Could Texas Be an Energy Independent Nation?

The United States of Texas

In 2012, total migration to Texas from the other 49 states reached approximately 106,000.

Texas Railroad Commission Chairman, and candidate in the 2014 attorney general’s race, Barry Smitherman stated last month that Texas has the capacity to be an independent nation because “we have energy resources, fossil and otherwise, and our own independent electrical grid.”

Mr. Smitherman explained that he and many other powerful Texans are anticipating an economic collapse in Washington, and have been making efforts to make Texas a “stand-alone entity” in the event that the “rest of the country falls apart.”

Although Smitherman did not use the term “secession,” it seems clear that Texas is preparing to once again stand separately as an “island nation” – a controversial but rather popular ideal for many Texans.

Restoring the Republic of Texas:

Texans revel in the idea of secession. Many still believe the highly popularized bit of Texas folklore that the Texas Constitution of 1876 grants Texas the right to secede from the United States despite the fact that there are no such provisions included in the current Texas Constitution.

Nevertheless, many still believe that restoring the Lone Star State to an independent republic would be a victory for Texans and their progeny.

Although it is true that there is no direct language regarding a secession in the current Texas constitution, Article 1, Section1 clearly states that “Texas is a free and independent State, subject only to the Constitution of the United States.”

Furthermore, neither the Texas Constitution nor the United States Constitution explicitly or implicitly prohibits the secession of Texas or any other “free and independent state” from the U.S. In fact, joining the “union” was always voluntary.

But does this make voluntary withdrawal a lawful and viable option for Texans seeking to become an independent nation? More importantly, if the U.S. suffered from an economic collapse, does Texas have the resources to progress as an independent energy nation?

Secession and Energy Independence:

Effective energy planning would without a doubt be one of the most important strategies for any state looking to become an independent nation.

However, the majority of states in the U.S. are not energy independent, and many states rely on imports for all of their energy needs. Even states with vast coal reserves like Kentucky and West Virginia must import oil and natural gas.

Texas is another story. The state is without a doubt in a better position to be energy independent because of its abundant natural resources, alternative energy solutions and growing energy efficiency programs.

Nevertheless, 2011 EIA data reveals that the short-term energy outlook for Texas regarding energy independence is not as promising as supporters of a Texas succession would hope.

Total Energy Output vs. Total Energy Consumption: 2011

Industrial operations account for roughly 50 percent of power consumed in Texas. Energy used for transportation represents just over 23 percent of energy consumed in Texas, and residential and commercial energy demands make-up the remaining 14 and 13 percent respectively.

Texas Energy Consumption by Sector, 2011

According to other EIA data, petroleum products are responsible for almost 97 percent of all transportation fuel burned in Texas, while natural gas accounts for nearly three percent.

However, roughly 50 percent of electricity generated in Texas derives from natural gas. Moreover, coal makes up approximately 36 percent of the Lone Star State’s energy mix.

Meanwhile, nuclear power is responsible for almost 9 percent of electricity generated in Texas, and renewables only account for about 6 percent.

Texas Net Electricity Generation by Source

Texas consumed an estimated 1,695.2 trillion btu in coal in 2011. However, the state only produced about 605.3 trillion btu in coal during the same year – roughly 36 percent of Texas’ total coal energy consumption in 2011.

Natural gas consumption in Texas reached roughly 3756.9 trillion btu in 2011. However, the state produced an impressive 8047.4 trillion btu in natural gas – more than double the 2011 consumption level.

Renewable energy production in Texas also outpaced consumption levels of alternative energy in 2011. Moreover, Texas produced roughly the same level of nuclear electric power as the state consumed, approximately 414.9 trillion btu.

However, total crude oil production was also outpaced by total petroleum demands in 2011. The consumption of biomass energy also exceeded the total amount of energy created from biofuels during the same year.

Texas Energy Production Estimates 2011

Based on the data outlined above, Texas did not sufficiently meet its own energy demands in 2011.

Furthermore, the looming threat of blackouts stemming from record setting heat waves in the summer, and power grid failures caused by the surprisingly frigid winter, demonstrate the vulnerability of the Texas energy infrastructure.

Texas Energy Consumption by Source, 2011

Although it is misguided to assume total energy consumption and production figures will remain consistent in the upcoming years, the belief that Texas could become an independent energy in the short term appears to be a fallacious concept deriving from a sense of overzealous state pride.

Moreover, this rudimentary, short-term energy analysis does not take Texas energy reserve estimates into account, which would be a very important consideration to determine Texas’ capacity for energy independence.

However, considering the progress Texas is making in total energy production, efforts to make natural gas a larger component of the state’s energy mix, improving adoption levels of energy efficiency programs, and state officials making preparations to ensure Texas’ energy reserves, the future may still be bright for supporters of a Texas secession.

