The Weekly Brief: US Global Impact

May 29, 2017 edition— Power prices heat up; debates over selling the emergency oil stockpile; and the TPP lives on.





Editorial Interlude


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Last Week in a Minute or Less


Renewables & Electricity. Electricity demand and prices went up; US nuclear energy’s future in doubt; and utilities offer corporations renewable energy.


Natural Gas & Liquid Fuels. The first US LNG cargo for Northwest Europe will arrive on June 7.


Oil & Gas Upstream. Trump under pressure for offering the emergency oil stockpile and OPEC and non-OPEC members agreed to extend output cut by 9 months.


Money & Power. The Fed maintains interest rates but there will be changes “soon”; the TPP will move forward; and Trump hopes to achieve peace in the Middle East.


Déjà vu all over again. Last week’s readers were particularly interested in the drop in new US residential solar capacity (English); Mexico’s interest in NAFTA (English); and the official NAFTA renegotiation announcement (English).



Keeping Track of Trump


Trump’s budget cut will gut DOE… President Donald Trump proposed a budget for 2018 cutting by US$3.1bn for energy research at the Energy Department (English) (English). By cutting the DOE’s programs, the research to develop future energy technologies that could bring long-term profits would be underfunded.


…and the money will come from the US oil stockpile. The White House budget includes a proposal to sell half of the US emergency oil stockpile and to open the Alaska National Wildlife Refuge for drilling (English). The US Strategic Petroleum Reserve contains 688 million barrels of crude oil.


Lawmakers question Trump’s plan for oil stockpile. Lawmakers from both parties worried over Trump’s proposal to sell half of the US emergency oil stockpile making the US vulnerable to supply hikes (English). Republican Senator John Hoeven argued the Strategic Petroleum Reserve should be used for emergencies and selling “would disrupt the market.”


Trump needs support from Congress and federal agencies. Republicans in Congress are focusing on their healthcare and tax reform agenda in the wake of the Russian interference scandal (English). As President Donald Trump has not yet filled senior roles at federal agencies, he faces a lack of support from loyalists.



Energy Policy


US coal production and train loadings are on the rise. Weekly US coal production increased by 1.2% from the previous week and 17.6% over the year-ago week (English). US coal train loadings averaged 86.4 trains/d, a rise from the 82.4 trains/d of the previous week (English).


US nuclear energy’s future could be more expensive than thought. Westinghouse’s bankruptcy means that the four nuclear plants it was building are looking for a home.  According to Reuters, Toshiba will pay US$3.48bn over three years (English) for Georgia Power to take over two of the plants, and a similar deal may be in the works with Scana for the remaining two.


Utilities direct corporations to renewable energy. In cost-competitive wind and solar power markets, there are economic incentives for utilities to offer renewable energy at a low price for 20 years, without risking fossil-fuel price volatility (English). According to the World Resources Institute, in ten US states utilities offer 13 green tariffs.


Electric cars are selling through the roof. In California, electric car sales increased 91% in the first quarter of 2017 compared to the same period last year (English). Sales for all cars in the state amounted to 506,745, including 13,804 pure electrics and 10,466 plug-in hybrids.



Boundary Issues


Tensions grew at the Asia-Pacific meeting for a word. The Asia-Pacific Economic Cooperation (APEC) forum faced a tense moment when failing to agree on a joint statement on fighting protectionism. US Trade Representative Robert Lighthizer explained the US opposed the word “protectionism” because it was being confused with the steps to promote free trade (English).


The TPP moves on without the US. Ministers from the 11 participating countries published a statement pledging their intention to move forward with the TPP (English). The statement was released after several meetings during the Asia-Pacific Economic Cooperation (APEC) and November 2017 is the target date for a road map on future actions.


US LNG set sail for the Netherlands. Although US LNG exports began in February 2016, the first ever US LNG cargo to Northwest Europe was sent to the Netherlands and is expected to arrive on June 7 (English).  US LNG exports have previously arrived in southern Europe.


Texas worries over the NAFTA renegotiation. International trade is a fundamental source of income for the state and certain Texans worry about President Donald Trump’s position on the NAFTA renegotiation. Texas created a joint manufacturing structure between the US and Mexico, being the state which benefited the most from NAFTA (English).



International Affairs


Trump focused on Islamist extremism and peace in the Middle East. During his visit to Saudi Arabia, President Donald Trump insisted on uniting with Arab and Islamic leaders to defeat Islamist extremists (English). Trump left Israel hoping to achieve peace, but no plan or talk of borders was offered (English).


North Korea tested a missile and the US sent China a challenge. North Korea fired an upgraded, extended-range submarine-launched missile (English). A US Navy warship sailed close to an artificial island built by China in the South China Sea, a challenge to Beijing in the area (English).


Trump reprimanded NATO allies again for payments. President Donald Trump again accused NATO members of not spending enough on defense and owing money to the US and the organization (English) (French) (German). Trump pointed to an increase in defense to stop terrorism and future attacks.


Flynn declined the Senate’s Russia investigation subpoena and the Senate issued more. The Senate Intelligence Committee issued two new subpoenas for information from Michael Flynn’s companies (English). Michael Flynn had previously declined to comply with a subpoena from the committee investigating the possible Russian interference in the 2016 election (English).



Macro Trends


OPEC will extend output cut another nine months. OPEC and non-OPEC producers are ready to extend supply cuts, the Saudi energy minister said (English) (Spanish). Saudi Arabia and Iraq agreed to prolong by nine months the production cuts and oil inventories are expected to drop to their 5-year average (English).


US electricity demand rose and so did prices. With temperatures rising in the Midwest and East Coast, electricity demand increased sending real-time prices to triple digits (English). New England Internal Hub real-time prices reached US$270/MWh and, at the New York ISO, West Zone A real-time prices shot up to US$733/MWh.


Trump’s proposal hit oil prices. President Donald Trump’s proposal to sell half of the US oil reserve made oil prices fall (English). According to the head of the White House Office of Management and Budget, Mick Mulvaney, the offer is “a responsible thing to do” owing to increasing domestic production (English).


The Fed pointed to a “soon” increase in interest rates. According to its May meeting minutes, the Federal Reserve will raise interest rates “soon” (English). After the news from the Fed and Trump’s oil reserve offer, US stock markets were up and the US dollar, oil, and bond yields fell (English).



Lateral Thinking


A great week for mouse fertility on Earth and in the heavens. Japanese scientists found that mouse sperm produced healthy mice after spending nine months in space suffering intense radiation (English). Chinese researchers transplanted sterilized female mice with egg-generating stem cells from another mouse and they produced healthy babies (English).



Quote of the Week


“A man should never be ashamed to own he has been in the wrong, which is but saying, in other words, that he is wiser today than he was yesterday.”


-Alexander Pope (1688-1744), English poet



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