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Yesterday, the United States and Iran signed an agreement to end the war. The 14-point Memorandum of Understanding (MOU) includes an immediate and permanent end to military operations, the lifting of the U.S. naval blockade, and the reopening of the Strait of Hormuz. It is a preliminary deal, not a final settlement, and sets a maximum 60-day deadline to negotiate a final agreement. 

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This is good news, both as a positive step towards a final end to hostilities and a potential return to normalcy in oil and gas markets. By choking off the strait, the passage for about a fifth of global oil and gas trade, the war produced the largest geopolitical oil supply disruption in history. West Texas Intermediate (WTI) crude, around $60 a barrel before the war, peaked close to $115 in early April. Gasoline followed, with the national average rising from under $3.00 a gallon to a peak of $4.50.

Prices are already softening: WTI is below $75 per barrel for the first time since March, while average gasoline prices are creeping below $4.00 per gallon. This early relief is good, but for a few reasons it will still be some time before prices are close to the prewar level.

First, the MoU is not an official peace deal, and any lingering uncertainty will be reflected in oil prices. Many of the hardest questions have been deferred, including the fate of Iran’s nuclear program. Others remain vague, such as a provision calling for a $300 billion reconstruction fund which leaves open exactly who pays. President Trump has explicitly ruled out U.S. funding and the Gulf states appear hesitant to commit. Most importantly, although the agreement calls for an end to fighting, including by Israel in Lebanon, attacks between Israel and Hezbollah continued even after the deal was announced. These and other uncertainties will be priced in by the market, meaning that there will likely be continuing volatility and higher prices until fears are fully assuaged.

On top of that risk premium, reopening the strait is a logistical undertaking. Iran has laid mines along the shipping routes, and normal traffic cannot resume until they are cleared and safe lanes are verified. The 100-plus tankers idling in the Gulf would normally need 10 to 15 days to sail out, but many may wait until the mines are cleared, which could take six weeks or more

Some vessels are beginning to transit the strait, but outbound traffic is only half the equation. Restoring inbound traffic will take longer, as many large carriers were shifted to safer, higher-paying alternative routes during the war. They won’t return to the Gulf until those voyages are complete and Gulf freight rates have climbed enough to justify it. All told, it could take four or five months for inbound traffic to return to normal.

>>>READ: The Iran War and the Long-Term Risks to Energy Affordability

In the meantime, a large portion of oil and gas production in the Gulf will need to be restarted. Despite the popular image of oil output being controlled by a spigot, oil production is constrained by geology, not just business and policy decisions. Some of the fields idled by the war will be easier to restart than others, depending on their individual characteristics, but returning overall production to pre-war levels could take significant time. Wood Mackenzie analysts project that the shut-in fields could reach 70 percent of capacity within three months and 90 percent within six, with the final million barrels per day taking considerably longer.

Compounding this is war damage. Oil refineries that were shut down as a precaution can restart in a couple of weeks, while refineries that were damaged could be repaired in months. The hardest hit, though, is the Gulfs gas infrastructure. Processing and liquifying natural gas requires highly complex, custom-built units with multi-year lead times. Damage to Qatari LNG capacity could take years to repair. The U.S. is largely insulated from these effects, as gas markets are less integrated and U.S. export terminals are already at a capacity. Internationally, though, high gas prices will persist.

Even after these supply-side effects recover, oil prices will likely stay elevated for a while. Stockpiles are at their lowest levels in decades, and governments that drew down their strategic reserves during the war may move to rebuild them. This misguided move would add increased demand just as supply is straining to recover and could inflate prices for several years.

And even once crude eases, there will be a lag before gasoline follows, because of a phenomenon known as “rockets and feathers.” Pump prices are quick to rise but slow to fall; a decline in the crude oil price takes roughly eight weeks to pass through to gasoline. All told, a substantial period will separate the peace deal from the moment its benefits reach our wallets.

Any movement toward peace is good news. But markets will take time to recover, and energy-affordability concerns will not dissipate overnight. The best policy move now is a firm commitment to turning this fragile framework into a durable peace.