Rich in Fossil Fuels

Texas is the leading producer of oil and natural gas in the United States. In fact, if Texas were a separate country, it would be the 10th largest oil-producing nation on the planet.

Furthermore, oil production in the Lone Star State has more than doubled in the last 27 months to an oil output level that surpasses seven OPEC nations – including Iran.

The state has roughly 812 active drilling rigs – about 47 percent of all U.S. rigs and 24 percent of drilling rigs worldwide. Furthermore, drilling permit applications are approaching the highest level the state has witnessed in nearly 30 years.

According to Smitherman, booming resource plays in Texas could reach 4 million barrels per day by 2020, doubling the oil production level the state achieved in 2012.

Furthermore, the Lone Star State currently has 27 active petroleum refineries which are capable of producing over 5.1 billion barrels of crude oil per day – almost 30 percent of total U.S. refining capacity.

Texas also holds about 23 percent of the country’s natural gas reserves and is producing more than any other state.

Moreover, the state has the largest natural gas processing capacity in the nation, and provides roughly 30 percent of all natural gas produced in the U.S. Although the number of natural gas production plants has fallen in recent years, the average capacity per plant has been increasing.

Despite the uphill battle that coal faces in the state, Texas is the nation’s fourth largest coal producer and yielded nearly 46 million tons in 2011. This is important since coal still accounts for roughly 32 percent of power generation in Texas.

Furthermore, coal exports reached record level highs this summer. Because coal will remain an important aspect of the global energy mix – and global energy demand is expected to rise by 56 percent by 2040 – coal mining is an attractive economic opportunity for Texas.

Promising Renewable Energy Solutions

Texas is also rich in renewable energy potential, including wind, solar and biomass resources.

According to EIA data, Texas leads the U.S. in wind powered generation and was the first state to reach 10,000 megawatts of wind capacity. Moreover, the Panhandle, the Gulf Coast and the Trans-Pecos regions in Texas have some of the nation’s greatest wind power potential.

West Texas alone has over 2,000 wind turbines and their numbers continue to increase due to lowered development costs and improvements in wind turbine technologies.

Solar power potential in Texas is also amongst the nation’s highest, with solar radiation suitable for large-scale power plants in West Texas.

Lastly, Texas has an abundance of biomass energy resources due to the large agricultural and forestry sectors in the state.

Improving Energy Efficiency

According to the International Energy Agency, becoming more energy efficient is the best global source of power and fuel.

While advanced controls for industrial buildings have had an impact on energy efficiency in the state, building codes requiring increased energy efficiency have been the biggest driver of energy savings in Texas.

In 2012, Texas implemented the 2009 International Energy Conservation Code for new buildings. These new building standards have boosted energy efficiency by 15 percent compared to previous standards. Moreover, Houston requires new buildings to be 10 percent more energy efficient than the new 2009 code.

Furthermore, Texas recently passed a law which allows cities and counties to provide financing to local businesses for the purposes of power-reduction. The Property Assessed Clean Energy law, which passed in June, will likely be implemented in Houston as early as next year.

As previously mentioned, industrial operations consume roughly 50 percent of the power in Texas. Meanwhile, the average rate nationwide is 32 percent. The state’s high industrial consumption rate is being driven primarily by the high summer temperatures in Texas.

Considering the fact that Lone Star State ranks in the bottom third of states for energy efficiency utility programs, programs dedicated to increasing the energy efficiency in buildings is an essential step to making Texas a self-sufficient energy nation.

Texas: An Energy Independent Nation?

Although it is possible, the idea that Texas could be an independent energy nation in the very near future seems improbable.

Moreover, an attempt to break away from the nation would likely result in an array of unintended consequences, and would presumably require cut-backs by Texans to conserve energy and preserve the outage-prone Texas power grid.

Nevertheless, Texas is without a doubt in a better position to self-sustain than most states because of its abundant natural resources, booming energy production, improving energy efficiency, renewable energy developments, independent electrical grid and robust energy infrastructure.

Whether or not Texas officials actually attempt to break away from the nation – or if the state’s booming energy production will significantly outpace energy demands in the upcoming years – one thing is for certain:

The attractive job opportunities, reduced cost of living, favorable economy and low taxes will continue to attract wealth, businesses and American migration to the great Lone Star State.

Is Shale Production the Future of American Wealth?

TAP ManagementFracking and horizontal drilling have created an affluence of economic and employment benefits in the U.S.

For instance, the unconventional development of oil and natural gas increased disposable income by an average of $1,200 per U.S. household in 2012. This figure is expected to grow to over $2,000 in 2015, and rise to more than 3,500 in 2025.

According to a study by IHS, lower energy prices and the dwindling costs of other goods and services are the primary drivers behind the unexpected increase in discretionary income.

