Today’s Key Takeaways: Environmental movement willing to sacrifice whales for wind. Will oil prices climb if Fed stops hiking interest rates? Alaska triples proven reserves of natural gas. Biden blocks another U.S. source of copper, critical for EV batteries. Investigating financial assets managers for ESG policies.
NEWS OF THE DAY:
Why Environmentalists May Make This Whale Species Extinct
Leighton Woodhouse, Michael Shellenberger, Breakthrough Institute, January 29, 2023
Since the passage of the 1973 Endangered Species Act, environmentalists have fought for strict protections for endangered species. They have demanded that the government apply what is known as the “precautionary principle,” which states that if there is any risk that a human activity will make a species extinct, it should be illegal.
And yet here we are, on the 50th anniversary of the Endangered Species Act, watching the whole of the environmental movement — from the Audubon Society and the National Wildlife Federation to scientific groups like the Woods Hole Institute, New England Aquarium, and Mystic Aquarium — betray the precautionary principle by risking the extinction of the North Atlantic right whale.
The cause of this environmental betrayal is massive industrial wind energy projects off the East Coast of the U.S. The wind turbine blades are the length of a football field. Sitting atop giant poles they will reach three times higher than the Statue of Liberty. The towers will be directly inside critical ocean habitat for the North Atlantic right whale.
There are only 340 of the whales left, down from 348 just one year earlier. So many North Atlantic right whales are killed by man-made factors that there have been no documented cases of any of them dying of natural causes in decades. Their average life expectancy has declined from a century to 45 years. A single additional unnatural and unnecessary death could risk the loss of the entire species.
Surveying for, building, and operating industrial wind projects could harm or kill whales, according to the U.S. government’s own science.
The National Oceanographic and Atmospheric Administration (NOAA) has given the wind industry 11 “incidental harassment authorizations,” or permits to harass hundreds of whales, including 169 critically endangered right whales.
The industry will bring more ships into the areas that could strike and kill whales. Submarine noise pollution from the wind farm’s construction and operation, and entanglements in equipment, also add to the risk. So too could air turbulence generated by the turbines harm or destroy zooplakton feeding grounds.
And, now, wind developers are demanding higher speed limits for their boats. If they don’t get them, the industry claims, it will need to build hotels for the workers at the sites, right in the middle of right whale habitat.
Defenders of the wind projects say they can reduce and mitigate the noise and ship traffic from the wind farm construction, but a senior scientist with the National Oceanographic and Atmospheric Administration (NOAA) contradicted that claim last spring when he wrote in a letter that “oceanographic impacts from installed and operating [wind] turbines cannot be mitigated for the 30-year lifespan of the project unless they are decommissioned.”
Scientists representing many of the same environmental groups supporting the industrial wind energy projects wrote in a 2021 letter that “the North Atlantic right whale population cannot withstand any additional stressors; any potential interruption of foraging behavior may lead to population-level effects and is of critical concern.”
Industrial wind projects “could have population-level effects on an already endangered and stressed species,” concluded the NOAA scientist, Sean Hayes. What are “population-level effects?” In a word: extinction.
What is going on? How is it that nearly every major conservation and environmental organization is actively championing industrial energy projects that could lead to the extinction of a whale species?
OIL:
Oil Prices Set To Climb On Rumors That The Fed Will Stop Hiking Interest Rates
Charles Kennedy, OilPrice.Com, January 30, 2023
- Traders believe the Federal Reserve could finally stop hiking interest rates this March as indicators suggest inflation is finally coming under control.
- Oil prices climbed on Friday on positive economic data coming out of the U.S., and expectations are the hike this week will be lower than previous ones.
- Other bullish factors for oil prices include rising Chinese demand and growing geopolitical risks in the Middle East following reports of drone attacks in Iran.
Traders expect the Federal Reserve to end its rate hikes in two months, which could push oil prices higher due to the generally inverse relationship between rates and oil prices.
According to a Reuters report, the Fed might end its rate-hike policy as soon as March, as economic indicators suggest inflation is slowing down and getting under control. What’s more, the Fed is set to announce another hike in benchmark rates this week but it may be lower than previous ones, at 25 basis points.
Oil prices climbed last week on the positive economic data coming out of the United States, although Treasury Secretary Janet Yellen has warned that a soft landing was far from certain and there was still a danger of recession.
Coupled with expectations for a rebound in oil demand in China, a lower rate hike and any other indication that the Fed may be preparing for a wind-down of its aggressive inflation control measures could lend additional upward potential to oil prices.
There has also been added support for prices from the reported drone attacks on targets in Iran, suggesting a possible escalation in Middle Eastern tensions. The reports pushed oil prices higher in morning trade in Asia today, although prices have since fallen back.
Some stability could come from the OPEC+ meeting this week as there are no expectations of any tweaks to the current policy of the extended cartel, with many members still unable to fulfill their production quotas even with their reduction last year.
