US designates alternative fuel corridors for transportation

U.S. federal highway administrators have announced the designation of 55 routes as "alternative fuel" corridors, capable of accommodating electric vehicles or those powered by hydrogen, propane, or natural gas.  The announcement sets the stage for further federal action supporting alternative transportation fuels.

An electric vehicle charging station, in an underground parking garage in Boston.

The U.S. Department of Transportation’s Federal Highway Administration (FHWA) oversees construction and maintenance of the nation's highways, bridges, and tunnels.  FHWA data suggests U.S. drivers travel over 3.15 trillion miles per year.  Overall, the U.S. transportation sector is a major consumer of energy, and among the largest contributors to domestic greenhouse gas emissions.  

Congress and the Obama administration are now pursuing strategies to reduce the transportation sector's greenhouse gas emissions.  Electric vehicles and alternative transportation fuels form one tool in these efforts.  Under a 2015 law -- Section 1413 of the Fixing America's Surface Transportation (FAST) Act -- the Secretary of Transportation is required to designate national electric vehicle (EV) charging, hydrogen, propane, and natural gas fueling corridors.  In July, the Department of Transportation asked states to nominate corridors along major highways, for EVs and other alternative fuels designated in the FAST Act.

In a November 3, 2016, announcement, the FHWA unveiled its designation of the nation's first alternative fuel corridors.  The network is nearly 85,000 miles long, and crosses 35 states.  Some corridors have been designed as "sign-ready," meaning alternative fueling stations are operational; these corridors are eligible to feature new signs showing where drivers can refuel.

The FHWA has posted maps of its alternative fuel corridors on its website.  The agency intends to add more miles in the future, as additional charging and fueling stations are built.

Propane inventory in US sets new record

As the U.S. prepares for another winter, government records show stockpiles of propane have reached record levels.  What's in store for propane markets?

Propane is a hydrocarbon gas liquid used mostly for space heating and as a feedstock for other chemicals like ethylene and propylene, as well as for drying agricultural crops.   Natural gas processing plants and petroleum refineries are the two largest sources of propane. 

The U.S. Energy Information Administration has collected weekly propane inventory data for 22 years.  According to its most recent report, U.S. inventories of propane and propylene reached 97.7 million barrels as of September 11.  EIA describes this as the highest level of propane inventory on record.

What explains the buildup of propane in storage?  Record high propane inventories are partly due to seasonal dynamics in supply and demand.  Demand for propane for heating and agricultural uses is highly seasonal, while demand for propane as a chemical feedstock lacks strong seasonality.  Over recent years, propane and propylene stocks are typically drawn down during the winter heating and agricultural drying season (October to March), and then rebuild from early April through September. 

This year, EIA data shows inventories began increasing in mid-February.  EIA notes that domestic consumption is relatively flat, but found increases in propane production.  In particular, EIA's latest data shows that natural gas processing plants are producing a greater share of propane than in previous years (rising from 62% in 2008 to 76% in 2014), while propane production at refineries has remained relatively constant.

US energy consumers paid $14 billion more last winter

U.S. consumers paid $14 billion more for their energy needs during the winter of 2013-2014 compared to the previous winter, according to a report by the U.S. Energy Information Administration.

The cost of energy affects people and businesses across the country.  Consumers are affected by both the price they pay per unit of electricity or fuel for transportation and heating and the volume of each energy commodity they demand.  In much of the U.S., demand for energy increases during winter months.  The winter season often sees prices increase as well, as more expensive supply is needed to meet consumer demand.

The winter of 2013-2014 was no exception, according to the EIA's data.  U.S. consumers spent $14 billion more for energy during the fourth quarter of 2013 and first quarter of 2014 compared to the previous winter.  This amounts to an increase of 4.4%, or a 0.1% increase when measured as a share of disposable income.

The biggest drivers of the increase in consumer energy costs were higher expenditures for electricity, natural gas, heating oil and propane.  Electricity expenditures increased $7.9 billion, or 10%, last winter compared with the previous winter.  Much of the increased cost of electricity came as a result of increased costs for natural gas, a key fuel used for electric power generation.  Constraints on interstate natural gas pipelines drive fuel prices up as demand increases.  Throughout much of the northeast region, interstate natural gas pipelines reach their maximum flow rates on an increasing number of winter days.  When the pipelines begin to fill, the price of natural gas delivered into the constrained region increases.  Ultimately, when the pipelines have reached their maximum capacity, no more natural gas can be bought at any price.

The price of natural gas also affects consumers directly, as consumers also rely upon natural gas for space heating and applications like drying.  EIA's data show that consumer expenditures for natural gas increased by $5.8 billion, or 16%, last winter compared with the previous winter.