Mitsubishi Electric and VTT Technical Research Centre of Finland have completed core development of a direct ocean capture system, moving the project closer to demonstration in coastal conditions.

The system is designed to remove carbon dioxide through seawater rather than through air or industrial exhaust streams. That makes it part of the growing marine carbon dioxide removal market, where developers are testing whether the ocean’s natural carbon sink role can be used in a controlled and measurable way.

Read more in E+E Leader here.

A Connecticut-based developer of distributed energy resources said it has begun construction on solar power installations at four municipal landfill sites in that state. Verogy, a West Hartford-headquartered group and distributed energy integrator focused on commercial, industrial, and utility-scale projects, on June 16 said each project is participating in Connecticut’s Non-Residential Renewable Energy Solutions (NRES) program.

The NRES program is a model for turning closed landfills into clean energy assets, according to Verogy, which said Connecticut’s NRES program compensates non-residential solar project owners for the clean power their systems deliver to the grid. Under the program, projects sited on capped landfills and brownfields receive a 20% bid price preference in the state’s procurement process, which officials said make landfill sites an attractive development opportunity for municipalities and developers. The Connecticut Dept. of Energy and Environmental Protection, known as DEEP, said 14 projects totaling more than 17 MW of power have been sited on landfills under the NRES program to date.

Read more in Power Magazine here.

A modular approach to data center design and construction could help overcome bottlenecks like labor availability, land constraints and long lead times for power and electrical equipment while boosting performance once operational, an executive with data center solutions provider Flex told Facilities Dive last week. 

Chris Butler, president of Flex’s embedded and critical power business, said the company’s modular approach is gaining traction among data center developers following decades of use in other critical industries, such as wastewater treatment and fossil energy extraction.

Read more in Utility Dive here.

In 1872, America set aside a vast stretch of mountains, rivers, valleys, and geysers in the West and created the world’s first national park, Yellowstone. At the time, the idea was revolutionary. It was only ten years after President Lincoln signed the Homestead Act in an effort to fast-track westward expansion to settle and cultivate the land. Preserving land for public enjoyment and future generations, rather than for development or cultivation, marked an incredible shift in how Americans would think about the nation’s natural resources. 

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In the 154 years since, the world has followed America’s lead, establishing national parks in over 100 countries. The United States now has 63 federally protected national parks, and hundreds of other National Park Service sites including battlefields, trails, seashores, and rivers. Often called “America’s best idea”, all play an incredible role in the preservation of some of the country’s most treasured landscapes. 

Yet, from the beginning, maintaining protected wilderness was a challenge. At the time, Yellowstone advocates believed the park would sustain itself, at no expense to the government. However, without funds to hire park staff or build infrastructure, there was little the unpaid superintendent Nathaniel P. Langford could do to protect the park’s natural assets and wildlife, particularly from poachers. A few years later, Congress authorized appropriations “to protect, preserve, and improve Yellowstone”. By 1916, it had become clear that a dedicated agency could better manage the nation’s growing portfolio of parks, leading to the creation of the National Park Service.

Still, over 150 years later, the National Park Service struggles to keep up with a growing deferred maintenance backlog. Today, the NPS faces a $24 billion deferred maintenance backlog, despite receiving historic investments in the 2020 Great American Outdoors Act. The Legacy Restoration Fund, established in the GAOA to fund deferred maintenance, expired last September. As the 250th anniversary approaches, lawmakers are looking to build on that legacy and reauthorize the fund that nearly three-quarters of Americans support.

>>>READ: To Save the Sequoias, Bring Back Good Fire

Last week, bills in both chambers of Congress that would reauthorize the Legacy Restoration Fund were discussed.

The Great American Outdoors Act 250, introduced by Congressmen Bruce Westerman (R-AK), Ryan Zinke (R-MT), and Jared Huffman(D-CA), would make significant changes to the original Great American Outdoors Act. One important change would codify the Interior Department’s surcharge on foreign visitor fees. Under the bill, entrance fees at national parks would include a $100 surcharge for international visitors on top of the standard admission fee, and annual passes would increase to $250.

