NEWS OF THE DAY:
From the Washington Examiner, Daily on Energy:
LATEST ON DEMOCRATS’ INFRASTRUCTURE FIGHT: Democrats’ massive infrastructure and social spending package stalled yesterday after House centrists threatened to vote against part of the deal, the Washington Examiner’s Susan Ferrechio reports.
A group of roughly 10 Democrats engaged in a standoff with top leaders last night over a planned vote to pass a $3.5 trillion budget resolution as early as today.
Speaker Nancy Pelosi, a California Democrat, had offered centrists a deal: She would pledge to take up the bipartisan infrastructure package by October and allow moderates to escape a vote on the budget resolution by allowing it to pass in a procedural vote setting the rules for debate.
Centrists appeared hesitant to accept the deal as of late yesterday, and a plan to vote on a combined rule for both the infrastructure and budget resolution was postponed. But the centrists huddled with Pelosi again this morning and are on the cusp of agreeing to a new Pelosi proposal.
According to reports, the House is planning to vote on a rule this afternoon which would pass the budget resolution teeing up the reconciliation process and establishing that a vote on the Senate’s bipartisan infrastructure bill would occur by Sept. 27.
OIL:
Brent Climbs Back Above $70 On Major Production Outage
Tsvetana Paraskova, August 24, 2021
Oil prices extended Monday’s 5-percent gain early into Tuesday, as concerns about global demand started to ease while a major outage in Mexico supported prices on the supply side.
As of 8:22 a.m. EDT, WTI Crude was up 1.34% at $66.55, and Brent Crude was up 1.50% at $69.77, attempting to bounce back to the $70 a barrel handle.
Oil prices had surged 5% at Monday’s close, rebounding from the longest losing streak since 2019 of seven consecutive settlements in the red, as investor risk appetite increased, and the U.S. dollar softened.
The weaker dollar continued to support oil prices early on Tuesday, while the market sentiment about demand turned more positive after China’s ‘zero COVID policy’ paid off, with the world’s top crude oil importer reporting zero symptomatic COVID cases for the first time in weeks.
In addition, the U.S. Food and Drug Administration (FDA) gave the full approval on Monday to the Pfizer-BioNTech COVID-19 vaccine, the first vaccine to get full approval from the FDA, which had given emergency use authorization to the Pfizer and other vaccines. Some experts say that the full approval could encourage hesitant people to get a vaccine amid surging Delta variant cases in many parts of the world.
On the supply side, a major outage after a fatal fire at a Mexican platform is also lending support to oil prices. A fire on Sunday killed five workers on an offshore platform operated by Mexico’s state oil firm Pemex and injured another six. The platform and 125 wells are offline, which reduced Mexico’s crude oil production by 421,000 barrels per day (bpd), or around a quarter of the country’s output. A restart of the platform could take days.
“An extended outage would likely be supportive for heavier grades of crude oil, with reduced output tightening the market for heavier crude oil,” ING strategists Warren Patterson and Wenyu Yao said early on Tuesday.
According to Saxo Bank’s daily market note, “A rebound in demand over the coming weeks could still see Brent hit the top end of our current preferred range at $75. In the short-term, however, and ahead of Friday’s Jackson Hole event, Brent may find resistance at $70.40 followed by $71.75.”
GAS:
Merkel: Europe Will No Longer Need Russian Gas In 25 Years
Irina Slav, OilPrice.Com, August 23, 2021
Europe will no longer need Russian gas in twenty-five years, German Chancellor Angela Merkel said at a meeting with Ukraine’s president, Vladimir Zelenski.
“Europe will need to achieve climatic neutrality step by step by 2050,” Merkel said, as quoted by TASS. “It means that in 25 year[s] no gas, or very small volumes of gas, will be supplied to Europe from Russia.”
At the same time, the German Chancellor told her Ukrainian partner that Germany will make sure Russia continues shipping natural gas through Ukraine even after Nord Stream 2 enters into operation. In case Russia tries to use the pipeline as a weapon against other countries, Merkel said, Germany would propose EU sanctions against Moscow.
The Nord Stream 2 pipeline, which will double the capacity of the already existing gas pipe under the Baltic Sea to Germany, has become a major bone of contention in Europe, with the U.S. also joining the fray.
The European Union and the United States have opposed the Nord Stream 2 project, citing concerns about Russia using gas sales and its gas monopoly Gazprom as a political tool. Poland, several other EU countries, and the United States have seen Nord Stream 2 as further undermining Europe’s energy security by giving Gazprom another pipeline to ship its natural gas to European markets. Germany has looked at the project from a business perspective mostly.
But last month, the United States and Germany said they had reached a deal over the controversial pipeline, clearing the way for the completion of the project and handing Germany a decisive victory in the matter.
