The Weekly Brief: US Global Impact

June 12, 2017 edition— Empowered rooftop solar; historic US oil production; and a new nuclear unit got the go ahead.






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Last Week in a Minute or Less


Renewables & Electricity. Small-scale photovoltaic systems generate 37% of annual US solar electricity; a new nuclear unit was approved.


Natural Gas & Liquid Fuels. High US natural gas prices will increase production gains, but reduce power generation; US polypropylene exports fell; and EU need to import US propylene.


Oil & Gas Upstream. US crude oil production will reach 10 million b/d by March 2018, and is already the king of hydrocarbon production.


Money & Power. Trump focused on his infrastructure plan; IMF warned over US fiscal stimulus; and the IEA needs modernizing.



Keeping Track of Trump


Cities, companies, and states backed the Paris Accord. Three governors, 30 mayors, and more than 100 business are discussing with the United Nations the acceptance of its contributions to the Paris accord (English). According to a UN official, there is no formal mechanism for entities that are not countries to participate in the accord.


Trump aims to cut regulation to build infrastructure… US President Donald Trump announced his focus is on reducing federal regulation and speeding approval to develop infrastructure projects (English). The infrastructure plan will reduce the time to obtain permits to two years from 10 and proposes a US$200bn budget to rebuild infrastructure.


…and asked for Democrats support. President Donald Trump called for the support of Democrats and Republicans to rebuild America. Senate Minority Leader Democrat Chuck Schumer said that Democrats want to work with Trump on infrastructure, but he has not been open to listening to them (English).


The Senate advanced Trump’s nominees, not without controversy. A Senate committee advanced four Trump nominees to the Interior and Energy departments and the FERC (English). Three passed on bipartisan votes, but most Democrats opposed David Bernhardt for deputy secretary of the Interior, because he used to lobby the agency while working in the private sector (English).



Energy Policy


Rooftop solar gets all the attention. The Nevada State Legislature passed a bill to reinstate net energy metering for residential solar projects at a discounted compensation rate (English). Generation from small-scale photovoltaic systems made up 37% of US solar electricity generation in 2016 (English).


Braidwood-1 worked at top capacity, while a new nuclear unit is good to go. The 1,320MW Braidwood-1 nuclear unit operated at 100% capacity after reducing production for grid constrains (English). The US Nuclear Regulatory Commission issued a permit to Dominion Virginia Power to build a third reactor at the North Anna plant (English).


US coal demand fell to a historic low. According to the US Energy Information Administration, the US power sector consumed 677 million short tons of coal in 2016, the lowest level since 1984 (English). That’s a 35% drop from coal’s peak in 2008.


The IEA is up for a makeover. The Center on Global Energy Policy studied the US administration’s role in modernizing the International Energy Agency (IEA) (English). The best outcome – although complicated – would be for the US to sustain the agency by focusing on today’s energy challenges.



Boundary Issues


US polypropylene exports dropped, while EU demands US propylene. The European Union is considering importing propylene from the US due to the supply shortages in Europe (English). US April polypropylene exports dropped by 28%, totaling 83,017 mt compared to the 115,462 mt in March (English).


An Aussie cyclone helped US coal exports. The Virginia’s Hampton Roads terminals exported 3.17 million st of coal in May, an increase of 19.3% from the previous month and up 84.3% compared to the same month last year (English). In a year, coal exports at the terminal increased by 194%, helped by Cyclone Debbie’s disruption of Australia’s exports.


Elections will speed up NAFTA talks. Mexico’s Economy Minister and US Commerce Secretary agreed the US and Mexican elections in 2018 are a reason to complete the NAFTA renegotiation in 2017 (English) (English). Trade association leaders asked to improve free trade among Canada, Mexico, and the US including the energy sector (English).


The US and Mexico agreed on sugar trade. Mexico gave in to US demands to change the terms of Mexico’s access to the US sugar market with a deal that will increase prices (English). US sugar producers wanted to push for further concessions from Mexico to support the agreement.



International Affairs


Trump’s tweets complicated a state visit to the UK… London mayor Sadiq Khan asked the British government to cancel President Donald Trump’s planned state visit after his tweets criticizing Khan’s response to the London Bridge terrorist attack (English). Khan insisted the UK should not roll out the red carpet.


…and damaged diplomatic relations with Qatar. President Donald Trump tweeted attacking Qatar, the home of US military air operations in the Middle East. US State and Defense departments are working to limit the diplomatic damage by downplaying the significance of the tweets and Trump called on Qatar to end terrorism funding (English) (English).


North Korea struck again. North Korea fired several land-to-ship missiles 200 km off its east coast. The launch came after South Korea postponed installing the remaining components of the US Terminal High Altitude Area Defense (THAAD) system, although it may yet be deployed (English) (English).


Russia remains in the eye of the hurricane. According to the Intercept, Russian intelligence agents hacked a US voting systems manufacturer a few weeks before the 2016 election (English). In an interview, President Vladimir Putin denied having compromising material about President Donald Trump and assured he had no previous relationship with Trump (English).



Macro Trends


The IMF warned Asia about the US fiscal stimulus. IMF Deputy Managing Director Mitsuhiro Furusawa pointed out the subsequent interest rate hikes could trigger an important dollar rise, increasing the debt of Asian emerging economies (English). Furusawa advised Asian policymakers to change their fiscal policies to face slowing population growth and fast aging.


High US natural gas prices will help production gains, but hit power generation. Higher natural gas prices will increase gas production but will make gas-fired power generation less attractive, falling to less than 32% of the US utility-scale generation in 2017 and 2018 from 34% in 2016 (English).


The US maintained the throne as top hydrocarbon producer. The United States was the world’s biggest producer of petroleum and natural gas in 2016 for the fifth straight year (English). US crude oil production will reach 10 million b/d by March 2018, a first in the last 50 years (English).


US stocks and energy suffered from Comey’s testimony. US stocks reduced gains and Treasury fell with former FBI Director James Comey’s testimony (English). US crude oil prices dropped 5% after the announcement of an unexpected rise in US inventories (English).



Lateral Thinking


NASA is recycling ships now. SpaceX launched the first recycled cargo ship with supplies for the International Space Station, reducing flight costs (English). The Falcon rocket took off carrying a Dragon capsule that supplied the space station three years ago. SpaceX is also the first to reuse boosters.



Quote of the Week


“The present is the ever moving shadow that divides yesterday from tomorrow. In that lies hope.”


-Frank Lloyd Wright (1867-1959), US architect, educator, and writer



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