The Weekly Brief: US Global Impact

June 5, 2017 edition— Tariffs on imported solar considered; Rover gas pipeline horizontal drilling denied; and the US out of Paris accord.





Editorial Interlude


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Last Week in a Minute or Less


Renewables & Electricity. Alternative renewables produce 4% of US power; the US is considering emergency tariffs on imported solar cells; and Texas limited wind farm tax benefits.


Natural Gas & Liquid Fuels. Libya’s production affected oil prices and the LNG market is surrounded by uncertainty.


Oil & Gas Upstream. FERC stopped Rover gas pipeline horizontal drilling.


Money & Power. Trump abandoned the Paris accord; FERC nominees were received with protests; and first quarter US GDP was revised up.


Déjà vu all over again. Last week’s readers were particularly interested in the increase in electric car sales (English).



Keeping Track of Trump


Trump abandoned the Paris accord and angered allies. President Donald Trump withdrew the US from the Paris accord to US business figures and former President Barack Obama’s dismay (English) (French). France, Germany, and Italy assured the Paris accord cannot be renegotiated at Trump’s demand and urged allies to double efforts against climate change (German).


Congress may have to increase the debt ceiling soon. Lawmakers in both parties expected to develop a broader spending package by the fall to avoid a government shutdown. The debt limit deadline is approaching faster than expected and the GOP is busy redesigning the tax code and repealing Obamacare (English).


Pence will campaign to comfort GOP supporters. Vice president Mike Pence will launch a summer tour to ease the GOP fears over the Trump Administration’s controversies and to avoid a midterm election disaster (English). Senior Republicans declared they lack direction from the White House as to how to plan for the midterm.


FERC nominees faced protests at Senate hearing. The Senate hearing to move the President Trump’s three nominations to fill the Federal Energy Regulatory Commission (FERC) was interrupted by protests (English). The Senate confirmation for the FERC nominees may be complicated by Democrat Commissioner Colette Honorable’s intention to leave.



Energy Policy


Alternative renewables produce 4% of US power capacity. Batteries, flywheels, hydroelectric pumped storage plants, geothermal units, and solid and wood waste represent 4% of the US power capacity. Hydroelectric pumped storage plants account for 23GW of installed capacity, while wood, solid waste, landfill gas, and other waste biomass generates 14.1GW (English).


US FERC said no to Rover gas pipeline horizontal drilling. The Federal Energy Regulatory Commission rejected the Energy Transfer Partners’ request to continue horizontal drilling at two sites for the Rover Pipeline (English). The rejection came after leaks of drilling fluids were spilt during a horizontal drilling at the Tuscarawas River.


Texas limited wind farm tax benefits close to air bases. The Texas Legislature passed the Senate Bill 277 banning tax abatements for wind farms located within 25 miles of a military aviation facility (English). Analysts consider the bill a way to affect wind farm siting attacking property tax abatements and “pure politics”.


Three Mile Island Nuclear Power Plants says good-bye in 2019. Exelon CEO announced the Three Mile Island nuclear plant will shut down in 2019, after fighting to obtain subsidies from Pennsylvania offered to renewable energy sources (English). The nuclear plant has been unprofitable for years, and has failed to auction off future energy production for the three years.



Boundary Issues


A changed TPP can still work in everyone’s favor. With the US withdrawal, the clause that requires ratification from countries which account for 85% of the members’ gross domestic product must be eliminated. The TPP can justify the structural reforms in Japan’s agriculture and Vietnam’s industries needed to increase productivity (English).


Trump and Trudeau discussed trade issues at the G-7 summit. President Donald Trump and Canadian Prime Minister Justin Trudeau talked about aerospace, steel, and softwood lumber in a meeting on the sidelines of the G-7 summit (English). Both leaders “reaffirmed their commitment” to the economic partnership valued at US$882bn.


Emergency tariffs on solar imports considered. The US notified the World Trade Organization the consideration of implementing emergency tariffs on imported solar cells (English). The US is investigating if serious damage was made to Suniva and SolarWorld due to an increase in solar cells’ imports (English).


The US-German car trade debate continued. President Donald Trump said, “the Germans are bad, very bad” on trade (English). The US exported US$1.48bn in vehicles to Germany and imported US$4.55bn in the first quarter of 2017, but the import-export balance does not consider the jobs of BMW and Volkswagen factories in southern US states (English).



International Affairs


Merkel said Europe cannot depend on the US. After failing to gain US support for the Paris climate accord, Angela Merkel accused US and Britain of no longer being completely reliable partners (English) (French). Merkel emphasized the importance of Europe as a united counterweight and the need to “take our destiny into our own hands” (English).


North Korea’s missiles returned to the headlines. Kim Jong Un supervised the test of a new ballistic missile and ordered more strategic weapons to be develop (English). Meanwhile, US bombers flew near North Korea’s border (English) South Korean President Moon Jae-in was not happy to learn that four more THAAD launchers were brought into the country (English).


Lawmakers opposed Trump’s weapon deal. Republican and Democrat lawmakers introduced in the Senate a resolution of disapproval to block part of President Donald Trump’s sale of weapons to Saudi Arabia (English). Under the Arms Export Control Act of 1976, a senator can force a vote on arms sale when Congress is notified.


Trump invites foreign leaders to call him on his personal cellphone. President Donald Trump has been sharing his cellphone number with world leaders, asking them to call him directly, breaking diplomatic protocol (English). The suggestion raised concerns over Trump’s calls vulnerability to eavesdropping from foreign governments.



Macro Trends


Libya shook global oil prices… With the hike in Libyan production, oil prices dropped 3% to a three-week low (English). Brent maintained its fifth monthly decline despite OPEC’s announced output cuts and the continued fall – for an eighth week- in US crude inventories.


…and the LNG market will remain uncertain. If the oil market will remain unbalanced until 2018, the forecast for LNG is worse due to its saturated, price-depressed, and economically unfavorable markets (English).


The dollar fell with cautious investors eying Europe. The dollar dropped to two-week lows compared to the steady yen and the Swiss franc (English). Investors avoided risks, considering political changes in Europe and weaker stock markets after a long holiday weekend.


US GDP exceeded all expectations. The first quarter GDP estimate was revised up to 1.2% from a previous 0.7% (English) (English). The US economy grew faster than initially thought, with record levels of employment.



Lateral Thinking


Jupiter, filled with cyclones and watered with ammonia. A NASA spacecraft found Jupiter’s atmosphere had 1,400 km per hour cyclones over the north and south poles and rivers of ammonia falling from the top of the atmosphere (English). On July 11, Juno will do a flyby over the Great Red Spot.



Quote of the Week


“The great enemy of the truth is very often not the lie — deliberate, contrived and dishonest — but the myth — persistent, persuasive, and unrealistic.”


-John F. Kennedy (1917-1963), the 35th President of the United States



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