The same report also determined that the shale oil and gas boom is improving the trade position of the United States and is increasing its competitiveness in the global market.

Increases in domestic oil and gas production, and the promising outlook of the energy-intensive manufacturing industry, is expected to displace U.S imports and reduce the trade deficit by more than $164 billion in 2020. That’s one-third of the United States’ current trade deficit.

Furthermore, rising crude supplies from the Bakken and Eagle Ford Shale have helped the U.S. become the leading exporter of refined fuels including gasoline and diesel.

Oil production in these regions is growing at an exponential rate. For instance, in July the Bakken reached an oil output level of 874,460 barrels per day – a 6.4 percent increase compared to the previous month.

Moreover, state officials are predicting that oil production in North Dakota could double to 1.6 million barrels a day by mid-2017.

Texas pumped an impressive 7.75 million barrels a day in June, reaching a production level that exceeds the amount of oil being produced by seven members of the Organization of Petroleum Exporting Countries, including Iran. Furthermore, Texas oil production in July was almost 30 percent higher than it was in July 2012.

The rising domestic supplies are also reducing American consumption of foreign oil. In fact, the U.S met 87 percent of its own energy needs in the first five months of 2013 and is on pace to reach the highest annual rate of energy independence since 1986.

Net imports of crude oil and petroleum products are expected to fall to 5.4 million barrels a day by 2014 – down from 12.5 million in 2005, according to the EIA.

Furthermore, total job growth in the oil and natural gas industry increased by 40 percent between 2007 and 2012. During this same timeframe, however, total private sector employment grew by a mere one percent.

The oil and gas industry now supports roughly 9.8 million American jobs and pays approximately $200 billion annually in wages to U.S. employees.

Oil and gas producing states have some of the lowest unemployment rates in the nation, and many have surpassed pre-recession employment levels.

Furthermore, regions in close proximity to shale oil and gas production have the highest recorded level of upward income mobility in the U.S.

Shale production in the U.S. is creating an energy revolution and allowing producers to extract resources previously believed to be unreachable.

The industry’s job creation and economic development capabilities are also providing stability during a period of economic uncertainty.

Is shale production paving the way to American energy independence and setting the stage for U.S. dominance in the global economy?

Please let us know your thoughts in the comments below.

Oklahoma Tornado Disaster Relief Efforts

Oklahoma Tornado Disaster Relief Supplies TrailerFollowing the catastrophic tornadoes that shattered multiple towns in Oklahoma, Cody Davis and Mike Butler of TAP Management spearheaded a disaster relief effort in conjunction with Prayer Force One to help the victims of the affected areas.

Cody and Mike inspired their friends, family members, colleagues and even strangers to contribute to the cause. As a result, we were able to donate a sizable amount of cash and disaster relief supplies to help the victims of this terrible tragedy.

Aiding the Oklahoma Tornado Victims

On Saturday, May 25th, Mike and his wife Rhonda towed a 26 ft. U-Haul packed with supplies such as water, clothing, food, personal hygiene products and other essentials to the Pecan Valley Baptist Church located in Newalla, Oklahoma.

It was heart-breaking to witness first-hand the demolished communities, and learn more about the struggles the victims had been facing. Just about every one of them had lost their home and all of their belongings.

Below are some of the tragic stories about the people we were able to help, and the heroic individuals who assisted us along the way.

  • Ashley: 

Ashley contacted us about three families she knew who had lost everything. Unfortunately, none of the families had insurance. One of the displaced families had been staying in the dorms at OU. The other two families, which consisted of two single moms and several children, were all staying together in an empty, unfurnished apartment. Ashley, who is currently 8 months pregnant, helped unload the U-Haul full of supplies and transported some necessary items back to the three relocated families.

  • Trent:

Trent is an insurance agent in the Oklahoma City area. Trent contacted us about four displaced families that were actually his clients. These families either had lapsed insurance policies due to insufficient funds, or they could not afford to pay for the extra insurance that helped cover the hotel expenditures, food costs, etc. while being displaced from their homes.

  • Sheila & Cody:

Sheila and her husband Cody lost their home and all of their belongings. Their child attended Plaza Tower Elementary, but fortunately was unharmed when the tornadoes destroyed the school. Sheila has epilepsy and had been unable to receive her prescription. During the unloading process, Sheila unfortunately suffered from another seizure. Due to the generosity of all those involved, Sheila now has her medication.

  • Jill:

We were informed of Jill’s situation by our friend Carrie. Like so many others, Jill had lost everything. When Jill returned to her leveled home, she found her dog underneath the debris, still alive!

  • Veronica:

Veronica rode out the storm with her grandson on her lap. Because Veronica is a contracted employee, FEMA would not help her until she applied for an SBA loan. FEMA considers contracted employment to be synonymous with self-employment, and therefore denied her request for assistance. Once we heard about Veronica’s troubles and the struggles she was dealing with, we knew that we had to reach out to her right away.

