switching from oil and coal to natural gas or renewables

–  Support for the safe and secure use of nuclear power

–  Cooperation on clean coal technologies

– Programs to improve and disseminate energy efficient technologies

References:

https://www.whitehouse.gov/energy/climate-change

https://www.whitehouse.gov/sites/default/files/image/president27sclimateactionplan.pdf