This reform brings America in line with much of the world, where charging foreign visitors more to see a country’s most treasured landscapes is a common practice. After all, Americans already pay twice for parks, once in taxes and once at the gate. It only makes sense for foreign visitors to pay their fair share as well. This change, along with allowing donations to advance GAOA projects, also helps to depoliticize our parks and provide adequate funding even during political changes in Washington. 

80 percent of the foreign visitor fees will stay at the park where they were collected and contribute directly towards priority projects. For highly trafficked parks like Yellowstone, which face some of the largest deferred maintenance backlogs, this is a major win. 

While not a permitting-focused bill, it would codify streamlined categorical exclusions from NEPA for deferred maintenance projects funded under the act. Often, these projects are for the benefit and safety of visitors, and lengthy reviews can slow down necessary health and safety upgrades and increase the cost of deferred maintenance.

>>>READ: Walmart Commits Millions Toward Wildlife Conservation 

In a win for sportsmen and women across the country, up to 15 percent of funds go to a sportsmen’s access pilot program to expand hunting and fishing opportunities on public lands. Greater access could increase participation in these activities and generate additional license revenue that provides nearly $1 billion annually to state wildlife agencies and supports conservation efforts across the country.

The Senate’s original America the Beautiful Act would essentially renew the Great American Outdoors Act with some minor changes. However, after a lengthy markup on Wednesday, the amended bill looks more similar to the House’s version. The bill advanced out of committee and heads to the floor for consideration.

When Yellowstone was set aside in 1872, its champions believed it would sustain itself. But then the first superintendent spent five unpaid years watching poachers thin the wildlife populations he had no money to protect. We’ve spent the last century since then trying to figure out how to keep America’s best idea thriving. The Great American Outdoors Act 250 provides an incredible path forward. A surcharge on foreign visitors and expanded matching funds give the parks a revenue source that does not rise and fall with each political fight. As the country turns 250, there is no better tribute to our nation’s treasured lands than making sure they can outlast the politics that have threatened them.

U.S. Energy Secretary Chris Wright says the Palisades nuclear power plant in Van Buren County will help power data centers while bringing down utility rates when it reopens later this year.

Wright discussed the plant during a media availability Monday in Lansing after an event with U.S. Rep. Tom Barrett, R-Charlotte, which he said was largely focused on affordability.

While some environmental groups oppose the Palisades facility reopening, Wright said the United States must grow the capacity of its power grid before decommissioning facilities.

Read more in WKAR News here.

The U.S. Strategic Petroleum Reserve has fallen to the lowest level in more than 40 years as emergency stocks are released to help ease the supply disruption triggered by the Iran war. 

The SPR stood at 340.3 million barrels as of June 12, the lowest level since the summer of 1983, according to data released Monday by the Department of Energy. The reserve fell nearly 9 million barrels week over week.

Read more in CNBC here.

Switch Bioworks is moving its engineered microbial fertilizer into U.S. field trials, giving the company a practical test for technology designed to reduce dependence on conventional nitrogen fertilizer.

The San Carlos, California-based biotechnology company has received authorization from the U.S. Department of Agriculture and the U.S. Environmental Protection Agency to begin advanced research and development field trials across multiple agricultural sites in the U.S. Midwest.

The trials will focus on corn, the largest U.S. crop by acreage and one of the most nitrogen-intensive parts of American agriculture. For growers, corn production is closely tied to fertilizer availability, pricing, and timing, making it a key market for any alternative nitrogen product.

Read more in E+E Leader here.

New coal-fired generation has been effectively off the table in the U.S. for more than a decade. The TerraSpark Energy Campus is testing whether that’s still true. The DOE’s selection of the Grant County, West Virginia, project for up to $18.5 million in development funding is a notable signal that surging electricity demand—driven by data centers, manufacturing, and electrification—is forcing a fresh look at baseload coal.