  • Tina:

Tina’s home was severely damaged, but fortunately, survived the devastating storm. However, the tornadoes had destroyed the electrical grid in the area. Tina and her neighbors remained trapped in their households, because if they left, they risked losing their belongings to looters and would not be allowed back into their homes. Because of this, Tina and several of her neighbors were sharing a small generator to power their homes while they protected their property. We were able to provide Tina with a generator of her own. At the time she was uncertain about how long her neighborhood would be without electricity.

  • Kendra:

Kendra is a high-school teacher and softball coach in Carney, Oklahoma. Although Carney was destroyed by the devastating tornadoes that touched ground on May 19th, the town had received very little disaster relief support from other organizations. While Kendra’s home was spared, many of her friends and students were not as fortunate. Because of this, Kendra requested specific supplies such as ice chests, storage bins, rakes and shovels in an effort to help her parties prepare for the immense clean-up process.

Oklahoma Tornado Relief Donators

We are fortunate to have been able to help our friends and family members take care of their neighbors and loved ones in the wake of this tragedy. Without the generous donations we received by all the parties involved, our efforts could not have been as beneficial.

Although there were so many generous individuals who helped us along the way that we have not listed below, we wanted to take the time to give special thanks and recognition to:

Mike & Rhonda Butler, TAP Management
Marty & Sarah Harper, Harper CPA

Allen Goldsmith, Technology Navigators 
Allen Gilmer, Drillinginfo

Pastor Ray Still & Jeff Covington, Oakwood Baptist Church
Michelle Knighton, Renew Church

Naiomi Cramer
Sam Jones, Vistage

Cheryl Mock & her students, New Braunfels Christian Academy

Alexa & Alden Elliot
Kathy & Richard Gehrke

Lisa Hannusch, UniMed Direct
Joseph & Amy Joubert 

Penny, Walmart – New Braunfels, TX
Hope, Kelly, Skylar & Monica,  Lowe’s – New Braunfels, TX

First Lutheran Church
Employees of TAP Management

Oklahoma: We Stand With You

Our hearts are with all of the families, students and educators that were affected by this catastrophe. Considering the grave difficulties these individuals are now facing as well as the scale of their needs, seeing a positive outcome to this tragedy can be a challenge.

However, the rapid responses, generous donations and hard work by all the parties involved are a remarkable demonstration of empathy and social responsibility.

Although our nation may appear irreversibly divided at times, in the face of adversity, we stand united with our fellow neighbors. And at the end of the day, that is what truly matters.

TAP Management Inc.  |  515 Congress Avenue, Suite 2525  |  Austin, TX  |  (512) 527-6000

TAP Management’s Oklahoma Emergency Relief Initiative

Oklahoma: We Stand With YouIn light of the tragedy that has struck Oklahoma, Cody Davis, the CEO of TAP Management, has decided to donate $20,000 to an emergency initiative.

Cody grew up in Moore, Oklahoma and graduated from Westmoore High School. The devastating tornadoes have affected the lives of several of his friends and loved ones.

Having witnessed first-hand the twisters that shattered the lives of thousands on May 3rd, 1999, Cody truly understands the struggle and devastation that follows in the aftermath of such tragedies.

The donation will provide Oklahoma victims with everyday essentials such as water, clothing, food and other related products. Cody is also offering temporary housing and employment opportunities for those affected by the disastrous tornadoes.

In addition to the company donation, employees of TAP Management are also making financial contributions to provide additional relief for those affected by the storms.

Furthermore, Petroleum Engineer Mike Butler, who is also a native Oklahoman with family and friends in the affected areas, is coordinating a separate relief effort through Prayer Force One.

As a parishioner of Pecan Valley Baptist Church (an affiliate of Prayer Force One), Mike is working with Ed Moore, the Director of Prayer Force One, to assist in the allocation of the contributions and resources donated to the church’s relief.

Mike is in the process of purchasing other necessary household items, and is collecting monetary contributions to deliver to residents of the shattered areas. He, along with several volunteers, will be pulling trailers full of supplies to assist the victims in Oklahoma.

Prayer Force One is in the process of creating a donation page with more detailed information for those interested in getting involved with their relief efforts. Please visit their site in the near future for further support relief details.

Although several friends and family members of the TAP Management team have been directly impacted by this tragedy, we feel it is always important to help those in need and encourage others to assist the victims in any way they can.

If you would like to join our efforts or need any assistance, please contact us by calling (512) 527-6000.

TAP Management Inc.  |  515 Congress Avenue, Suite 2525  |  Austin, TX  |  (512) 527-6000

Consumer Complaints of Spiraling Gas Prices

Although U.S. gasoline consumption has been declining in recent years, elevated fuel prices have increased the cost of living for Americans, adding to the frustration and complaints of already weary consumers.

