The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
The blog's authors include staff from the Atlanta Fed’s Regional Economic Information Network and Public Affairs Department.
Postings are weekly.
Insight from our Energy Advisory Council
The Federal Reserve Bank of Atlanta's Energy Advisory Council met at the New Orleans Branch a few weeks ago. The Energy Advisory Council is one of five such councils that are part of the Atlanta Fed's Regional Economic Information Network (REIN). Others include agriculture, trade and transportation, travel and tourism, and small/emerging business. The Energy Advisory Council consists of representatives from upstream and downstream production firms, utility companies, and manufacturing/fabrication companies.
Part of the meeting focused on the recent increase in oil prices, and council members discussed the causes and sustainability of higher energy costs. The conclusion was that the price increases were largely the result of higher demand and the increased potential of supply issues, the latter being most affected by recent unrest in the Middle East. Longer-term, members agreed that Gulf of Mexico energy production may not reach its potential. They noted that although 10 offshore drilling permits have been approved since the expiration of the moratorium on deepwater drilling in the Gulf of Mexico, only one was for new exploration. The other permits were issued to resume operations that had been shut down during the moratorium.
Another focus of the meeting was the crisis at the nuclear plant in Japan and the possible repercussions this event may have for the U. S. nuclear power industry. Currently, council members noted, the new nuclear facilities being approved and built have an advanced design, which does not require electricity to cool an overheating reactor, but uses gravity instead. The advanced designs will have other redundant backups as well. In addition, the oversight of existing nuclear plant operations will likely become even more stringent. With the government's current push for clean energy, members agreed that a slowdown in permitting new facilities is not likely.
More generally, council members discussed rising commodity costs being felt throughout the industry, especially with regard to steel (see the chart). They agreed that higher raw materials costs will eventually be passed through to oil and gasoline prices.
Also among the notes from the meeting:
• Activity in the utility sector is up as measured by electricity sales, with the industrial sector showing positive activity, but weakness persists in the residential and commercial markets.
• The introduction of horizontal drilling and liquefaction has changed the natural gas industry, both from the supply and demand side. Supply has increased as a result of the development horizontal fracturing, and demand has increased in part because of the high cost of petroleum.
Input from our Energy Advisory Council and other advisory councils helps us gain insight into economic developments in key industries and sectors in the region's economy. Since developments in these important areas of economic activity influence the broader economy, this insight is a key part of our overall assessment of economic activity in the nation as a whole.
By Kate Glover, Regional Economic Information Network analyst at the New Orleans Branch of the Atlanta Fed
TrackBack URL for this entry:
Listed below are links to blogs that reference Insight from our Energy Advisory Council:
- Tiny Bubbles in Alabama
- Through the Eyes of a Big Fan
- Southeastern Manufacturing Sees No Shadow
- Southeastern Labor Market Continues Strengthening
- A New Year, a Better Economy?
- Florida's Economic Rebound Continues
- Charting Employer Sentiment in the Southeast
- O Manufacturing, Is Winter Thy Enemy?
- New Orleans Area Optimistic Heading into 2015
- Florida's Job Report Shines Bright
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- Banks and banking
- Beige Book
- Business Cycles
- Commodity Prices
- Consumer Savings
- Data Releases
- Disaster recovery
- Economic conditions
- Economic Growth and Development
- Economic Indicators
- Fiscal Policy
- Gulf Coast
- Health Care
- Holiday Sales
- Labor Markets
- Local Economic Analysis and Research Network (LEARN)
- Monetary Policy
- Natural Disasters
- New Orleans
- Oil Spill
- Real Estate
- Sales Tax