Energy and Environment News

Energy and Environment News

February 18, 2015

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Energy Outlook. The Wall Street Journal reports that a team of economic advisers to the Chinese government is considering merging two or more of the country’s major energy companies in an attempt to make them more efficient and globally competitive.  Analysts warn that while such a consolidation would help the state firms compete overseas, it would harm competition within China and work against current market-oriented reforms.  WSJ

Energy Policy.  European Union antitrust commissioner Margrethe Vestager reported that the EU will soon move ahead with an antimonopoly case against Russia’s Gazprom energy company amid concerns that it abuses Eastern Europe market dominance to block rivals.  Formal charges against Gazprom are likely to be taken as an act of aggression by the Kremlin, but Ms. Vestager has dismissed political concerns and is standing by the economic case against the alleged monopolistic activity.  WSJ

Oil.  Royal Dutch Shell is beginning to decommission and dismantle its Brent Oil Field in the North Sea — an effort estimated to cost billions of pounds and take up to a decade to complete.  Industry experts at Wood Mackenzie, a leading oil-industry consulting firm, report that the full cost of decommissioning has been greatly underestimated for most projects, and predicts that dismantling costs will exceed new investment across the oil industry within the next decade.  NY Times

Energy Security.  According to a study by the International Centre for Security Analysis, Saudi Arabia is seeking to build up its nuclear capacity over the next ten years in efforts to lessen its own reliance on oil so that more of its total oil production will be available for export. Experts contend that while this is a logical energy and economic strategy, it heightens concerns about future nuclear arms races in the region.  FT

Energy and Environment News

Energy and Environment News

February 17, 2015

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EPA.  After many state regulators and utilities warned that the pace of proposed carbon emissions regulations may endanger the reliability of the electric grid, EPA administrator Gina McCarthy hinted that the deadline for carbon emissions cuts may be extended beyond 2020.  As currently proposed, the Clean Power Plan requires states to cut emissions by 26% from 2005 levels by 2020 in order to reduce emissions by 30% from 2005 levels by 2030.  Bloomberg

Oil.  A train carrying millions of pounds of oil through West Virginia derailed during a snowstorm this morning, dumping crude into a local river and causing the evacuation of nearby villages.  The derailment follows several similar incidents over the past few years and has amplified public concerns about the safety of oil shipments by rail.  NY Times

Natural Gas.  The U.S. Department of Energy proposed a higher minimum efficiency standard for gas furnaces, which currently account for roughly 20% of energy delivered to homes and apartments throughout the United States and are mostly fueled by natural gas.  By law, the DOE must set the highest efficiency level that is both technologically feasible and economically justified, and the proposed standard represents the first increase since 1992.  EIA

Energy Outlook.  Despite tumbling commodity prices, mining companies have vowed not to cut production because the stronger dollar is, in part, cushioning the blow of falling markets.  However, some observers say that the stronger dollar will only postpone the inevitable global glut of metals, coal, and iron ore; miners need to grow production, deliver cash to shareholders, and maintain a strong balance sheet — all three of which, they argue, are not likely to happen in a weaker price environment.  WSJ

Energy and Environment News

Energy and Environment News

February 13, 2015

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Oil.  Despite increased household savings in gasoline over recent months, overall retail sales unexpectedly declined 0.7% in January, on top of a 0.9% decline in December.  This may be explained by the fact that Americans are saving the money they are not spending at the pump; that being said, economists predict that consumers may be reacting with a bit of a delay and will spend their gains eventually.  WSJ

Energy Policy.  The company developing the Keystone XL pipeline plans to ask the U.S. government to permit a new and different project: a 200-mile pipeline from North Dakota’s oil fields that will cross the border into Canada to connect to another proposed pipeline, costing $600 million.  While U.S. laws currently restrict American oil exports, companies are generally allowed to sell crude oil to Canada if they apply for a license, which helps account for the rise in exports in recent years.  WSJ

Oil.  For the first time this year, Brent crude oil prices rose to about $60 a barrel – a 3.5% increase since late December and 35% increase since the recent low in mid-January.  Prices rallied after a leading shale oil operator in the U.S. became the latest in the wave of companies announcing cuts in capital expenditure.  FT

Energy and Environment News

Energy and Environment News

February 12, 2015

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Natural Gas.  The price of natural gas for March delivery is up slightly (0.1%) due to increasingly cold weather forecasts over the next few weeks.  Given that half of U.S. homes use natural gas for heat, winter cold is traditionally a big driver in demand for this resource.  WSJ

Oil.  While low oil prices will continue to benefit U.S. consumers and the broader economy this year, economists surveyed by the WSJ predict that slower business investment will offset some of these gains.  They contend that cheap oil is a double-edged sword for the economy in that as falling prices squeeze earnings, the energy sector will scale back on capital spending — as evidenced by energy producers’ sharp recent cuts in purchases of new rigs, drilling machinery, and other supplies.  WSJ

Climate Change.  A survey released by the American Chamber of Commerce in China reveals that pollution is a growing issue for foreign companies operating there.  For example, companies reported encountering trouble in attracting and retaining executives to work there for the first time in the survey’s 17-year history because of the growing perception that large Chinese cities have become less hospitable places to live and work as a result of the high pollution levels.  NY Times

Energy Outlook.  According to a new report, universities that shed their investments in fossil fuel stocks could hurt the value of their endowments.  A series of stock indices reveals that funds without energy-sector stocks underperform those with them by as much as 0.7 percent, according to the analysis.  NY Times

Energy and Environment News

Energy and Environment News

February 11, 2015

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Energy Outlook.  European utilities shut down more coal and natural gas power plants last year than in any year since 2009, mostly due to falling demand for electricity and a tighter market for carbon under the EU’s cap-and-trade program.  The pace of plant closures is expected to increase moving forward, with more ambitious emissions reduction goals and likely price increases for carbon allowances.  Bloomberg

Energy Policy.  The House of Representatives is expected to pass a bill today forcing the Obama administration to approve construction of the Keystone XL pipeline.  While most congressional Republicans and some Democrats support the bill, it will likely not garner the two-thirds majority necessary to override a guaranteed veto from the President.  NY Times

Oil.  A leading oil-field service provider announced plans to lay off roughly 7 percent of its workforce, or up to 6,400 workers, in response to plummeting oil prices and an increasingly challenging market environment.  These companies that drill and complete wells onshore and offshore are typically the first and worst hit when producers decommission rigs and cut investments in exploration and production.  NY Times