According to the Energy Information Administration, prices at the pump in 2012 took the biggest share of U.S. household income in 30 years.

The average household spent $2,912 on gasoline in 2012 – approximately 4 percent of American’s pre-tax income.

Because of this, many consumers have issued complaints about the rising gasoline costs, and find themselves wondering, “What factors contribute to the price of gasoline?”

Gasoline prices are composed of four main components:

  • The price of oil determined by world markets.
  • Taxes levied by federal, state and local governments.
  • Refining costs to convert oil into gasoline.
  • Distribution and marketing costs, including the costs of the retailer providing the gasoline at the pump.

SEE ALSO:  Complaints Regarding Volatile Gas Prices

Crude Oil Prices

The price of crude oil is the largest component of the prices consumers pay at the pumps. Crude oil accounts for roughly 68 percent of the retail price of gasoline.

World crude oil and liquid fuel consumption rose to the highest level ever in 2012. The EIA projects that total world oil consumption will grow by 1.05 million barrel per day during 2013 and 1.4 million barrels per day in 2014.  Countries outside the OECD are expected to be responsible for most of the increase in consumption.

The most significant increases in oil consumption are predicted to come from non-OECD Asian countries, because these nations are consuming large amounts of oil to help stimulate rapid economic growth.

For instance, as of 2009, China is the second-largest consumer of oil behind the United States. China also became the second-largest net oil importer in 2011.

China has a substantial role in the increased global demand of oil. Because global supply is being outpaced by world oil demand, and the price of oil is determined by speculative markets reacting to external forecasts, the price of oil is constantly rising.

For instance, even the potential of an outbreak of a major war in the Middle East keeps oil prices elevated, as oil traders factor in the chance of a significant disruption in exports from the region.

Furthermore, growing demand from China, reduced oil production and Saudi Arabia and supply disruptions in Venezuela, Nigeria, North Africa and the Middle East have also put markets on edge.

 SEE ALSO:  Exploring Tax & Earning Complaints of Oil and Gas Industry

Federal, State and Local Tax Burdens

Taxes are the second largest factor in retail gasoline prices. In December 2012, federal state and local taxes represented 13 percent of gasoline costs.

As of January 2013, the federal tax on gasoline accounts for 18.4 cents per gallon and the average state and local tax is 30.4 cents per gallon.

This means consumers nationwide are paying an average of 48.8 cents per gallon in taxes when filling up their tanks.

 SEE ALSO:  Why Energy Officials Have Issues Complaints of New Energy Taxes

Distribution and Marketing Costs

The price retailers charge for gasoline involves the distribution and marketing of the refined product. This represents roughly 11 percent of the retail price of gasoline.

Most gasoline is shipped from the refinery via a pipeline to terminals near consuming areas. The product is then loaded onto trucks and delivered to individual stations.

Although most gas stations are branded as Chevron, Exxon, BP, Shell or another major oil company, the majority of these stations are independently owned.

Moreover, large oil companies like the ones listed above own less than 5 percent of gas stations in the United States. However, some retailers are owned and operated by refining companies.

The price consumers pay at the pumps reflects the retailers purchase price of the fuel as well as the other costs of operating the service station.

This price also reflects other external conditions and factors, such as the location and marketing strategy of the individual owners.

 SEE ALSO:  TAP Management Complaints of Energy Growth Prevention

Refining Costs

The refining process accounts for roughly 8 percent of the price consumers pay at the pumps. This figure varies regionally because some parts of the country require different additives and processing steps in their gasoline formulas.

This figure also tends to vary in other months because of seasonal changes in refinery operations. For instance, in the spring when refineries adjust their operations to produce summer-blend gasoline and to meet summer gasoline demands, the cost of refinery operation is increased.

The operational costs of refineries also tend to rise as a result of increased federal regulations. This significantly impacts the price of gasoline as refineries are forced to pass on the additional cost burdens to consumers.

Gasoline is currently at a production low because plants like Chevron’s El Segundo refinery near Los Angeles and LyondellBassell Industries NV’s Houston site in Texas are offline and undergoing routine maintenance.

This demonstrates a limited refining capacity in the United States. Since the 1990s, over 66 U.S. refineries have been closed due mainly to increasing regulatory costs. Furthermore, refineries have also spent $128 billion to comply with federal environmental regulations.

 SEE ALSO:  Complaints of Refinery Profits Are Inaccurate

Global and Domestic Supply Issues

The United States has witnessed the highest level of domestic oil production in over 20 years. Furthermore, the U.S. net oil imports have reached the lowest level in 20 years.

Hydraulic fracturing and advancements in drilling technology are the primary reasons for these accomplishments. Roughly 96 percent of the rapid oil production growth in the U.S. since 2007 has occurred on private and state lands.

