🎢 Oil's wild December
Axios Generate
December 1st 2022, 8:39 AM
By Ben Geman and Andrew Freedman ·
Dec 01, 2022
🥞 Good morning. Today's newsletter has a Smart Brevity count of 1,086 words, 4.5 minutes.
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1 big thing: Critical decisions loom that will sway oil markets
Illustration of an oil barrel spilling oil, forming an erratic line chart.
Illustration: Shoshana Gordon/Axios
Get ready for a potentially wild stretch in oil markets as European officials, OPEC+ and China prepare to make decisions that will sway the costs of the fuel that powers the global economy, Ben writes.
👀 What we're watching: EU countries are preparing to institute their long-awaited ban on seaborne Russian crude next week.
This morning there's no firm deal yet on the 'price cap' on Russian barrels G7 countries and allies are planning to impose at the same time — a plan meant to limit Russian revenues while enabling continued supply. But the WSJ reports that the EU is asking members to set it at $60 a barrel.
Meanwhile, the alliance of OPEC, Russia and allied producers meet this weekend to discuss whether to impose further output curbs to prop up prices.
Another wild card: multiple reports that China — the world's largest oil importer — is preparing to ease drastic COVID lockdowns that have put downward pressure on prices.
What they're saying: It will be a 'huge few days for oil markets,' Oanda analyst Craig Erlam said in a note this morning.
The speculation over what OPEC+ may do and the EU price cap drama are a potent pair, he said.
'The range of possibilities on these two things alone is huge which will make rumors and speculation over the coming day or two all the more impactful.'
🖼️ The big picture: Prices have been volatile of late. The global benchmark Brent crude is almost $88 per barrel this morning after dipping below $81 earlier this week.
Yes, but: OPEC+ may steer clear of the kind of dramatic move they made a month ago by announcing a major cut.
'While sources said on Wednesday a policy change was unlikely, some analysts say a further cut cannot be ruled out,' Reuters reports.
🔭 Zoom out: I'm hardly the first person to point out that December's slated to start off with a bang in oil markets.
The Financial Times has a detailed look at the reordering of global oil markets spurred by Russia's invasion of Ukraine that's occurring alongside cracks in the U.S.-Saudi rapport.
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2. The EV-solar pairing takes a step forward
Photo of the production model of the EV startup Lightyear's electric car
Photo courtesy of Lightyear
The EV startup Lightyear has begun producing its car that gets extra range from solar panels — a marriage of renewables and battery power that a few fledgling automakers are pursuing, Ben writes.
How it works: The 'Lightyear 0' can get up to 43 miles of added range from the sun, which lessens charging needs given that many car trips are short.
The Dutch company has contracted manufacturing to Valmet Automotive in Finland.
Why it matters: 'It is the first automotive company to manufacture an electric vehicle that generates power directly from sunlight,' Automotive World reports.
Yes, but: Volume is very low with plans to initially produce one per week before scaling gradually next year, per Automotive World and Bloomberg.
CEO Lex Hoefsloot tells Bloomberg the goal is to reach five weekly in the second half of 2023.
They have around 150 pre-orders for the $259,000 Lightyear 0 model, the outlet reports.
Go deeper: Axios' Joann Muller has a nice look into Sono Motors, another solar EV startup.
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3. Why heat waves bring power loss risks for the poor
Animated illustration of a thermometer in the shape of a dollar bill sign, with temperature rising rapidly
Illustration: Annelise Capossela/Axios
Warmer temperatures are leading more low-income households to have their electricity disconnected, a recently published peer-reviewed study finds, Axios' Ayurella Horn-Muller reports.
The big picture: Rising temperatures and more frequent, hotter heat waves result in higher energy expenses, which becomes a crisis for households that can't afford them.
What they're saying: 'This is adding to the tax of being poor,' said economist Alan Barreca of UCLA's Institute of the Environment and Sustainability, who co-authored the study in Nature Energy.
What they found: For each day between 2012 and 2017 with a temperature of 95°F, electricity expenses increased an average of 1.6% for nearly 300,000 low-income households in California.
Between the lines: According to reported disconnection and electricity data for the low-income households analyzed, the average summer utility bill was around $100, meaning a 1.6% expense increase amounts to an added $1.60.
That causes the relative risk of disconnection to increase by 1.2% 51–75 days later, per Nature Energy.
But that is just the impact of one additional 95°F day when the typical range can include several days that surge total energy costs.
'I think a lot of people who haven't been poor would say, 'Oh, that doesn't seem like much,'' Barreca said — but in reality, the added utility cost can be 'significant' for those living paycheck to paycheck.
Read the whole story
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A MESSAGE FROM CHEVRON
Chevron is working to fuel a lower carbon future.
We believe the future of transportation can be lower carbon.
At Chevron, our renewable diesel, made with bio feedstock, can fuel trucks, trains, heavy-duty equipment and more with lower carbon intensity today.
Because we know creating renewable fuels is just as important as putting them to use.
4. How the climate law moved a big bank on coal
Illustration of a broom made of hundred dollar bills sweeping coal dust ... Illustration: Natalie Peeples/Axios
Bloomberg spotted something interesting in Barclay's Q3 earnings presentation: The banking giant is accelerating its exit from U.S. coal financing and citing the U.S. climate law as a reason, Ben writes.
Driving the news: Considering the law and 'other business factors,' Barclays plans to move the phase-out date from 2035 to 2030, CEO C.S. Venkatakrishnan recently told analysts when reporting Q3 results.
He called this consistent with the U.K.-based bank's approach in Europe.
Why it matters: 'It’s a move that may well spread across more of the finance industry as executives digest the full effect of the IRA,' the story notes.
It steers tens of billions of dollars into new and expanded tax subsidies for low-carbon power sources that compete with coal.
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5. United Airlines wants batteries for ground power
Illustration of a power strip with lights along the side animating as if it were a landing strip.
Illustration: Aïda Amer/Axios
United Airlines this week bought an undisclosed stake in energy storage company Natron Energy, making it the first airline to invest directly in a battery manufacturer, Axios' Joann Muller reports.
Why it matters: Even the largest airports don't have enough juice to quickly charge all the electrified planes, flying taxis and ground equipment that airlines intend to roll out over the coming years.
Stationary power storage — meaning, gigantic industrial batteries — will help fill the gap while avoiding carbon emissions.
How it works: Natron makes trailer-size sodium-ion batteries that can charge electric airport ground vehicles, such as baggage tractors and pushback tugs.
They can recharge vehicles more quickly than today's lithium-ion batteries — an advantage at busy airports, where vehicle uptime is key.
Longer term, United expects such batteries to power short-range electric aircraft, such as regional planes and urban air taxis.
Read the whole story
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6. 💬 Quoted
“If the world said tomorrow there is no capital available for mining, decarbonization is impossible. It simply can’t happen...There is a growing recognition of the criticality of mining to the world’s decarbonization effort.”
— Mike Henry, chief executive of mining giant BHP, via the Financial Times
Why it matters: The world will need a lot more copper, lithium, and many more minerals to fuel the expansion of batteries, renewables and other low-carbon energy.
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A MESSAGE FROM CHEVRON
Chevron is working to fuel a lower carbon future.
We believe the future of transportation can be lower carbon.
At Chevron, our renewable diesel, made with bio feedstock, can fuel trucks, trains, heavy-duty equipment and more with lower carbon intensity today.
Because we know creating renewable fuels is just as important as putting them to use.
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🙏Thanks to Mickey Meece and David Nather for edits to today's newsletter. We'll see you back here tomorrow!
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