The award will support front-end engineering and design (FEED), permitting work, and early technical studies for the greenfield facility, which would be sited near the existing Mt. Storm energy complex. Combined with $21.5 million in non-federal cost share from the developer, the scoping and design phase carries a total value of roughly $40 million. Project developer TerraSpark—legally TerraPurus Inc., doing business as TerraSpark Inc.—announced the award on June 4.

Read more in Power Magazine here.

Necessity, the proverb says, is the mother of invention. That indicates that the reason behind most innovations is that they fill a need. Many of us have a different, more modern way to explain that same observation: free markets work. People see a need, and they innovate to fill it, often crafting a new product or service.

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The most obvious example of this is, even now, helping to insulate Americans from higher energy prices. Yes, the price per gallon of fuel has jumped since February, but domestic price increases pale in comparison to the jump in Asia and Europe. That’s because entrepreneurs in the U.S. developed fracking to release and then recover tight oil and natural gas from shale formations.

The United States had been a net importer of petroleum products for decades when Texas oilman George P. Mitchell decided to experiment with fracking. He knew there were fossil fuels available in shale formations, but it took him many years of dogged experimentation to craft a process to extract those fuels.

Mitchell’s work paid off. “The wells began producing far more gas than ever before, and the costs dropped low enough to make shale gas drilling not just feasible, but profitable,” Authentic Texas magazine wrote. “The energy industry took notice. What had once been considered an impossible dream became a full-scale energy revolution.”

Keep in mind that this innovation was driven by necessity. By the late 1990s, other experts were predicting that the U.S. and the world had passed “peak oil” and would forever be energy deficient. Even fracking couldn’t save us, these experts insisted. “If we step back and acknowledge that the shale oil phenomenon will be over in a couple of years and that oil production is dropping in the rest of the world, then we have to expect that the remainder of the peak oil story will play out shortly,” retired CIA energy analyst Tom Whipple wrote in 2014. We are still awaiting that crash, more than a decade later.

>>>READ: AI can lower energy bills with data centers that power themselves

“As is well known, economic development can have major reactions and feedbacks,” Whipple added, having failed to take into account either the reaction to or feedback from fracking, which took the U.S. from being a net importer to a net exporter of hydrocarbons. Even with the oil we still need to import, three-quarters comes from the Western Hemisphere (principally Canada and Mexico), with less than 15% sourced from Saudi Arabia and Iraq.

The innovations that will shape the 21st century are coming from data centers.

Yes, it is fair to say these centers have become less popular as they’ve become more widespread. But because there are so many, and because they need so much energy to operate, datacenters are driving innovations that will improve energy efficiency. One way is through experiments with new building materials. 

“We see data centers as really important customers for entrepreneurs to commercialize technologies that we’ve been working on for a long time,” Dawn Lippert, the CEO of the non-profit Elemental Impact, told Axios recently. The company’s innovations include advanced cooling, energy storage, and low-carbon building materials.

Elemental will invest up to $5 million over the next two years to test technologies. “This initiative is coming at the most perfect time,” industry analyst Ryan Panchadsaram said, “because the priorities they have are literally the same priorities that you’re hearing from communities.”

At the same time that data centers are reducing their energy use, they are also preparing to use less water. Google recently announced plans to return more water to local watersheds than its data centers consume by 2030. It will also attempt to use reclaimed wastewater for cooling, and it will disclose each year how much water its facilities use.

>>>READ: Blocking Data Centers Won’t Make Electricity Cheaper

Expect more breakthroughs over time. 

Perhaps new data centers could be constructed with solar panels on their roofs? Doesn’t seem much of a technology challenge but it’s yet to catch on. Doing so would have dual benefit of insulating the roof from direct sunlight while also generating electricity that could be used to power and cool the computer components within. It won’t be enough to power the data center, but why not leverage every square inch of that roof? 

Or perhaps data centers could use geothermal technology to cool the facilities, such as the process used to air condition the visitor center at Brooklyn’s Botanical Garden. 

The one thing we can be sure about is that as needs arise, the free market will deliver innovations that solve problems.

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