Tue. Oct 19th, 2021

Hello again from Energiebron.

It’s time for Joe Biden’s energy and climate plans. Two major pieces of legislation will hit the floor of the U.S. House of Representatives this week.

Democratic Speaker Nancy Pelosi has scheduled a vote on the $ 1.2-ton dual infrastructure bill for this Thursday. But progressive Democrats have promised to block the package if it is voted on before an agreement can be reached on the larger budget bill of $ 3.5 tons that is also on the dossier. Pelosi also wants to push the spending bill forward this week – but details are still being deleted.

Meanwhile, a new global energy crisis is emerging, as European and especially British readers are already aware of. In the UK, the military can be called in to help alleviate acute petrol shortages. Power and natural gas prices in Europe are still close to record highs and liquefied natural gas is also sold worldwide at historic prices.

The US has so far been mostly isolated, although pump prices are the Biden administration bothersand rising natural gas prices will contribute to broader inflation.

But crude prices are also tearing. Below we try to explain what is going on with oil prices.

One big question is what the rising prices of fossil fuels and the shortage of supplies mean for the UN climate summit in Glasgow and, more broadly, efforts to reduce emissions and reduce economies. Does an old-fashioned energy crisis make it easier to persuade consumers (and voters) to give up fossil fuels? After all, burning the goods is not only responsible for climate change – it has also become expensive.

Or are rising prices making it more urgent to increase the supply of fossil fuels and make the hydrocarbons on which the world economy still depends much cheaper?

Our colleague Martin Sandbu argue that given Europe’s decarbonisation agenda should make the use of fossil energy more expensive, current trauma politicians are asking “to convince voters that doubling carbon – its consequences for gas prices – is the best way to avoid similar crises in the future”.

Merryn Somerset Webb, on the other hand, argues that the crisis belongs give a little reality in the debate surrounding the energy transition.

‘The truth is: whether we like it or not, our energy transition involves long-term dependence on fossil fuels. That means we have to stop demonizing them – evangelize about ESG, follow the trend of selling shares in oil companies and new projects with regulation, high financing costs (many banks withdraw from the sector) and so on. Instead, we must focus on making the extraction cleaner and more efficient while waiting for the engineering challenges surrounding a future led by renewable energy. “

I know many of you who read this have equally strong views. Please share it with me derek.brower@ft.com. In short, my question is: Will this rise in the price of fossil fuels make it easier or harder to pursue the urgent carbon emissions the world needs?

Elsewhere in the newsletter today, US solar developers say that the threat of new import tariffs on panels is hurting their business – and carbon emissions.

Finally, we outline how the increasing demand for electric vehicles plays a role in the global increase in commodities.

Thanks for reading!

This article is a version in place of our news source on energy sources. Sign in here to send the newsletter directly to your inbox every Tuesday and Thursday

What’s going on with oil prices?

Oil prices follow global natural gas and electricity prices higher. Brent, the international benchmark, rose to $ 79.53 yesterday, a three-year high. West Texas Intermediate, the American brand, now trades at more than $ 75 / b.

Given the Biden administration’s sentiment on petrol prices, it seems likely that Jake Sullivan, Biden’s national security adviser, will name crude markets when he visits the Middle East with Mohammed bin Salman, the Saudi Crown Prince, this week during a visit to the Middle East. , meeting.

There is little consensus among analysts, traders and consultants on what drives the rally. They say many things happen at once.

First, world stocks are rapidly depleting because supply is not keeping pace with rising demand as economies reopen.

Global equities are depleting at a rate of about 4.5 mb / d – the fastest record – and stocks could fall to their lowest level since 2013 by the end of the year, according to analysts at Goldman Sachs. Goldman predicts that Brent will then be at $ 90 / b – $ 10 / b higher than he previously predicted.

Opec is recovering some of the production it reduced last year to raise prices, with about 2 million b / d of extra oil to be added by the end of the year. Bulls say it is not enough to suppress the market meeting.

But the cartel will only increase production if it is confident that the market really needs the extra oil next year as well. In fact, analysts at HSBC think that Opec could interrupt its supply increases next year to prevent too much inventory in the market. The cartel is more likely to fail due to an undersupply in the market than to risk a price reduction.