However, oil production in the Gulf of Mexico is expected to drop by 10 percent from the production levels recorded in 2010. The main reason for this decline is due to government policies that restrict drilling in the Gulf.

Currently, only 2 percent of offshore federal lands and 6 percent of onshore federal lands are leased to oil and gas drilling. Permits for drilling in these areas have fallen dramatically.

Production in these areas could be significantly increased if federal regulatory procedures were commensurate to state regulations. These regionally sensitive procedures are typically more conducive to the exploration and drilling of oil and natural gas fields.

Furthermore, these states have a vested interest in encouraging the responsible regulation of hydraulic fracturing by protecting their citizens and properties.

 SEE ALSO:  TAP Management Reviews Potential Benefits of Keystone XL

Approximately 23 percent of the United States’ imported oil supply in 2012 came from the twelve OPEC countries: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.

In order to maintain higher oil prices to fund their governments, these nations agree on production targets that curtail the supply of oil from other member states.

Because these twelve oil-exporting nations possess much of the world’s confirmed oil reserves, their efforts to inflate the global price of oil leaves the United States with little room to reduce the world price of oil.

 SEE ALSO: Utility and Coal Executives Issue Complaints of National Energy Policy

Reducing the demand for oil or increasing the world oil supplies could theoretically help lower oil prices, but the United States cannot affect the oil demand of other countries nor increase the supply of oil from other oil producing nations.

Furthermore, the price of gasoline in the U.S. could be lowered by reducing refinery costs, decreasing gasoline taxes or decreasing marketing and distribution costs.

However, these three components have significantly less influence on the price consumers pay at the pumps compared to the price of crude oil.

Responding to Consumer Complaints

Gasoline prices are increasing because oil supply output is being outpaced by world oil demand growth. Despite the efforts of independent oil and gas producers like TAP Management, the record breaking oil production levels in the U.S. have had little impact on the global price of oil.

However, if the United States achieves energy independence, the amount of oil the U.S. exports overseas will likely increase and cut into OPEC’s global market share. This could greatly disrupt the global oil marketplace and help the United States become a revered superpower once again.

TAP Management Inc.  |  515 Congress Avenue, Suite 2525  |  Austin, TX  |  (512) 527-6000

TAP Management Reviews Potential Benefits of Keystone XL

According to a new report by Harris Interactive, roughly 69 percent of Americans support the Keystone XL project and 83 percent believe the pipeline would enhance U.S. energy security.

Furthermore, 92 percent of respondents agreed that the job creation expectations of the Keystone XL were very important factors in their consideration of the project.

Nevertheless, the pipeline remains unapproved, and is in its fifth year of review by U.S. officials.

The Keystone XL pipeline would efficiently transport oil produced in Alberta, Canada to several points in the United States, create thousands of American jobs and add billions in tax revenue to local, state and federal authorities.

President Obama declined to approve the Keystone XL about one year ago, citing concerns about the proposed route of the pipeline since it would cross the environmentally sensitive Sand Hills of Nebraska.

In response to Obama’s concerns, the pipeline has been re-routed to avoid the sensitive Sand Hills area. Furthermore, Nebraska Governor Dave Heineman has approved the Nebraska Department of Environmental Quality’s most recent review of the project.

Now that Nebraska has approved a new route across the state and has eased environmental concerns, a bipartisan group of 53 senators have sent a letter to Obama asking him to review and approve the project.

Because the Keystone XL crosses international boundaries, the Obama administration and the State Department have the ultimate authority in whether the project will be approved, and if the project serves the national interest.

Economists and energy proponents are expecting the United States to benefit from the pipeline in the following areas:

  • The construction of the Keystone XL will create 20,000 jobs during the building phase.
  • Oil sands development associated with the Keystone pipeline could add 117,000 new U.S. jobs by 2035.
  • New oil sands development could support over 500,000 additional American jobs by 2035.
  • The Keystone XL pipeline will be able to transport 830,000 barrels of North American oil per day from Canada’s oil sands as well as the Bakken fields in the U.S.

Moreover, the Keystone pipeline would likely strengthen the United States’ energy partnership with Canada – our number one supplier of imported oil.

If the Keystone is approved, the improved infrastructure and full development of oil sands crude could help the U.S. meet 100 percent of its liquid fuel needs from North American resources by 2024.

Furthermore, TransCanada, the pipeline builder, has agreed to adhere to 57 special safety conditions related to the Keystone’s design, construction and operation.

The organization has complied with all environmental study requirements and views the project as a low risk venture even though the company would have to buy $200 million of insurance to pay for any unintended consequences.

The Obama Administration has promised U.S. citizens a balanced energy policy which focuses on increased conservation and the development of domestic resources.