The U.S. and Germany said that their “commitment is designed to ensure that Russia will not misuse any pipeline, including Nord Stream 2, to achieve aggressive political ends by using energy as a weapon.”
Russia has insisted that the pipeline is a purely business venture, and Gazprom’s chief executive Alexei Miller has reiterated that the company will continue transiting gas through Ukraine. If Merkel is correct, however, and Europe will need no more gas in 25 years, Ukraine would do well to diversify its revenue streams. Merkel advised Zelenski to bet on green energy.
MINING:
Washington Wants America to Catch Up to China’s Manufacturing — a Mining Boom in North America Might be Needed
Michael O’ Connor, Yahoo!Finance, August 23, 2021
The continued competition and economic back and forth between the United States and China has spurred American policy to move toward a renewal of old capabilities in heavy industry and manufacturing. America used to be the king of the majority of sectors, including mining, refining, and processing raw materials required for advanced manufacturing activities.
However, these industries have shifted through decades of advancement on China’s part and the decomposition of pieces within the entire supply chain in America. While much of the economic activity in the U.S. has shifted toward technology and services, China has stepped in the gap with lower labor costs, integrated supply chains and minimal environmental regulations.
Crucially included in the required ingredients for manufacturing in the 21st century are a host of materials including precious metals and rare earth metals. Both are used in industries and sectors ranging from electric and hybrid vehicle production to battery manufacturing, green energy, defense, telecommunication, medical devices, and other technology inputs.
A recent piece by Marketplace.org stated that “The U.S. was 100% net import reliant on rare-earth elements in 2018, importing an estimated 11,130 metric tons of compounds and metals valued at $160 million. Eighty percent of those imports were sourced from China, according to the U.S. Geological Survey.”
A New Mining to Manufacturing Era?
In terms of another crucial material, the United States is No. 4 for raw tonnage of global gold production, compared to China’s 1st place. If U.S. policy is to be able to move toward more domestic production, significantly more mining and processing capabilities might be needed. This scenario could bode well for existing domestic mining companies to expand operations back toward historic levels across North America.
U.S.-based giants like Newmont (NYSE: NEM), Freeport McMoRan (NYSE: FCX) and Albemarle (NYSE: ALB) are likely looking to capitalize on American policy. However, other domestic players might also reap big rewards. American Pacific Mining (CSE: USGD.CN) (OTCQB: USGDF) is an example of a mining company with existing projects focused completely in America that could look to further expand domestically.
POLITICS:
Alaska’s redistricting board sets Nov. 10 deadline for new legislative map
James Brooks, Anchorage Daily News, August 23, 2021
The committee in charge of redrawing Alaska’s legislative boundaries will have at least one draft plan ready by Sept. 11 and a final map by Nov. 10.
The five-member Alaska Redistricting Board set that schedule Monday during its first meeting since the Census Bureau published figures for Alaska’s 2020 population.
Under Alaska’s constitution, a five-member board must redraw the boundaries of Alaska’s 40 legislative districts after every census.
The result will last for 10 years, until the next census, and is politically fraught: Political parties, groups and individual legislators frequently worry that one map or another may disadvantage them.
Furthermore, until the map is complete, individual lawmakers and candidates for the 2022 statewide election won’t know which district they will represent.
Based on the latest figures and the rules set in place by the constitution and state law, each district will have 18,335 residents, plus or minus 5%.
To satisfy population changes since 2010, the Matanuska-Susitna Borough is expected to gain a legislative seat at the expense of Interior Alaska, Fairbanks and Anchorage, areas that lost population between 2010 and 2020.
The redistricting board, which has members appointed by the governor, Legislature and the chief justice of the Alaska Supreme Court, began its mapping work Monday afternoon by starting to divide the state into separate geographic regions — Interior, Southeast, Anchorage, etc.
Those regions will then be divided into individual districts.
As happened the last time the state redrew district boundaries, the board expects to submit multiple draft maps to the public, then collect feedback from across Alaska before voting in November on a final version.
In every redistricting process since 1970, that final version has been subject to a lawsuit and subsequent review by the Alaska Supreme Court.
CLIMATE CHANGE:
U.S. clean power sees record growth
Ben Geman, Axios, August 24, 2021
Just-published industry data shows that installation of renewable power and battery storage capacity is on a record pace this year.
By the numbers: The American Clean Power Association said 9,915 megawatts of capacity came online in the first half of this year — a 17% increase over the first half of 2020.
- On a quarterly basis, new solar installations in April-June were 2,226 megawatts of capacity, a 73% jump over the first quarter.
- Q2 wind capacity installations were 2,824 megawatts, similar to Q1 and above the same period last year.
New battery storage capacity is growing even faster, albeit from a much smaller base, with Q2 installations of 570 megawatts compared to roughly 100 in Q1.
- The storage amount added this year already comes close to matching 2020’s full-year additions.
- U.S. battery storage is expected to see a lot more growth in the years she