Expenditures for the other major heating fuels -- oil and propane -- also increased by $6.0 billion, or 27%, over the previous winter.  As EIA notes, heating oil and propane are used predominantly for space heating and are used to heat a relatively small number of homes, but their use is concentrated in the Northeast -- the area of the country that experienced the coldest weather this winter.  Propane consumers experienced not only price spikes but even shortages during the coldest parts of the season.

As costly as the past winter was, the increase in consumer energy costs would have been even higher if transportation-related costs had not decreased significantly.  In fact, transportation accounts for the largest single share of U.S. consumers' energy budget -- often over two-thirds of energy expenditures during the summer driving season, and over half of energy expenditures even in the winter.  But transportation fuel expenses decreased by $5.8 billion, or 3%, last winter compared with the previous winter.  EIA cites reductions in demand for gasoline due to winter storms that reduced driving.

Weather is a significant factor affecting winter energy costs -- but policies and infrastructure also play major roles in shaping consumers' energy expenditures.  What will next winter bring?

Propane: winter shortages in 2014

Propane is widely used as a fuel -- but shortages this past winter led to an unprecedented emergency in the eyes of federal regulators.

Propane is a hydrocarbon produced as a byproduct from natural gas processing and crude oil refining.   Also known as liquefied petroleum gas, this natural gas liquid serves as a fuel in homes, businesses, and industry.  It is used for heating, cooling, cooking, motor vehicle transportation, and agriculture.  In the U.S., propane is transported on a network of pipelines stretching 56,000 miles long, and can also be shipped by rail and by truck.  In recent years, the U.S. propane industry has reached $10 billion in annual activity, with consumers using 15 billion gallons of propane annually for home, agricultural, industrial, and commercial uses.

A marker showing the location of an underground natural gas pipeline near Memphis, Tennessee.

This past winter, a propane shortage affected 24 states, primarily in the Midwest and Northeast regions.  Stored supplies of propane declined in the Midwest, and prices in some places increased by over 50% between January and February 2014.  As forecasts called for continued unseasonably cold weather, local, state, and federal agencies declared states of emergency.  The Federal Motor Carrier Safety Administration issued and extended emergency exemptions to provide regulatory relief for commercial motor vehicle operations directly supporting the delivery of propane and home heating fuels to areas under emergency, ultimately resulting in Congress's enactment of the Home Heating Emergency Assistance Through Transportation Act of 2014.

While the Federal Energy Regulatory Commission regulates neither propane as a commodity nor its storage or marketing, the Commission does regulate the transportation of propane on pipelines.  As this past winter's crisis deepened, some pipelines serving the Midwest voluntarily filed for permission to flow more propane into the region, but this was insufficient to meet demand.

In an unprecedented move, the Federal Energy Regulatory Commission exercised its emergency powers under the Interstate Commerce Act to require a pipeline company to temporarily provide priority treatment to propane shipments from Mont Belvieu, Texas, to locations in the Midwest and Northeast to help alleviate the shortage of propane supplies in those regions.  Citing school closures due to lack of heat, price hikes leading states to provide emergency heating assistance to those who could not afford fuel costs, and economic impacts on chicken farmers, pig farmers, and dairy farms in the South and Midwest who use propane to maintain the livelihood and health of their stock, the Commission found that an emergency existed requiring immediate action.

To address the emergency, the Commission targeted a pipeline owned by Enterprise TE Products Pipeline Company, LLC. In a February 7, 2014, Order Directing Priority Treatment, the Commission required the pipeline company to prioritize the shipment of propane on its natural gas liquids pipeline from the Mont Belvieu hub into the Midwest and Northeast.  That initial order provided for priority treatment for 7 days, which was extended once for another 7 days.

These actions apparently relieved the emergency.  According to testimony provided to the U.S. Senate Committee on Energy and Natural Resources by Commission staff member Nils Nichols, "no further action by the Commission with respect to propane supply was required this past winter."

Will propane again be in short supply next winter?  Will markets respond to align supply and demand at a reasonable price?  Will further regulatory action affect the U.S. propane industry?

Yellowstone park proposes utility upgrades

The U.S. National Park Service manages over 84 million acres of land for both conservation and visitor use.  For wilderness parks, these joint objectives lead to the challenge of providing park facilities with electricity despite their remote location.  The Park Service has launched energy efficiency and sustainability programs, but many visitor and administrative facilities still need electricity for safety and comfort.  How should the Park Service balance conservation and development?

Old Faithful geyser erupts in Yellowstone National Park.

Yellowstone National Park, the nation's first park, highlights the difficulty.  Most facilities in the park receive electricity from transmission and distribution lines owned by utility NorthWestern Energy, but the park's rugged environment, challenging climate, and relatively old electrical infrastrucutre lead to frequent power outages - over 250 in 2012.  Unlike much of the electric grid outside the park, facilities in Yellowstone lack modern communication infrastructure - a Supervisory Control and Data Acquisition or SCADA system - that would let the utility diagnose and correct the cause of power outages from the utility's central offices in Montana.

