Daily Archives: January 12, 2010

Sheila McNulty

Chevron’s interim update, at first glance, is bad news. Earnings for the fourth quarter 2009 are expected to be lower than in the third quarter of 2009. When broken down by segment, downstream – refining and marketing – results, are expected to be sharply lower, due mainly to significantly weaker refining margins, which are affecting the industry as a whole. Upstream – exploration and production – results are expected to be in line with third quarter results, as the benefit of higher commodity prices is offset by the absence of gains recognized in the third quarter associated with formal approval of the Gorgan liquefied natural gas project in Australia.

But a closer look at Chevron’s upstream results by Credit Suisse reveals all is not lost.

Sheila McNulty

The vast majority of the world’s largest investment managers are not factoring climate-related trends into their short- and long-term investment decision-making, resulting in significant hidden risks in the trillions of dollars of investment portfolios they are managing. This is the findings of a new study by Ceres , a coalition of investors, environmental groups and other public interest organizations working with companies to address climate change.

It is not really surprising, given that world leaders were unable to provide definitive leadership on climate change in Copenhagen. But bringing the countries of the world together on such a major issue should be harder than convincing investment managers that climate change is going to affect business.

Kate Mackenzie

On FT Energy Source:

- Who likes the cold?

- The changing love affair with driving

- More bad findings for corn ethanol

- California‘s complex energy climate

- Headlines: BP overtakes Shell, growing Saudi consumption and more
Further reading:

- Waiting for China’s Copenhagen Accord submission

- An update on Khurais and other Saudi projects

- Esolar’s tasty China deal

- 2009 was a good year for energy, really

- Should taxpayers back new nuclear?

- Electric and hybrid vehicles at the Detroit Auto Show

- $3 gas is one thing, expectations of a return to $4 is another

- Extreme weather and the solar cycle

By Izabella Kaminska

Recent cold weather in the northern hemisphere may be putting pressure on natural gas and rock-salt supply, but there’s one imbalanced market where the big chill is probably very welcome indeed.

We’re talking here about the refining business and related oil products market. An overhang of distillate stock due to poor demand over the past year put significant pressure on refining margins, leading many facilities to mothball or shutdown capacity.

Luckily for the industry, cold weather stands to increase demand for distillate products like heating oil. The bout of icier than expected climes in January has consequently had a bullish effect on prices.

Kate Mackenzie

US environmentalist and Earth Policy Institute president Lester Brown had a good run last week with his projection that 4m more cars in the US were scrapped than sold in 2009, leading to a net decline in the country’s fleet.

It makes some sense, intuitively, with scrappage schemes and the recession; but the data is very preliminary; pre-2009 numbers comes from one source over the July 1 – June 30 periods, while the 2009 sales data is for the calender year, comes from a different source, and the 2009 scrappage number is a projection.

Plus, there are some signs that the great US driving era hasn’t quite peaked yet.

Sheila McNulty

A new study by Rice University raises an old point about ethanol – but backs it up with new research, so there is cause for hope that it just might be taken up by the Obama Administration. The report, which includes analysis by environmental scientists and was led by Amy Myers Jaffe, energy expert at Rice University, concludes that the US’ biofuels policies are flawed, raising questions about the economic, environmental and logistical basis for the billions of dollars in federal subsidies and protectionist tariffs that go to domestic ethanol producers every year.

Indeed the numbers detailed in the report are staggering:

In 2008, the US government spent $4bn in biofuels subsidies to replace roughly 2 per cent of the US gasoline supply. The average cost to the taxpayer of those `substituted’ barrels of gasoline was roughly $82 a barrel, or $1.95 per gallon on top of the retail gasoline price (i.e., what consumers pay at the pump.)

Kate Mackenzie

Pity poor California, as it faces up to its energy future with a mixture of ambition and dread.

It is one of the states hardest-hit by the US recession, suffering a massive budget deficit and unemployment above 12 per cent. As for its ability to shift to a lower-carbon economy, well, it’s complex. It may have the advantage of light industry, a declining oil industry and a strong energy efficiency regime, but it’s population also very much tied to car transport. Meanwhile, that falling oil revenue – and the potential from offshore resources – is something the state could do with, not only to address its immediate financial problems but also, as Gregor has suggested, to fund the expense of shifting away from road-based infrastructure.

Kate Mackenzie

BP overtakes Shell on market value for first time in three years (FT)

China drops 70% homemade rule for wind turbines (Bloomberg)

California wants EPA to slow down climate rules (Reuters)

Three Britons charged over €3m carbon trading ‘carousel fraud’ (Guardian)

China may shut 11% of power stations as snow snarls coal transport (Bloomberg)

Brazil cuts ethanol blend in gasoline to 20% (Reuters)

Germany sticking to ambitious CO2 target (Reuters)

Saudi craving for oil comes at a price (FT)

Jordan seeks to rekindle trade with Iraq (FT)

White House eyes new nuclear plants in climate battle (Reuters)

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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