As for the U.S., shale producers will add only 250,000 barrels a day this year, according to analysts at Tudor Pickering Holt & Company – a fraction of the growth rate seen over the past year. (Growth in 2022 will be much more significant.)

Meanwhile, Hurricane Ida’s damage to U.S. foreign production was worse than expected. Energy Aspects analysts say 29 million barrels of stock have been lost so far, “which is far greater than the output reductions of other storms over the past ten years”. Production will not be completely restored for months.

The sudden shortage of supplies came just as China’s independent refineries – the so-called “teapots” – also began to suck more roughly, according to OilX, a data company that looks at oil shipping. Florian Thaler, CEO of OilX, said that these refineries have achieved a real and proper V-shaped recovery. . . of the lows seen in August ”. This is happening despite efforts by the government to slow down the activities of non-state controllers. Thaler says the result is likely to be stronger demand than expected in China in the fourth quarter.

Finally, the pandemic. Market sentiment indicates that many people believe that the worst is over. “Covid is over,” said one consultant.

This is bullish. But it is also a line that has been heard before. (Derek Brower)

Song groups say import tariffs could derail the industry

The U.S. solar industry says hefty tariffs on imports from Southeast Asia could pose a “deadly blow” to the development of U.S. projects — and some shipments have already disrupted.

The Department of Commerce is considering petitions to cut taxes by between 50 and 250 percent on most imports from Malaysia, Vietnam and Thailand. Together, these three countries make up 59 percent of the U.S. solar power supply.

‘These rates. . . That would be a serious blow – perhaps a fatal blow – to the broader U.S. solar power industry, “said Abigail Ross Hopper, president of the Solar Energy Industries Association.

The petitions, filed anonymously in August, caused a severe setback for U.S. solar developers and contractors. The SEIA says the duties could contribute more than $ 3 billion in costs to players in the industry over the next 15 years and wants Commerce to eliminate the petitions. The department will decide on Thursday what to do.

While the US is trying to power a local green manufacturing industry, the developers of renewable energy are afraid of introducing protectionist policies that could increase their costs and cause a slower rollout.

The concerns of solar developers reflect those of their counterparts in the wind industry, which is in conflict with the provisions of “Buy America” ​​which is attached to tax credits. The CEO who led the development of the country’s first major offshore wind project in the country told us last month that the sector could be left behind “death in the waterIf the authorities restrict the use of foreign material.

Developers have said that the threat of tariffs alone – which could be dated to this Thursday if it is finally imposed – is already causing suppliers to stop shipping.

“Just the filing of this petition essentially froze the market,” said George Hershman, president of Swinerton Renewable Energy, the largest solar contractor in the United States.

‘Today we can not get module manufacturers to sign purchase orders that we need to deliver projects in the short term, due to concerns about whether there is a. . . tariff when these modules hit the port. ”

By the way, if you are one of the anonymous applicants of the prospective rates, I would love to hear from you: myles.mccormick@ft.com. (Myles McCormick)


As more electric vehicles hit the road, the need for batteries increased the demand for metals. A new analysis by S&P estimates lithium demand will double in the next four years and predicts shortages in 2025. Currently, EVs account for more than 50 percent of global lithium demand.

Whether a supply crisis will occur is uncertain, as metal production scales up and recycling capabilities growth. Currently, western miners skarrel to secure new metal sources.

Global EV sales grown more than 140 percent in the first quarter of 2021, according to the International Energy Agency. The organization expects EV sales to reach 22 million by 2030, with the number possibly higher as governments intensify their climate efforts.

More than 20 countries have announced plans to phase out conventional car sales in the next few decades. If the dual infrastructure bill gets the stamp of approval from the U.S. House of Representatives this week, the package will invest $ 7.5 billion in charging stations. (Amanda Chu)

Line graph of the number of sales according to the type of EV that under current policy shows that EV sales can grow 650 percent by 2030
Bar graph of the demand for passenger EV (thousand tons) showing the EV junction could push the metal supply

Power points

Energy Source is a twice-weekly Financial Times newsletter. It was written and edited by Derek Brower, Myles McCormick, Justin Jacobs and Emily Goldberg.

Recommended newsletters for you

Moral money – Our indispensable newsletter on socially responsible business, sustainable finance and more. Sign in here

Trade secrets A must-read about the changing face of international trade and globalization. Sign in here

Source link

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *