Energy impacts, near and far

Just over a week ago, a large explosion and fire at the Irving Oil Co. refinery in St. John, New Brunswick, sent ripples throughout the energy industry. Processing over 300,000 barrels of crude oil a day into refined energy products (heating oil, gasoline, diesel fuels and jet fuel), the Irving refinery is Canada’s largest. It sends almost half of its production to New England and New York. In September, four million barrels of refined products (a barrel is the equivalent of 42-gallons) were barged into Northeast ports such as Searsport, South Portland, Portsmouth, Revere, etc.

Initially, last week’s fire had a small impact on pricing and inventory levels. These are the bellwether measurements that affect trading and the paper traders who set energy prices in New York Harbor. At the end of September, gasoline inventories were above average in the Northeast’s ports and tank farms. This helped insulate the region from the inevitable gas price spikes that occur with hurricanes.

But distillate inventories (diesel and heating oil) were 15 percent below the five-year inventory average. This helped propel heating oil prices to a 30 percent increase over last winter and create consumer stress as we approach winter.

Irving is not the sole provider of the region’s liquid energy needs. Valero and Ultra-Mar also operate refineries in Quebec that serve New England, plus Sprague and other energy suppliers operate delivery and storage systems sourcing product from other East Coast refineries. But the Irving incident highlights, again, how tenuous our overall energy system is. Disruptions in one sector — electric, nuclear, natural gas, or petroleum — affects all of us with a ripple effect as the grid compensates to keep the lights on.

The expansion of alternative energy supplies, such as wind and solar power, can help. But base-load power supply and transportation energy needs still require huge amounts of petroleum-based products for everyday life. According to the Energy Information Agency, the Earth’s various economies consume more than 100-million barrels of oil every day. America now provides over 10 million barrels a day of this energy — the largest of any nation on earth — even as we rapidly expand solar and wind energy production. Population growth and the economic expansion of the United States and many other countries demand increasing levels of energy now.

The Irving refinery incident injured four workers; no one died. And initial reports suggest that refinery disruption is manageable so energy supply will soon resume. Yet this latest disruption should remind us all of the volatile nature of our energy supply. From freak fall wind storms (last Halloween), to lengthy ice storms, to extended cold snaps (last January) to refinery fires, sudden and unexpected energy supply issues inevitably affect us. Working for alternative energy supply helps increase our independence Conservation steps by each of us (insulating, efficient lights and heating appliances, more fuel-efficient vehicles) will also help. But they are not the whole answer. Not yet, anyway.

Three decades ago, forecasters warned of “peak oil” and the exhaustion of this energy source. This is obviously contrary to the reality throughout the world today. Still, we must be aware of all our energy sources so that consumers have economic confidence and real-world comfort with the management of our energy.

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