As a result, Yellowstone and NorthWestern Energy have proposed to update the park's electrical distribution system.  Proposed upgrades include an automated, remote monitoring and control system, the installation of equipment buildings, back-up power generators and propane fuel tanks.  The proposed communication system would require the construction of seven towers for radio equipment within the park, generally located at existing electrical substation sites.

Under the National Environmental Policy Act, the Park Service cannot approve the plan without conducting an environmental assessment of the impacts of the proposed development.  The Park Service has released its Environmental Assessment (10.5 megabyte PDF), which is open for public comment until December 6.

The use of national park lands for energy infrastructure can be controversial due to differing philosophies on the level of development desirable in parks.  At the same time, the Park Service notes that the Yellowstone outages have had negative effects on park operations and visitor experience, creating health and safety concerns and lost revenue for concessioners.  How will this balance play out in Yellowstone?

Monhegan island electricity grid updates

Residents of the Maine island of Monhegan will soon benefit from upgraded electricity infrastructure, thanks to a grant from the U.S. Department of Agriculture.

Supplying electricity and other forms of energy on remote islands offers a unique set of challenges.  For islands too far from the mainland grid to be connected by undersea transmission cables, island utilities must both produce the power and distribute it to homes and businesses.  On small, remote islands, the lack of economies of scale can lead to very high electricity costs.  About 12 miles offshore, Monhegan one of those islands.  In recent years, customers served by the Monhegan Plantation Power District have paid electricity prices about 5 times higher than those on the mainland.

Propane tanks sit by the dock on Monhegan Island, Maine.

Yesterday the U.S. Department of Agriculture announced that the Monhegan Plantation Power District has won $420,154 from the USDA's High Energy Cost Grant Program.  That program provides competitively-awarded grants to improve and provide energy generation, transmission and distribution facilities serving communities with average home energy costs exceeding 275% of the national average. Grant funds may be used for on-grid and off-grid renewable energy projects, energy efficiency and energy conservation projects serving eligible communities.

On Monhegan, the grant will be used to replace the current switchgear, add a smaller, 40 kW generator to the power station's fleet, and add a 13 kW solar photovoltaic array to the power station's roof.  Currently, electricity is provided to about 100 accounts on Monhegan from a 300 kW diesel generator.  Demand for electricity on Monhegan varies seasonally, with many fewer consumers on the island during the winter months.  The new 40 kW generator and solar array are expected to be able to cover the winter load more efficiently than using the existing larger generator.

While Monhegan typifies the remote, inhabited small island, other islands face similar energy challenges.  Will Monhegan serve as an example for other island communities?

Oil, from crude to fuels and chemicals

Petroleum - what we often think of as oil - powers a large sector of the world economy.  Crude oil, a naturally-occurring mix of substances produced by ancient life and transformed by time and geological forces, lies trapped beneath soil, rock, and the sea floor.  When captured and refined, the crude oil can be transformed into gasoline and diesel, but also into a wide variety of other fuels and chemicals.

In the U.S., crude oil is typically quantified in a 42-gallon unit known as the barrel.  While this bears some historic tie to actual barrels of oil, crude oil today is seldom packed in actual 42-gallon barrels, more typically being shipped in large seagoing oil tankers or pipelines.

At a refinery, each of the components of the crude oil mix is separated.  Some are converted from heavy, low-valued chemicals into lighter, higher-valued products like gasoline.  Processes like cracking, coking, and alkylation allow the production of more exotic petroleum derivatives.

From 42 gallons of crude oils, refineries can produce about 45 gallons of refined petroleum products. Typically, these might include:

• 19 gallons of gasoline
• 10 gallons of diesel
• 4 gallons of jet fuel
• 2 gallons of liquefied petroleum gases (propane, butane, etc.)
• 1 gallon of other distillates (heating oil)
• 2 gallons of residual fuel oil
• 7 gallons of other products

Most of this increase in total product volume comes as different fractions of the petroleum mix are distilled and transformed; the U.S. Energy Information Administration has described the increased volume after refining as "similar to what happens to popcorn, which gets bigger after it's popped".

Because each source of crude oil contains a different mix of hydrocarbons and other chemicals, the refining process yields different mixes of products for each type of crude. The demand for these products drives oil producers' decisions about where to drill and produce oil.

December 28, 2010 - a history of heating my house, and current economics

In the wake of yesterday's blizzard, I've been thinking about how we heat our homes.  At over 150 years old, my house has kept people dry and warm for quite some time.  Much of the house remains the same as it was originally, while other "new" systems like electricity and running water have been installed later in the house's history.  Its heating systems have likely been changed several times in those years.

