Daily Archives: May 19, 2009

Kate Mackenzie

“The signs are that if a bill does somehow pass, it will be ugly,” says an FT editorial today of a proposed US cap and trade scheme. The debates around the Waxman-Markey bill, thought to be the best hope of getting a scheme approved, are already turning ugly.

Oil companies are not happy, and neither are some environmentalists. Republicans and quite a few Democrats are also opposed. Some of the political opposition is explained by constituency: those from electorates with more carbon intensive industries are the most likely to be opposed.

But there are also concerns that it will punish American industries in favour of imports, and harm those on low incomes – just to name a few.

Kate Mackenzie

A nifty chart by Point Carbon shows how energy allowances would be distributed under the Waxman-Markey bill as it is – or at least, how it was a couple of days ago. Local power distribution companies (pink) get the bulk of the proceeds, followed by low income households (yellow) and trade-exposed and energy-intensive industries (grey).

Kate Mackenzie

Royal Dutch Shell had several reasons to be cautious about its remuneration report, which was just voted down at its AGM today.

It might be an unusual event for shareholders to reject such a move but the warning signs were all in place.

At the broadest level, the financial crisis has provoked a generally critical sentiment about executive pay.

At the sector level, this year’s lower oil prices have clearly rankled with shareholders. While oil companies have fared relatively well in the recession and Shell is raising its dividend this year, its debt ratio is also set to rise significantly.

Kate Mackenzie

So who says there’s no oil/dollar correlation?
The evidence has grown stronger over recent months

Throwing out the myths: the realities of recycling
It’s not a waste of energy after all

China-Brazil update
Loans for oil here we come


Elsewhere:

The great ethanol scam Consumer wrath at corn biofuels; $1,000 fuel pump repairs and all (BusinessWeek)

From a theory to a consensus on emissions How cap-and-trade won the day over carbon tax (NY Times)

A Bletchley Park for renewable energy schemes Channeling clever people into solving the problem (Guardian)

Solar’s important new players: Chevron, Lockheed Martin Enormous balance sheets and expertise with large, complex projects makes them a threat to pure-play solar companies (SeekingAlpha)

Fuel cell miracles Are as many needed as Stephen Chu thinks? (Energy Outlook)

Cost viability and algae Why a leading algae fuel company ran into problems (Bit Tooth Energy)

When oil behaves irrationally at the moment, it seems there’s usually only one explanation offered: it’s trading in an opposite direction to the dollar.

RBC Capital sums up the return of this significant correlation in the following chart:

Dollar/Oil correlation - RBC Capital

As can be seen, it appears the correlation slipped out of place from October 2008 until February 2009 – the peak of the financial crisis – and since then has increasingly been coming back into play.

The Government’s Waste and Resources Action Programme (WRAP) has been coming to the defence of recycling recently, addressing three key myths that have been circulating in the press.

Myth 1: Collecting and transporting recycling is bad for the environment as it causes CO2 emissions.

According to Dr Liz Goodwin, WRAP’s chief executive, this greatly overstates the emissions associated with transportation. “The impact of collecting and transporting is a tiny fraction of CO2 emissions, equivalent to 0.04 tonnes per tonne of recycled material.”

Dr Goodwin adds: “Current levels of recycling in the UK save 18 million tonnes of CO2 per year. This is equivalent to flying the population of Northern Ireland to Australia and back twice.”

Kate Mackenzie

Early snaps:

BEIJING (Dow Jones)–China Development Bank Corp. signed a $10 billion credit
pact with Petroleo Brasileiro SA (PBR), as well as an agreement to extend an
$800 million credit line to Brazil’s state development bank, the Brazilian and
Chinese governments said Tuesday.

Wires reports are also suggesting Brazil will supply 150,000 barrels per day to China, rising to 200,000 barrels in 2010.

Related links:

China and Brazil cement ties (FT, 19/05/09)
China takes the long view on oil (FT Energy Source, 14/04/09)
China gets busy (FT Energy Source, 20/02/09)

US crude oil prices regained the $60 a barrel level while base metals, agricultural and soft commodities all made gains on hopes for a more rapid recovery in the global economy.

In energy markets, Nymex June West Texas Intermediate hit a high of $60.48 before easing back to trade 75 cents higher at $59.58 a barrel. The June WTI contract was due to expire at the close on Tuesday and the July contract, the US benchmark from Wednesday, rose $71 cents to $60.30 a barrel after reaching a high of $60.99.

Supply disruptions supported prices. An explosion at Sunoco’s Marcus Hook refinery in Pennsylvania disrupted production at the 178,000 barrel-a-day plant.

In Nigeria, militants threatened to block key waterways in the Niger delta as tensions escalated following an upsurge in violence between Nigerian security forces and the Movement for the Emancipation of the Niger Delta.

Full markets report

James Fontanella-Khan

- China plans to build petrol reserves
Move that mirrors Europe’s policy (FT)

- PetroChina says to issue $3.8bn in corporate bills
Asia’s top oil and gas producer says issuance would start soon (Reuters)

- Greenpeace warns Shell on oil shale projects
Canadian oil and Nigerian gas make for high carbon intensity (FT)

- Obama to unveil tough fuel rules for cars
Move likely to please environmentalists (FT)

- Black-and-white answers to motley puzzle
Scientists propose deceptively simple solutions to climate change (FT series)

- Australia in race for biggest solar plant
Part of commitment to source 20% of its energy needs from renewables by 2020 (FT)

- Italy’s solar energy rush risks overheating
Industry is warning of the dangers of a speculative bubble (FT)

- Greenpeace warns on Shell oil sands projects
Opposition to oil group’s carbon-intense Canada investments (FT)

- Brazil and China cement ties
Package of trade deals and finance for Petrobras signed (FT)

- Lex: BHP Billiton
‘Waiting for Groucho’…(FT)

- Nigerian militants threaten to attack oil vessels
Rebels threatened to block waterways (Bloomberg)

- Recovery predicted for platinum and palladium prices
Significant uncertainty surrounds the outlook for both metals (FT)

Energy Source is no longer updated but it remains open as an archive.

Insight into the financial, economic and policy aspects of energy and the environment.

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