The Weekly Brief: US Global Impact

March 13, 2017 edition— Tillerson out from Keystone XL; IEA forecasts more oil demand than supply; and the EPA isn’t so curious about methane emissions.





Last Week in a Minute or Less



Renewables & Electricity. Solar power doubled worldwide and the White House plans to end the Energy Star program.


Natural Gas & Liquid Fuels. FERC certificated 7 Bcf/d of new natural gas pipelines and EPA deregulates methane emissions.


Oil & Gas Upstream. Tillerson recused himself from the Keystone XL pipeline permit; US oil rigs keep growing to 609; and IEA forecasts oil demand outpacing supply after 2020.


Money & Power. Crude oil prices dropped; Morgan Stanley is annoyed by the Fed’s hinting interest rate increases; and Trump announced a new travel ban.


Déjà vu all over again. Last week’s readers were particularly interested in Pruitt’s decision over the Clean Power Plan (English).



Keeping Track of Trump


Tillerson recused himself from the Keystone XL pipeline. In a letter directed to Greenpeace, US Secretary of State Rex Tillerson recused himself from themes related to the permit requested by TransCanada Corp for the Keystone XL pipeline (English). Greenpeace demanded Tillerson’s recusal arguing Exxon Mobil would benefit “directly” from Keystone XL approval.


Who is bugging who? President Trump accused Obama of wiretapping Trump’s Tower during the presidential campaign, possibly based on allegations published by Breitbart News (English). The FBI Director and a spokesman for Obama denied the allegation, and the White House asked that the allegations be added to the ongoing congressional investigation of Russia’s interference in the election (English) (English) (English).


US Senate Democrats want to see Trump’s tax returns. The US Senate Democrats demanded Republican lawmakers to obtain Pres. Trump’s tax returns as a matter of “critical national security” (English). The demand was blocked by House Republicans on February 28 after a procedural vote of 229-185 (English).


The White House plans Energy star demise. In a preliminary budget proposal, the White House suggested the end of the Energy Star program, designed to label energy-efficient consumer products and appliances (English). The slash in Energy Star will leave US$5m for the “closeout or transfer” of climate protection voluntary partnership programs.


Trump orders a new travel ban and suspends the H-1B visa fast track. President Trump signed a revised executive order, removing Iraq from the list of countries from which travelers are banned (English) (French) (Spanish). The Trump administration also suspended temporarily the premium processing of H-1B visa petitions, often used by the technology industry to hire technical experts from abroad (English) (English).



Energy Policy


The EPA ditched its survey on methane emissions. The US Environmental Protection Agency will withdraw the request of extensive information about equipment and methane emissions for oil and gas operators (English). Industry associations lauded the reduced reporting burden for companies, although some state officials and the Ute Mountain Tribe voiced their opposition before the Senate (English).


Trump will soon rule on vehicle emissions. The Trump administration is expected to modify federal regulation on vehicle pollution which contributes to global warming, after an agreement with the auto industry (English) (English). California is expected to fight – and win – against changing its own stricter standards (English).


FERC certificated seven natural gas pipelines before it lost its quorum. The Senate Democrats urged President Trump to quickly fill FERC’S three vacancies (English). Before the lack of quorum, FERC certificated more than 7 Bcf/d of new natural gas pipelines (English).


US oil rigs keep growing to 609. The US oil rig count is up by seven, with continued expansion in the Eagle Ford Shale. In 2017, oil rigs in the Eagle Ford have increased 60%. The Eagle Ford  produces 1 million b/d of oil and is expected to increase during the year (English).



Boundary Issues


Higher oil prices boosted the US trade deficit in January. In January, the US trade deficit increased to a nearly five-year high due in part to rising oil prices (English). This result points to a slower economic growth and a challenge to the Trump administration’s goal to boost economic growth and reduce the trade deficit.


All eyes set in the Asia Pacific Region LNG. While the formation of a functional natural gas market will take time, the US LNG export capacity will help liquidity in global LNG market (Energy).


Canada says the NAFTA renegotiation hurts investment. Canada’s ambassador to Washington said that delays in the NAFTA renegotiation would create uncertainty and slow investment in North America (English). Trudeau assured that Canada can be the secure, reliable source of energy that the US economy needs (English).



International Affairs


Solar power shines 50% brighter worldwide. US and China doubled the amount of solar they added in 2015. Their efforts made solar power grow 50% last year worldwide, adding 76 gigawatts in 2016 to reach 305GW of solar power capacity globally (English).


China cuts its 2017 growth target. After warning over global trade controls, Premier Li Keqiang set China’s growth target at around 6.5%, down from last year’s 6.7% growth (English). The International Monetary Fund considered China’s growth target “achievable” (English).


Donald Tusk was reelected as European council president. Despite Poland’s opposition to its former prime minister, Donald Tusk won a second term leading the European council (English) (Spanish) (German) (French). Tusk will have to manage negotiations between Britain and the European Union after the Brexit vote.


Tensions between Turkey and Germany escalated. After the arrest of a German reporter in Turkey, certain German municipalities cancelled rallies where Turkish ministers would support a national referendum to extend the Turkish president’s power (English) (German) (Spanish). Erdogan accused Germany of “Nazi practices” and Merkel said the accusation “cannot be justified”.



Macro Trends


IEA forecasts oil demand will outpace supply after 2020. The International Energy Agency (IEA) predicts global oil supply could fall behind demand after 2020, with demand growth averaging 1.2 million b/d until 2022 (English). Meanwhile, the EIA increased US crude oil production forecast to 9.2 million b/d in 2017 and 9.7 million b/d in 2018 (English).


Morgan Stanley is annoyed by the Fed… Morgan Stanley’s head of global interest-rate strategy lamented the continuous pre-signals sent by the Fed on rate movements, affecting bond market data (English). After Fed officials’ comments, traders saw an 80 percent chance of the Federal Reserve raising interest rates in March (English).


…and 30-year mortgage rates are up. Before the Federal Reserve officially meets, US mortgage rates increased, pushing costs for 30-year home loans to a yearly high (English).  The average rate for a 30-year fixed mortgage for that period has climbed to 4.21% from 4.1% and a 15-year mortgage to 3.42% from 3.32%.


Crude oil prices plummet and dollar rises over euro. After a record 8.2 million bbl increase in US crude oil inventories, crude oil prices dropped in New York and London markets (English). Following the scandals surrounding the French elections, the dollar rose 0.4 percent against the euro (English).



Lateral Thinking


Clay membranes may help reduce carbon emission. Researchers in China have developed a clay membrane which reduces carbon dioxide emissions in factory exhaust (English). Polymers and montmorillonite, a special type of clay, contain OH groups which interact with carbon dioxide, so the compound passes through the membrane separating it from other gases.



Quote of the Week


“The day may dawn when fair play, love for one’s fellow men, respect for justice and freedom, will enable tormented generations to march forth triumphant from the hideous epoch in which we have to dwell. Meanwhile, never flinch, never weary, never despair.”


– Winston Churchill (1874-1965), British Prime Minister of the United Kingdom from 1940 to 1945 and 1951 to 1955.




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