Monthly Archives: December 2005

Price Summary–Oil. Gas, Natural Gas

Official Energy Statistics from the U.S. Government

Price Summary
  Year Percent Change
2003 2004 2005 2006 03-04 04-05 05-06
WTI Crudea ($/barrel)
Gasolineb ($/gal) 
Dieselc ($/gal)
Heating Oild ($/gal)
Natural Gasd ($/mcf)
a West Texas Intermediate.
b Average regular pump price.
c On-highway retail.
d Residential average.

Renewable Wind get Colorado Boost from Xcel Energy

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Xcel (XEL) would become biggest Wind Power provider in U.S.

Xcel Energy announced today that it intends to acquire 775 megawatts of new wind power capacity for its Colorado system by 2007. The additional capacity would make Xcel Energy the nation’s largest utility user of wind power.

The announcement today is part of filings made with the Colorado Public Utilities Commission (CPUC) on the company’s Least-Cost (Resource) Plan (LCP), a process designed to address the state’s growing energy demand. Xcel Energy also announced today that it intends to acquire approximately 1,300 megawatts of natural gas-fired generation from new and existing facilities between 2007 and 2012.

In addition, the company intends to acquire up to 30 megawatts of energy efficiency supplied by bidders, known as Demand-Side Management (DSM). Xcel Energy has committed $196 million in company-sponsored initiatives for the remainder of the DSM program, which would be an additional 290 megawatts.

“Xcel Energy has taken the leadership position among all electric utilities in support of renewable energy — both in Colorado and throughout the country,” said Pat Vincent, Xcel Energy’s president and chief executive officer for Colorado. “We are working to ensure that wind power is an integral part of our nation’s future energy supply.” Xcel Energy — which currently has 282 megawatts of wind in-service or under-construction in Colorado — would increase its overall wind capacity in the state by 275 percent. Xcel Energy estimates that it also would meet the non-solar mandates of the voter-approved Renewable Energy Standard through 2014, essentially meeting the standard seven years earlier than required.

Companywide, Xcel Energy — which operates in 10 states — expects to have more than 1,100 megawatts of owned or purchased wind capacity on its system by early 2006, increasing to more than 2,300 megawatts of wind capacity by the end of 2007. This includes more than 1,000 megawatts each in Colorado and Minnesota.

Xcel Energy cautioned that while it is aggressively seeking to add more wind power in Colorado, the ultimate success of permitting, constructing and placing new wind farms into commercial operation remains in the hands of independent wind developers.

“While current economic conditions in the wind power industry are challenging, we will closely work with our future wind development partners in Colorado to see that their projects are successful,” Vincent said. “The completion of these projects is important to our customers and to Xcel Energy.”

Xcel Energy’s estimates of its current and future wind power capacity standing — in relationship to other utilities — is based on a compilation of current and proposed wind projects announced by utilities through various national wind power trade associations, and is subject to change based on future announcements.

Also today, Xcel Energy filed with the CPUC a request to shorten its planned resource acquisition period under the current LCP to nine from 10 years. In an application filed today, the company noted that conditions have changed since the original plan was filed in April 2004, requiring it to reconsider its long-range acquisition strategy.

“There are several recent economic, legislative and regulatory uncertainties that we need to better understand before we commit to another major resource that would come on line many years from now,” said David Eves, Xcel Energy vice president for resource planning and acquisition.

Specifically, Eves noted that the federal Energy Policy Act of 2005 places significant emphasis on improving the nation’s transmission grid, which could open up new generation resources previously thought unavailable to the company’s Colorado operations. Likewise, the Colorado commission will hold future resource planning and DSM hearings that could significantly alter the rules for acquisition of future generation.

The resource planning process occurs every four years in Colorado, and is designed to determine the company’s future energy needs and identify the resources that would be acquired to meet those needs. In the past decade, Xcel Energy has seen a 10 percent growth in per-household electricity use, a 20 percent increase in total customers and a 60 percent increase in peak demand for power.

