Undergraduate Business Journal - Energy Issue 2016

Energy 2016

Daniel Kraft

The following paper complements the current discussion about the intermediate to long-term crude oil price outlook. To accomplish this, the paper conducts a qualitative and quantitative analysis of a time series of real, inflation-adjusted Brent crude prices in the context of OPEC’s history of production and supply management. The paper identifies $50 per barrel (in 2014 dollars) as the key demarcation level between monopolistic and competitive pricing in a historical analysis and confirms the statistical significance of the differences in mean prices between monopolistic and competitive environments. As this key level of $50 per barrel has historically served either as a price floor or as a price ceiling, depending on the market’s competitive dynamics, the paper also attempts to assess whether this level will be a price floor or a price ceiling in the intermediate to long-term future. Considering the nature of OPEC’s supply management and examining the causes and origins of the current slump in crude oil prices, the paper therefore develops two potential scenarios for the future crude oil price environment and discusses their validity and respective likelihoods.

Magdalena Naziemiec, Josh Burandt, Sam Gage, Stephanie Yu, Molly Blondell

This paper analyzes the technological, economic and social feasibility of reprocessing spent nuclear fuel in the United States. In nuclear reprocessing, spent fuel is refined to decrease the amount of waste generated in a nuclear reaction and to extract usable materials for fuel in future reactions. Reprocessing technology is analyzed as well as its economic costs, environmental impacts, and implications on domestic policy. We find that while reprocessing technology is very promising, it is not economically feasible in the foreseeable future when compared to direct disposal. Besides economic barriers, new policies that focus on standards and procedures and accommodate public or private businesses in gaining jurisdiction for reprocessing facilities must be considered before nuclear reprocessing can be done at the commercial level.

Alexander Bennett, James Ebert, Benjamin Herst, Daniel Kraft, Scott Southern

The goal of this study is to identify the optimal location for the implementation of a high-speed rail line in the United States and assess the economic, technical, and political feasibility of such a project. We focus on the current political climate and existing policy initiatives to establish a framework for how a high-speed rail project would be received by the general public as to develop a realistic scenario for the endeavor were it started today. Taking into account the currently existing travel options between major metropolitan areas, we ultimately chose to focus our study on a rail connecting Chicago and major cities in Texas via St. Louis. Through an analysis of the required infrastructure, historical economic trends in the transportation sector, and potential financing options, we project the cost for developing and executing this project to be between $118bn and $125bn. Modeling the operational performance of the proposed HSR system under different scenarios, we conclude that the proposed HSR system requires a minimum 10% diversion rate from other modes of transportation and a variable cost structure of less than or equal to $0.30 per passenger mile in order to be operationally profitable. Lastly, we also calculate that the present value of all future environmental benefits, measured in US$, only accounts for 1% to 2% of the overall construction costs. Hence, based on a five-legged cost-benefit analysis, which is outlined in detail in Section 11, we conclude that the economic and environmental viability of this proposed high-speed rail line remains questionable at the current point in time.