CONTRIBUTOR: SKYLAR LATHROP
EDITOR: DAVE PRICE
Energy production is competitive. One segment could compete with others for market share. But for the near future, the United States will rely on a variety of sectors for energy dependence in an unstable global environment.
While there is much focus on alternative energy creators, petroleum remains the United States’ leading source (36%), according to data from the U.S. Energy Information Administration. That is nearly three times as much of the share as renewable energy (13%).
Blake Singleton, Oil and Gas Manager at Peoples Company, thinks that the oil outlook is positive. “With COVID-19… there was a big tank in production for oil companies,” Singleton said. “We are starting to see that climb back up and level off, so production should stay pretty level during 2024.”
PERSPECTIVE: Global demand for petroleum collapsed as travel plummeted during the onset of the COVID-19 pandemic. Here’s how the U.S. Bureau of Labor Statistics described the impact:
“Prices dropped precipitously in March and April 2020. The combination of falling demand, rising supply, and diminishing storage space caused such a pronounced crude petroleum price plunge that, on April 20, crude petroleum traded at a negative price in the intraday futures market. Producer prices for crude petroleum declined 34.0 percent in March and 48.8 percent in April. In all, the PPI for crude petroleum fell 71.0 percent from January to April. The March and April decreases were the two largest monthly declines since the index was first published in July 1991. The trend was similar for U.S. import prices. The Import Price Index for crude petroleum declined 34.1 percent in March and 36.6 percent in April. In all, prices for crude petroleum imports fell 62.8 percent from January to April. As was the case with producer prices, the March and April declines in the Import Price Index were the largest 1-month decreases since the index was first published on a monthly basis in September 1992.”
“As far as pricing goes, they [EIA] are estimating it to hover around $90 a barrel, which back in April of 2020, it went (minus) 37 dollars a barrel. From there to now, it’s a really promising outlook,” Singleton said.
Singleton doesn’t consider demand for natural gas currently high. “They're still producing it, but because of last winter and how this year has gone with the weather, there is a huge surplus in inventory for natural gas,” Singleton said.
Some factors that could change the production rate of natural gas and oil, he believes, include the 2024 presidential election, as well as the Israeli-Palestinian conflict. These factors have yet to affect production and pricing but major conflict could result in a shift in supply.
When discussing the future of oil and gas within the United States in the wake of climate change concerns, Singleton shared that the oil and gas industry will continue to prevail. “We want to take care of the environment. We want to take care of the land. But we can’t just flip a switch and go all renewables at once. Everything we do in our lives is made out of some kind of fossil fuel. I don’t think it's (oil and gas) going away anytime soon, at least here in the United States.”
Renewable energy has been an increased focus, especially in rural communities. Brad Haight -- the President of Denver, Colorado-based Farm First Energy -- said, “I’ve been in the wind business since 2001. I've watched the PTC (Production Tax Credit) in Iowa go up and down and we survive the dips.”
As far as whether the renewable energy industry could continue without tax credits, Haight said, “Could they survive without it? Yeah, I think so. I think the industry would be a bit flatter without it, but absolutely.”
RELATED: The United States needs more wind turbines is among the seven takeaways that Successful Farming’s Cassidy Walter had from the 2024 Land Investment Expo. Read that here.
Craig Kaiser -- President and Co-Founder of Denver, Colorado-based LandGate -- said that natural resources significantly impact the value of real estate. “Energy is no longer just associated with subsurface minerals. It's now in the backyards of almost every piece of property in the United States.”
Kaiser added, “We are beginning to see a shift in the value placed upon the presence of natural resources. This is primarily because hydrocarbons and minerals are present everywhere you look. “[Natural resources are] literally on the doorstep of every piece of property. It trickles down to anybody who touches property, anyone who touches real estate, from someone with a couple of acres of vacant land up to JP Morgan, Wells Fargo and everyone in between,” said Kaiser. “The energy market is now part of the real estate market and vice versa.”
Kaiser and Haight wanted to stress what they see as differences between battery and solar power. Battery power is the process of removing excess electrons from an electrical grid when there is too much energy on the grid. This power is stored in battery packs and then put back onto the market when there is a lack of available energy. “That [battery storage] only takes a few acres. We aren't talking about hundreds of acres where you need enormous plots for wind turbines or solar farms,” said Kaiser.
While battery storage may save space, it is not always the best option. “If anyone has seen a Lithium-Ion battery fire when they get water inside them, salt water especially, they don’t put themselves out,” Kaiser said. “There is a consequence to what could happen there. Solar is pretty mild, solar panels anyway.”
VIDEO: The Today Show on NBC aired a report on how Lithium-Ion batteries can catch fire. Watch that here.
Solar farms are acres of large panels that collect energy from the sun and convert it into usable electricity. These panels can consume a significant amount of space on farmland. Haight is taking a different approach. “We have a goal of taking community solar and turning it on its head…We want the project to fit the farm, as opposed to the farm fitting the project.”
Farm First Energy seeks to achieve this goal by taking corners of farmland that are underutilized during production but have a strong grid connection and turning them into small-scale projects. “It works because it's smaller. It's less land. You are not taking the entire farm out of production,” Haight said.
NOTE: Kayla Rowan, Director of Energy Management at Peoples Company, led a panel discussion on the future on energy with Blake Singleton, Brad Haight and Craig Kaiser during the 2024 Land Investment Expo in Des Moines, Iowa. Click here for an early bird discount on tickets to attend the 2025 Land Investment Expo on January 14th.