Today’s Key Takeaways: Competing oil price estimates. Gas exports permit slow under current administration. China’s control of graphite exports impacts energy sector. Alaska’s energy industry in the crosshairs.
OIL:
Oil Prices Could Test $115 If Hamas-Israel War Escalates Into Regional Conflict
Charles Kennedy, OilPrice.Com, October 31, 2023
Weakening global economic growth could keep oil prices below $90 per barrel this year and next, barring a major escalation in the Hamas-Israel war that could spill over the Middle East and threaten supply, which could send oil to above $100 and testing $115 a barrel, analysts said in the monthly Reuters poll.
Brent Crude prices are expected to average $84.80 per barrel this year and $86.62 next year, a Reuters survey of 40 analysts and economists found.
So far this year, Brent Crude prices have averaged $82.60 a barrel.
Oil prices are falling even as Israel steps up its war on Hamas. A spike could still happen
Anna Cooban, CNN, October 31, 2023
Oil prices fell again Monday as concerns about the health of the global economy outweighed fears that Israel’s move on the weekend to expand its military operations in Gaza could lead to a regional conflict.
Brent crude, the global oil benchmark, fell 1.6% to $89 a barrel, and West Texas Intermediate (WTI) crude, the US benchmark, dropped 1.9% to trade at $84 a barrel by 8.47 a.m. ET.Last week, Brent fell 1.8% and WTI 3.6%.
Richard Bronze, co-founder, and head of geopolitics at consultancy Energy Aspects, told CNN that the biggest reason for the declines was likely to be “market concerns about the health of the global economy and the implications for oil demand.”
GAS:
US reviews of gas-export permits slow under Biden administration
Curtis Williams, Reuters, October 30, 2023
U.S. Department of Energy reviews for liquefied natural gas (LNG) export permits have lengthened under President Joe Biden’s administration to 11 months or more, from seven weeks, according to government data.
The delay could mean nearly completed LNG projects may not being able to supply big European buyers because of a lack of the permit. Increasing LNG exports is opposed by some U.S. industries who fear it could raise domestic prices, while environmental groups have raised concerns about continued expansion of a fossil fuel industry.
Big swaths of U.S. industry – ranging from chemicals, steel, food, and agriculture – oppose unrestricted exports of U.S. gas. Export permits represent the most significant limit thus far on an industry hoping to add 50% more to U.S. export capacity by 2026.
The average time for issuing an export license for supplying the superchilled gas to some of the biggest buyers of U.S. LNG, non-Free Trade Agreement (non-FTA) countries, has climbed under the Biden administration to over 330 days from 155 days under the Obama administration and 49 days under the Trump administration, according to DOE data.
MINING:
Will China Controls on Graphite Exports Affect Energy Sector?
Andreas Exarheas, Rigzone, October 31, 2023
On October 20, China’s Ministry of Commerce (MOC) and the country’s General Administration of Customs issued an announcement on “optimizing and adjusting temporary export control measures for graphite items”, a statement on China’s MOC website, which was translated from Chinese, showed.
“In accordance with the relevant provisions of the Export Control Law of the People’s Republic of China, the Foreign Trade Law of the People’s Republic of China, and the Customs Law of the People’s Republic of China, in order to safeguard national security and interests, and with the approval of the State Council, it was decided to impose restrictions on the Ministry of Commerce, the State Commission of Science, Technology and Industry for National Defense, and the Customs,” the translated statement noted.
What does this mean for energy markets? Well, when Rigzone asked Carole Nakhle, the CEO of consultancy Crystol Energy, if China’s controls on graphite exports will affect renewable energy operations, Nakhle highlighted that “graphite is an important component for electric vehicles’ battery”.
“A curb in the supply of the material originating from an important supplier that is China will increase its price and therefore the cost of production of batteries, particularly for non-Chinese producers,” Nakhle told Rigzone.
“However, it is that same price signal and the concern of customers about security of supply that will also encourage the development of alternatives supplies, which is desperately needed to support security of supply for the energy transition,” Nakhle added.
When asked if China’s controls on graphite exports will affect oil and gas operations, Nakhle highlighted that graphite is also used in oil and gas operations but noted that it is not as critical as for electric vehicles.
POLITICS:
Alaska and America’s energy industry are in the crosshairs
Mike Pompeo, Anchorage Daily News, October 30, 2023
It’s not a coincidence that the vicious, barbaric attack by Hamas on Israel took place 50 years to the day of the start of the Yom Kippur War in 1973. That invasion helped spark an oil crisis that crushed America’s economy and drove rapid inflation. Today, Iran not only hopes to wipe Israel off the face of the earth but also seeks to inflict real costs on the United States by fomenting war and terror across the Middle East. The regime in Tehran seeks to replicate what the 1973 invasion wrought: global energy instability and an upper hand over the Western world. Thanks to the remarkable innovations of America’s energy producers, though, we can now stop this pain from ever being inflicted on our country or the world. We can ensure prosperity and energy security at home while maintaining the capacity to help our ally, Israel, defend itself from these wicked attacks.
Unfortunately, standing in the way of achieving this energy security are the policies that deliberately undermine our domestic oil and gas industry. In his first one hundred days in office, President Joe Biden canceled the Keystone XL pipeline, ceased issuing new drilling permits on federal lands, and imposed new burdensome regulations on oil and gas companies. In short, he declared war on the industry that allows American families and businesses to prosper. This war continues today, with recent actions to rewrite the rules in the National Petroleum Reserve in Alaska and revoked leases legally obtained on Alaska’s coastal plain.
At the state level, activists, and their allied politicians in energy-producing states such as New Mexico, Pennsylvania and Louisiana are using lawsuits and mandates to strangle their oil and gas industries. In other states, they seek to discourage production through tax hikes.
It may be hard to believe, but this is exactly what some lawmakers in Alaska were considering last session, proposing bills that would raise taxes on oil and gas production by as much as 40%. The Last Frontier can play a uniquely important role in ensuring American energy independence due to its strategic location, substantial natural resources and vast untapped gas reserves. However, with producers already under fire from the Biden administration, introducing tax hikes would be catastrophic for the industry and the American economy.
Tax hikes in Alaska’s already challenging environment would trigger an immediate retreat in Alaska’s energy development. Destabilizing current production while greatly disincentivizing future development in Alaska would have ramifications across the United States and for our allies who depend on American energy in Europe, the Middle East, and even potentially in the Indo-Pacific.
As secretary of state, I saw firsthand how energy security impacted geopolitics. When we can supply our allies with clean energy from our own industry rather than relying on others, the United States can lead from a position of strength. Due to bad policies by the Biden administration at the federal level and misguided lawmakers and activists at the state level, we are in danger of losing our ability to do this.
With war in Europe and now the Middle East, the United States and our allies are at a dangerous moment. We can either become a 21st-century energy superpower, capable of supporting peace and prosperity at home and around the world, or we can return to the dreary days of the 1970s – where high inflation, economic stagnation, and global instability threatened American families.
Getting this right starts at home. It starts in key energy states like Alaska. I urge Alaskans to recognize the responsibility and opportunity to lead by making choices to increase production by defeating efforts to increase state taxes so that they have the credibility to push back on the Biden Administration’s policies. The fate of our economy and national security hangs in the balance.