China remains the biggest bullish factor for oil prices, however, especially after the government in Beijing said over the weekend it would aim to stimulate consumption as a means of boosting economic growth after the lockdowns.
Uncertainty remains, however. “We have Russia on the supply side and China on the demand side. Both can swing by more than 1 million barrels per day above or below expectation,” one investment manager told CNBC.
“China seems to have surprised the market in terms of how fast they are coming out of zero Covid while Russia has surprised in terms of resilience of export volume despite the sanctions,” Stefano Grasso said.
GAS:
Proved reserves of natural gas increased 32% in the United States during 2021
U.S. Energy Information Administration, January 30, 2023
Proved reserves of natural gas in the United States grew to a new record of 625.4 trillion cubic feet (Tcf) in 2021, a 32% increase from 2020, according to our recently released Proved Reserves of Crude Oil and Natural Gas in the United States, Year-End 2021 report. U.S. proved reserves had previously decreased 4% in 2020 as a response to prices that fell with decreased consumption during the first year of the COVID-19 pandemic. At year-end 2021, however, five of the eight states with the most proved reserves of natural gas each reported new record volumes, driving the growth nationally.
Proved reserves are operator estimates of the volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Prices heavily affect estimates of proved reserves. The wholesale spot price for natural gas at the U.S. benchmark Henry Hub in Louisiana averaged $3.89 per million British thermal units in 2021, almost doubling from 2020, according to data from Refinitiv.
MINING:
US blocks mining in parts of Minnesota, dealing blow to Antofagasta’s Twin Metals copper project
Staff Writer, Mining.Com, January 29, 2023
The US Interior Department on Thursday blocked mining in part of northeast Minnesota for 20 years, the latest blow to Antofagasta Plc’s Twin Metals copper and nickel mining project but a step officials said is needed to protect the state’s vast network of interconnected waterways.
Interior Secretary Deb Haaland signed an order on Thursday withdrawing 225,504 acres in the Superior National Forest from leasing to mining or geothermal companies through 2043.
In 2019, Chilean miner Antofagasta (LON:ANTO), through its subsidiary Twin Metals, carried out a feasibility study for the project, an underground copper-nickel mine and processing facility along the shores of Birch Lake and the South Kawishiwi River, which lie in the Rainy River watershed.
A coalition of businesses, environmental advocates and outdoor recreation groups in the state of Minnesota went to court challenging a Trump administration’s decision that opened the door to a copper, nickel and platinum project by a wilderness area.
In August 2022, Antofagasta Plc’s Twin Metals subsidiary sued the US government in a bid to revive the proposed Minnesota copper and nickel mine, which Biden administration officials had blocked over concerns it could pollute a major recreational waterway.
Twin Metals asked the US District Court in Washington to restore the leases, which were first granted in 1966 and have been passed between successor companies. No mining has taken place at the site.
The underground mine would, if built, be a major US source of copper and nickel, two metals crucial for the green energy transition. The only existing US nickel mine is set to close by 2025.
POLITICS:
Meet the group sharpening the GOP attack on ‘woke’ climate policies
Steven Mufson, The Washington Post, January 30, 2023
Consumers’ Research, bolstered by millions in donations and the Republican takeover of the House, targets Wall Street’s evaluation of climate risks
Bankrolled by mysterious donors, a little-known group named Consumers’ Research has emerged as a key player in the conservative crusade to prevent Wall Street from factoring climate change into its investment decisions.
On Dec. 1, the group joined 13 state attorneys general in calling for a federal regulatory agency to investigateVanguard, one of the world’s three biggest financial asset managers. Consumers’ Research accused Vanguard of “meddling with [the] energy industry to achieve progressive political goals at the expense of market efficiency.”
Within days, Vanguard announced it was quitting a coalition called the Net Zero Asset Managers Alliance and shelved its own modest pledges to cut the amount of greenhouse gas emissions linked to companies in which it invests. Leaders of Consumers’ Research were surprised — and elated.
“I knew we had found something important,” said Will Hild, who became executive director of the organization in March 2020, just as the pandemic hit. “But I didn’t know Vanguard would just capitulate.”
Vanguard didn’t put it that way. In a statement, it affirmed its commitment to “helping our investors navigate the risks that climate change can pose to their long-term returns,” despite leaving the business coalition.
Even so,Hild’s group and other opponents of “woke capitalism” are feeling emboldened now that Republicans control the House of Representatives. They see themselves as part of a political alliance that can scrutinize and possibly derail the environmental, social and governance — or ESG — goals of corporations and the Biden administration.
Some big Wall Street firms — most notably BlackRock, State Street, Vanguard and Fidelity Investments — have publicly embraced sustainable investing, partly because of investor demands and pressure on businesses to speed up climate measures.