Energy and Environment News

Energy and Environment News

February 4, 2015

Top Stories

Renewable Energy.  A new report from Bloomberg New Energy Finance shows that energy capacity from wind and solar sources has more than tripled since 2008 while becoming increasingly cost-competitive.  Additionally, the analysts note that electricity demand has remained flat despite the economic rebound — a significant sign of improvement for the energy productivity of the U.S. economy.  WP

Oil.  The recent plunge in oil prices has led to a wave of credit rating downgrades in the oil and gas sector, increasing the risk of default for corporate bonds.  There were more downgrades in oil and gas than in any other sector during the past four months – marking the largest set of credit rating downgrades for a single sector since 2009.  FT

Energy Policy.  The New York Times notes that governments such as India, Indonesia, Malaysia, Angola, and Ghana are beginning to take advantage of low oil and natural gas prices by cutting fuel subsidies.  Though these subsidy cuts comprise only a small percentage of all fuel subsidies globally, experts report that the cuts are “beginning to add up”.  NY Times

Oil.  Despite a fall in oil prices of more than 50% since June, U.S. crude production remains at multi-decade highs.  According to the Energy Information Administration (EIA), U.S. crude oil inventories grew to the highest level for this time of year in at least 80 years, and analysts expect inventories to continue growing in coming weeks due to scheduled seasonal maintenance at many U.S. refineries.  WSJ

U.S. Economic News

U.S. Economic News

U.S. Economic Indicators

The ADP National Employment report indicated that nonfarm private-sector employment increased by 213,000 in January, down from an upwardly revised 253,000 jobs in December.  Gains in hiring by medium-sized businesses and the trade, transportation, and utilities sector drove the report.  ADP report

ISM’s non-manufacturing index ticked up 0.2 points to 56.7, indicating robust growth in the services sector.  The Business Activity and New Orders Indexes increased 2.9 points and 0.3 points, respectively, while the Employment Index fell 4.1 points.  Report

U.S. News

Auto sales increased to a seasonally adjusted annualized rate of 16.66 million vehicles, a 13.7% increase from year-ago levels.  Boosted by low gas prices and a broadly improving economy, sales of General Motors, Ford, Toyota, Fiat, Nissan, Honda, and Suburu all posted double-digits gains.  NY Times

Treasury Secretary Jack Lew warned in written congressional testimony yesterday that although the U.S. was on pace to grow “substantially faster than all of the other advanced economies combined” in 2015, the rest of the developed world needed to do more to stimulate demand.  Lew argued that the U.S. could not be the “sole engine of growth” and expressed concern with the potential for a slowdown abroad to weaken U.S. growth.  FT

A growing group of young Republicans now dubbed “reformicons” are pushing for a move away from orthodox conservative tax policy premised on broad-based tax cuts towards more middle-income friendly policies, including subsidies and tax credits.  Former Florida Governor Jeb Bush, Florida Senator Marco Rubio, and former Texas Governor Rick Perry have warmed to the “reformicon” agenda in recent months, acknowledging that tax cuts may be less effective now that the top rate is roughly half of what it was in the 1980s.  WSJ

Martin Wolf warns in the FT that both Greece and the “troika” of the ECB, IMF, and EC are engaging in a game of “chicken”, in which the new Greek government is taking an aggressive and dismissive attitude towards the troika, while the latter refuses to negotiate fairly with the Greek government.  Wolf argues that both parties need to “calm down and talk”; “deep and radical reform” to achieve “low-governed modernity” in Greece will take time but is imperative.  FT

Energy and Environment News

Energy and Environment News

February 3, 2015

Top Stories

Energy Outlook.  Some utility experts have expressed fears that energy conservation efforts among Americans will render electric utility companies unable to bring in revenues required to maintain the nation’s electric infrastructure.  Electricity sales to homes and businesses have been declining since 2007; in response, some utility providers have proposed different payment structures to regulators while a minority of others have begun to embrace decentralization and personal power systems.  WSJ

Oil.  Oil prices continued to rally today as investors bet that the oversupplied global market would be offset by a sharp decline in U.S. drilling activity.  Data show that the number of U.S. oil-drilling rigs — a leading indicator of future crude production — fell to its lowest level in three years last week.  WSJ

Keystone XL.  In a letter to the State Department yesterday, the Environmental Protection Agency urged the White House to reject the expected Keystone XL pipeline bill on grounds that plummeting oil prices undermine most arguments in favor of the pipeline, as well as new analysis suggesting its construction would be more harmful to the environment than previously predicted.  The House of Representatives will vote on the measure next week.  EPA, WP

Oil.  Major U.S. airlines reported 2014 as their best year ever — most earned record profits largely due to constant fare prices and ancillary fees amid a dramatic decline in fuel prices.  While many carriers have received public complaints for not trimming prices, Dan Reed defends that the industry has a “more-bust-than-boom history” and airlines are accordingly sensitive to their investors’ keen desire to maximize profits during a rare boom.  Forbes

Energy and Environment News

Energy and Environment News

February 2, 2015

Top Stories

Oil. Union workers at many U.S. oil refineries went on strike yesterday after contract negotiations failed to resolve salary requests and safety concerns. Industry analysts note that while gasoline prices rose upon news of the refinery strikes, crude prices may continue to fall amid concerns that a reduction in refining capacity will cut consumption and build crude inventories even further. WSJ

Energy Policy. The 60% collapse in global oil prices has significantly eased pressure on policymakers to end the decades-old ban on oil exports. Some analysts argue that market dynamics still encourage an end to the ban — particularly given the demand from oil-producing countries like Mexico — while other analysts anticipate that it may be up to four years before U.S. oil production resumes levels where it would be economically advantageous for producers to lobby for exports. Reuters

Energy Policy. The White House released its fiscal 2016 budget plan today, which proposes allocating billions of dollars to climate change and renewable energy technologies, as well as repealing nearly $50 billion in tax breaks from the oil, natural gas, and coal industries. The proposal reflects an effort to cement President Obama’s legacy in addressing climate change. WSJ

Energy and Environment News

Energy and Environment News

January 30, 2015

Top Stories

Climate Change.  According to a poll conducted by the NY Times, Stanford University, and Resources for the Future  (a nonpartisan environmental research group), an overwhelming majority of the American public supports government action to curb global warming.  Perhaps even more notable is that nearly half of surveyed Republicans indicated being more likely to vote for a candidate that supports fighting climate change, which could have implications for the 2016 presidential campaign.  NY Times

Oil.  John Dizard explains that whenever the oil and gas industry is in trouble, it typically acts by “curing low prices with low prices” – following the rationale that low oil prices encourage more use while also discouraging drilling and associated development, which in turn causes supply to fall and prices to return to normal levels.  He questions the soundness of this tactic, citing recent evidence that falling world oil prices have in fact made natural gas prices even lower in markets that link oil and gas, rather than “cure” them.  FT

Oil.  U.S. oil prices surged more than 8% into the end of the trading session today, with most of the gain occurring in the last 45 minutes of trading as investors rushed to close bets after data showed a steep drop in the number of rigs drilling for oil.  This is a likely sign that the drop in energy prices will impact oil production in the near future.  WSJ

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