The Gassing Down of The Energy Industry and The Rise of Renewables
Submitted by Gemma Potter
The prices of gas and oil are at a year-long low, down 40% in the past year: these profit drops are cutting the incentive for producers to keep drilling. According to a rig count from Baker Hughes Inc, energy companies have shut down more than half of their operating oil rigs and have also cut back on the number of gas rigs they have in operation to their lowest levels since rig counting records began approximately 28 years ago.
A Reduction of Drilling Activity
The reduced drilling activity has led to a downshift in natural gas and oil production, and although this has yet to be seen within the market, it will obviously begin to have an effect on the prices of these products at a consumer level. However, it is thought that this change will take a while to trickle through the system and affect the everyday homeowner at a financial level, if it reduces to the point where homeowners notice the change at all.
Two of the companies that worked tirelessly to pioneer new techniques in shale-gas drilling across the United States, Range Resources Corp. which is based in Fort Worth, Texas, and Chesapeake Energy Corp. which is based in Oklahoma City, have both cut their growth targets for this year, and are aware that the profits they are able to bring this year will be declined because of the broad collapse in energy prices, including for oil and other similar liquid fuels, across the United States.
The Comparative Rise of Renewable Energies
Whilst the prices of gas and oil are in decline, the usage of renewable energy sources within the United States is at an all-time high. In 2014, the use of renewable sources of energy accounted for about 10% of the total amount of energy consumption in the United States and also accounted for 13% of the electricity generation in the United States. That figure is set to rise for 2015 and to continue to rise for the next decade. It is interesting that this rise in renewable energies is occurring in conjunction with the decline of oil and gas energy generation and the financial values being placed upon it.
Large multinational companies are looking to renewable energies as the solution of the future. Amazon announced this week that they have forged a new business relationship with Berdrola Renewables, LLC to realize their vision of constructing and operating a 208 megawatt (MW) wind farm in North Carolina, which will become known as the Amazon Wind Farm US East. Once construction of the wind farm is complete in December 2016, it will generate approximately 670,000megawatt hours (MWh) of wind energy every year, which equates to enough energy to power 61,000 homes for an entire year. This will be the third Amazon wind farm in the United States, and is part of Amazon’s commitment to supporting renewable energy, with a vision of ultimately becoming an entirely carbon neutral corporation. Amazon isn’t the only corporation with a commitment to finding new renewable energy sources, and this is a move that is being supported by government investment too.
Will there ever be a world where we won’t need the fossil fuels of gas and oil on which we are so reliable? At this point that seems impossible to envisage, and those much maligned fuels remain essential to the smooth running of almost every aspect of enterprise. But it is clear that these will have to work in conjunction with renewable energy sources, such as wind and solar power, which are continuing to grow considerably.
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“Energy industry is gassing down”, Wall Street Journal, http://www.wsj.com/articles/energy-industry-is-gassing-down-1434410757
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“How much U.S. energy consumption and electricity generation comes from renewable sources?”, US Energy Information Administration,http://www.eia.gov/tools/faqs/faq.cfm?id=92&t=4