Because of this, energy proponents and companies like TAP Management are anticipating the project to be approved after President Obama and the State Department review the updated Keystone XL proposal.

 TAP Management Inc.  |  515 Congress Avenue, Suite 2525  |  Austin, TX  |  (512) 527-6000

Could the Super Bowl Blackout Influence Energy Policy?

The Super Bowl power outage on Sunday could fuel increased public interest in energy policy debates that have been set aside in recent years.

According to Senator Lisa Murkowski, the ranking Republican on the Senate Energy and Natural Resources Committee, “I think it raises awareness. Unfortunately for us, most of us take energy for granted. It’s just always there.”

Early in the third quarter of the Super Bowl on Sunday night, play was halted by a 34 minute blackout that resulted in a momentum shift for the trailing San Francisco 49ers.

The blackout occurred shortly after an energy-intensive halftime performance from Beyoncé involving light displays, video boards and fireworks. The outage partially darkened the stadium when half the lights throughout the arena shut off and the scoreboards went dim.

Although the root cause of the issue has not yet been determined, Entergy, which provides power to the Superdome and roughly 2.8 million utility customers, stated on Monday that the electrical monitoring equipment experienced an abnormality.

“Shortly after the beginning of the second half of the Super Bowl in the Mercedes Benz Superdome, a piece of equipment that is designed to monitor electrical load sensed an abnormality in the system,” the company claimed in a joint statement with stadium operator SMG.

“Once the issue was detected, the sensing equipment operated as designed and opened a breaker, causing power to be partially cut to the Superdome in order to isolate the issue.”

Entergy and SMG explained that the backup generators “kicked in immediately as designed” and that full power was restored. According to the statement, “the fault-sensing equipment activated where the Superdome equipment intersects with Entergy’s feed into the facility.”

Although it remains unknown what exactly caused the problem, millions of viewers were affected by the outage. Senator Murkowski believes the incident will serve as a reminder to the public that energy supplies shouldn’t be taken for granted.

Murkowski has launched a public relations campaign to promote her extensive energy blueprint. This proposal encompasses electricity policy, oil and natural gas production, coal fired power generation, biofuels and more.

Moments after she unveiled the energy policy blueprint to a conference of state electricity regulators, Murkowski told reporters, “We have got this immaculate conception theory of energy. It just happens. The lights turn on, it’s the temperature we want, until it’s not, until it becomes inconvenient, it interrupts our game, it interrupts what we are doing, and then all of a sudden it is like, ‘well wait a minute, what it going on here, where do we get this stuff from, how could it not be there and be reliable.’”

“We should aim to use energy more wisely, but that is not a substitute for production, or for measures that will increase the reliability of our systems and supply.”

TAP Management Inc.  |  515 Congress Avenue, Suite 2525  |  Austin, TX  |  (512) 527-6000

The Mississippian Lime: A Top 5 Shale Play

Oil WellUnconventional oil and natural gas production from shale in the Eagle Ford, Bakken, Marcellus and Utica formations has transformed the  U.S. energy landscape.

By utilizing horizontal drilling and other progressive drilling methods, energy producers now have the ability to extract energy resources from abandoned fields that were once believed to be dry.

Within a short amount of time, advancements in drilling technology has helped the United States reach a 20 year oil production high, reduce our net oil imports to a 20 year low, and are setting the stage for making the U.S. a net exporter of natural gas.

Furthermore, a substantial amount of focus has been placed on how oil and natural gas development from shale is benefiting citizens and businesses in Texas, North Dakota and Ohio.

However, the economic and geological data of the Mississippian Lime play have caught the attention of independent producers like TAP Management because of the lucrative investment opportunities the play provides.

The depth of the Mississippi Lime’s production area is approximately 5,000 feet – substantially less than the average 10,000 foot zone in the Bakken.

Furthermore, the typical Mississippi Lime well costs roughly $3.3 million to drill. Meanwhile, estimated well expenses in the Bakken typically require about $8 million in capital.

Leasing acreage in the Mississippian is also less costly, sometimes negotiated at around $3,000 an acre. Other leases in the highly publicized Bakken or Marcellus shales can reach up to $20,000 an acre.

However, the Mississippi Lime play is by no means a secret to oil and natural gas industry personnel.

Dating back to the 1950’s, over 14,000 vertical wells have been drilled in this region, with many previously producing at commercial levels.

Because of the priceless data that can be observed from these abandoned wells, unlocking the oil-rich reserves in the Mississippian through horizontal drilling and hydraulic fracking methods can be more easily optimized.

Although many energy companies are attempting to capitalize on the reduced drilling and operational costs, the largest players in the Mississippian are two Oklahoma City-based companies – Chesapeake Energy and SandRidge Energy.

The development opportunities that the Mississippian Lime play offers have attracted a tremendous amount of attention from oil and natural gas producers.