Coupled with the addition of the 750-megawatt, coal-fired third generating unit at the Comanche Generating Station in Pueblo, Colo., the wind, natural gas and energy efficiency resources to be acquired through the announcement today combine to give Xcel Energy a very balanced and diversified supply portfolio, Eves said.

The acquisition of future wind power in Colorado is not a part of Xcel Energy’s premium customer “green pricing” program, known as Windsource. Xcel Energy also notes that one megawatt of generation can meet the electricity needs of approximately 1,000 homes in Colorado.

Xcel Energy (NYSE:XEL) is a major U.S. electricity and natural gas company, with operations in 10 Western and Midwestern states. Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.3 million electricity customers and 1.8 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth-largest combination natural gas and electricity company in the nation. Company headquarters are located in Minneapolis. More information is available at

If peaking is imminent

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Avoiding economic turmoil will require more than a decade of “intense, expensive effort,” according to a February study by Science Applications International for the Energy Department. The U.S. would need to build alternative fuel plants and greatly increase vehicle fuel efficiency.

“If peaking is imminent, failure to initiate timely mitigation could be extremely damaging,” the report warned.

Energy Impact slows Global Economy

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Continued from the the Cherry Creek News

“The relationship between U.S. crude oil stocks and oil prices has become unhinged during the past year, probably due to new demand/supply factors heavily influenced by China,” says Gail D. Fosler, Executive Vice President and Chief Economist of The Conference Board. Her analysis appears in StraightTalk, a newsletter designed exclusively for members of The Conference Board’s global business network.

These imbalances have generated major crises in the past, both in the U.S. and abroad, although there are important offsets-particularly by deep discounting in other prices-today. Despite recent dips in energy prices and holiday promotions, consumers across the U.S. will be hard hit in the short term.

Says Fosler: “The recent energy shock is reminiscent of the 1970s. Rising gasoline prices have taken the energy share of consumer spending from about 4% in 2001 to 6.5% this September-the highest level in more than 20 years.”

While oil prices hit new highs during the recent hurricane crises, the recent surge was not sustainable and oil prices have already declined again. But current oil prices are still well above the level consistent with their long-term fundamentals. In the coming months, oil prices should continue to fall toward levels more consistent with long-term economic fundamentals.

The effect of lower oil prices on natural gas and gasoline prices is based in part on their relationship to crude prices, since natural gas prices tend to lag crude oil prices. When crude prices rise sharply, natural gas prices spike briefly and then begin to decline.

“Still, even if oil prices fall to $40 a barrel, natural gas prices are likely to remain at about $7 per MMBTU, which is still above the prevailing price of the last 10 years,” says Fosler.

A Trend Toward Higher Energy Prices

The same trend is pushing gasoline prices. Refiners’ margins have been increasing steadily as crude oil prices rise. The shortage of refining capacity is due, at least partly, to low crude oil prices over the past 15 years, which have depressed refiners’ margins. Today, margins are up, as are crude oil prices. As with natural gas, however, even a sharp drop in oil prices would produce gasoline prices that are in the range of $2 a gallon, which is above the prevailing level of recent years.

Meanwhile, non-food, non-energy prices in the Consumer Price Index have continued to slow since 2001.

A Drop in Personal Consumption

Estimates from The Conference Board show that a permanent increase of 50 cents per gallon in the price of retail gasoline will reduce the level of real personal consumption by 1% to 1.5% within a year.

Consumers have benefited from low interest rates and home equity refinancing, trends that have supported spending power in the face of relatively modest wage growth. Now, rising interest rates and the magnitude of the hurricane-related gasoline shock appear to be taking their toll. Auto sales are likely to be down 30% year over year and 4.5% from the third quarter.

“Probably the most critical impact of higher energy prices is their ability to weaken consumer spending relative to investment and impose margin pressure on energy-intensive industries globally,” says Fosler. “Investment is driving most of the economic growth around the world and in the U.S. History suggests that, despite the huge amounts of cash available to fund investment, investment rates cannot be sustained if they get too far ahead of consumer spending.”

Source: StraightTalk, Volume 16, #10, November/December 2005 The Conference Board