[Photo: down by the docks on Monhegan Island, Maine.  A large cache of propane tanks rests just out of view on the right.  Propane provides a major part of Monhegan's space heating energy needs.]

When the house was built, its residents likely burned wood to keep warm.  The front room or parlor on the first floor had a fireplace, as did the bedroom above the parlor.   (These fireplaces are now bricked up, as the chimney they used is now dedicated to an oil furnace situated in the basement.)  Until 1885, wood was the dominant fuel used to heat homes in the U.S.  After 1885, wood was surpassed by coal as the dominant heating fuel in the U.S.  It isn't clear whether my house was ever heated by coal.

Today, my house has three primary heating systems: an oil furnace in the basement that feeds warm air to the first floor, a propane "decorative appliance" in the kitchen, and small amounts of electric heat (a baseboard in one room, and a portable heater).  How much does it cost for me to operate these resources?  How are my decisions affected by that cost structure?  What should I do differently?

A few data points:

The portable electric heater is rated at 1,500 W.  In one hour, it uses 1.5 kWh.  One kWh = 3,412 Btu.  Thus in one hour of maximal operation, the heater puts out 5,118 Btu of heat.  Over the past several years, I've paid an average of 15.5 cents per kWh delivered.  This means the portable electric heater costs 23.25 cents per hour of operation -- or yields 146 Btu per penny.

According to the Maine Office of Energy Independence and Security, oil in Maine is retailing for an average price of $2.98 per gallon as of 12/20/2010.  In general, a gallon of heating oil contains about 138,690 Btu.  This divides out to 465 Btu per penny assuming 100% efficiency - or 386 Btu per penny at a more realistic 83% efficiency.

The Maine OEIS reports that the statewide average for propane based on a use of 925 gallons a year is $2.74 per gallon.  Notably, a gallon of propane contains less usable energy than does a gallon of oil; a gallon of propane might contain 91,330 Btu.  This divides out to 333 Btu per penny assuming 100% efficiency.  Even assuming 80% efficiency, this yields 266 Btu per penny.

Compare wood, a fuel the house is no longer set up to burn.  Wood can be an imprecise fuel type, with great variability in both how much wood is really in a delivered cord, as well as in how many Btu are available per cord.  (It's supposed to be 128 cubic feet per cord, but in practice air spaces mean there is almost never that much wood in a cord.)  The EIA recommends a figure of 20,000,000 Btu per cord.  Prices vary widely, but $200 per cord isn't a bad price in Maine.  Using that figure, you get 1000 Btu per penny assuming 100% efficiency, or 800 Btu per penny at a more reasonable 80% efficiency.  This makes wood seem like an attractive option.

Btu per penny may not be the only factor I consider in allocating my heating burden across these fuel sources.  For example, I can set the portable electric heater up anywhere in the house, while the oil-based warm air system is permanently installed in the first floor of the house.  Wood may appear economical, but without further capital investment (in a wood stove) is unavailable as a heating source.  Still, this look at the history of the house is illustrative.  What did previous owners spend on heating?  What fuels did they use?  Do we pay more today to heat our house than they did in 1860?  Are we more comfortable today than was the house's first owner?

August 4, 2010 - House CLEAR Act; Monhegan energy

One of the dominant forms of energy on Monhegan Island, Maine: propane tanks.  About 10 miles offshore, Monhegan does not have any electric cables to the mainland, relying instead on a 300-kilowatt diesel generator. For home heating, cooking, lighting and even refrigeration, many island residents still use propane.  Monhegan is also considering wind resources.

On July 30, 2010, the House of Representatives passed H.R. 3534, the Consolidated Land, Energy, and Aquatic Resources (CLEAR) Act by a vote of 209 to 193.  Much of CLEAR came from the previous Blowout Prevention Act of 2010 (H.R. 5626) (things like requiring blowout preventers, CEO accountability, etc.)

CLEAR also does the following:

• Shifts around Dept of Interior agencies (abolishes the Minerals Management Service)
• Reforms Outer Continental Shelf Lands Act and Federal Onshore Oil and Gas Leasing Program to protect environment and safety, and to repeal certain royalty relief and royalty-in-kind provisions
• Reforms oil and gas royalties.
• Full funding for the Land and Water Conservation and Historic Preservation Funds.
• Alternative energy development, specifically leasing federal land for commercial wind and solar leasing program.  The Bureau of Land Management and US Forest Service can lease land for commercial wind and solar projects.  It has a transmission savings provision ("Nothing in this title shall affect the authority of a Federal agency to issue right-of-way grants for electric transmission facilities.")
• Coordination and planning.  Better interagency coordination on the use of Federal energy resources.
• Geothemal production expansion.
• Conservation fee on all oil and gas leases on Federal onshore and offshore lands.  $2 per barrel of oil, 20 cents per million Btu of gas, sunsetting in 2021.