Energy experts and companies that focus on the redevelopment of mature fields believe the Mississippi Lime play is one of the nation’s hottest oil plays, and are looking forward to decades of production.

TAP Management Inc.  |  515 Congress Avenue, Suite 2525  |  Austin, TX  |  (512) 527-6000

Fraud Concerns from Facebook Graph Search

As digital innovations become more heavily ingrained in our society, securing the privacy of customers, employees and other proprietary information will become a more significant focus of companies like TAP Management. Fraud tactics stemming from social engineering and phishing activities pose a serious threat to both individuals and businesses.

On Tuesday, Facebook introduced “Graph Search.” This innovative search technology will utilize the digital connections the social site has developed between its users, interests, places, etc.

According to a Facebook press release, “It makes finding new things much easier, but you can only see what you could already view elsewhere on Facebook.”

Graph Search will allow Facebook members to discover content based on criteria that’s been voluntarily shared by other users.

In other words, people will be able to use Graph Search to find content that others have published on the social network.

For example, you will soon be able to discover “restaurants in San Francisco my friends have visited,” or even “TV shows supporters of Ron Paul like.” This smart search feature will then lead users to more, serendipitous connections.

As of now, the search tool is limited to people, photos, places and interests. It does not include events or posts enabled in search or many of the other gated Facebook content. Not yet at least.

This ABC video provides a more detailed explanation of how Graph Search works:

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Although Graph Search currently excludes users’ status updates, ultimately any content that is uploaded to the social network will be discoverable with the exception of limitations caused by privacy settings.

To help ensure Facebook users have adjusted their privacy settings to satisfy their preferences before anything unpleasant is revealed by Graph Search, Facebook has begun asking users to “review who can see your stuff” when they log-in.

While unveiling the new tool, CEO Mark Zuckerburg explained, “We realize that people are going to care what shows up about them in search.”

Although it is true users can adjust their own privacy settings to meet their needs, the relaxed privacy settings of their connections is a vulnerability issue to more concerned users.

For instance, if a friend uploads a picture of you at a bar, geo-tags it and sets it as public, it will be Graph Searchable to anyone looking for pictures from that bar.

If this occurs, users have the option to untag themselves, request the uploader of the photo remove it from Facebook, or change their privacy settings.

Mashable effectively outlines these privacy concerns and offers some best practices to cope with the new Graph Search tool in the following video:

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In addition to privacy concerns, Facebook users should be weary of devious members who will take of advantage of this wealth of knowledge for the purposes of fraud or social engineering.

The amount of GPS location data, photos and personal information that Facebook stores about users provides fraudsters and phishers with an enormous supply of information to scam unsuspecting users.

Therefore, TAP Management encourages Facebook users to educate themselves on the most common online fraud tactics, and to adjust their privacy settings to help ensure the protection of their data.

TAP Management Inc.  |  515 Congress Avenue, Suite 2525  |  Austin, TX  |  (512) 527-6000

Eagle Ford Shale: A Texas Game-Changer

Although the Eagle Ford Shale play is still in its early stages of development, citizens of the counties surrounding the formation are benefiting from a significant boost in personal income.

According to the U.S. Commerce Department’s Bureau of Economic Analysis, counties with wells permitted or in production experienced an average increase of 13.62 percent in per capita income between 2008 and 2011.

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Some of the counties that are benefiting from Eagle Ford Shale development have been amongst the poorest counties in the entire state.

Between 2008 and 2011, Texas also saw an increase of 1.34 percent in per capita income – reaching an average annual pay of $40,147.

Furthermore, the average per capita income in the counties surrounding the Eagle Ford increased from $28,148.92 in 2008 to $31,893.93 in 2011.

Several of the surrounding counties even experienced an income growth that significantly outpaced Texas as a whole.

The average Eagle Ford county’s per capita income experienced an average increase of more than 13 percent since the beginning of the shale boom.

Increasing the wealth of the population is not a new benefit of oil and natural gas production. For instance, Midland, TX is now the second richest city per capita in the United States.

Although Midland has long been known for its abundance of oil and natural gas, fracking and the natural gas boom have lowered the unemployment rate to less than 3 percent, and the metropolis is dealing with a housing shortage caused by flocking workers.

Oil and natural gas production in the Eagle Ford Shale is providing a better standard of living for Texans. From the products we use every day to the stimulation of the steel and manufacturing industries, our nation’s infrastructure depends on the development of natural resources.

Because of this, TAP Management is proud to be contributing to the exploration and production of our nation’s valuable resources. By creating better jobs and increasing the domestic supply of oil and natural gas, the United States will benefit from a robust energy sector and lowered reliance oil imports.

TAP Management Inc.  |  515 Congress Avenue, Suite 2525  |  Austin, TX  |  (512) 527-6000

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