Today’s Key Takeaways: Oil & gas taking net zero challenge seriously. Gas prices drop while oil prices climb. 5 measures EU can take to avoid major gas crunch. Congo mine suspends cobalt, copper exports. Crossover clout for Murkowski.
NEWS OF THE DAY:
Energy crisis prompts ESG rethink on oil and gas
Chris Flood, Financial Times, July 17, 2022
Investors are starting to look more favourably on energy companies because of their role in the transition to a decarbonised economy
Russia’s invasion of Ukraine has made the immense task of reducing the global economy’s addiction to fossil fuels even more daunting. Existing pledges to cut carbon emissions to net zero by 2050 were already challenging enough. Now, governments and companies are scrambling to balance their green ambitions with the new imperatives of energy security. Just as the Ukraine war has sparked intense debate over whether defence companies should be considered suitable for sustainable investment strategies, the conflict has also prompted discussion about the role of oil and gas producers in investors’ portfolios.
Mark Lacey, lead manager of Schroders’ $3bn ISF Global Energy and Energy Transition strategies, says that investors are starting to look more favourably on energy companies because of their vital role in the transition to a decarbonised economy. He adds that these businesses “have been taking the net zero challenge much more seriously” since 2015, through investments in technologies such as hydrogen and carbon capture
Monday’s Oil Rally Threatens Slump At The Pump
Julianne Geiger, OilPrice.Com, July 18, 2022
Gasoline prices dipped for the fifth straight week, according to a new note from GasBuddy, with the most common gas price found in the United States falling to $3.99 per gallon.
Meanwhile, WTI has resumed its climb, threatening to slow falling prices at the pump.
The national average for a gallon of regular gasoline fell to $4.51 today, according to GasBuddy data, which surveys over 11 million price reports from 150,000 gas stations across the United States.
“We’ve seen the national average price of gasoline decline for a fifth straight week, with the pace of recent declines accelerating to some of the most significant we’ve seen in years. This trend is likely to reach a sixth straight week, with prices likely to fall again this week. Barring major hurricanes, outages, or unexpected disruptions, I forecast the national average to fall to $3.99/gal by mid-August,” BadBuddy head Patrick De Haan said, adding that the United States has seen 34 days of continual price drops.
There are now 25,000 stations across the U.S. “back at $3.99 per gallon or less, and thousands more stations will join this week. In addition, we will see several states fall back under an average of $4, the majority being in the south, but that could spread to more states in the weeks ahead,” De Haan said.
According to AAA, the national average for a gallon of gasoline in the United States fell to $4.521 as of Monday. That’s down 1.1 cents from yesterday, 15.7 cents from a week ago, and 46.8 cents from a month ago.
According to AAA, however, gasoline prices in the United States are still $1.35 more than they were a year ago—despite the significant drop over this last month.
Oil prices were trading sharply up on Monday, with WTI crude reclaiming its place above $100 per barrel—a threat to the continued slump in prices at the pump.
Coordinated actions across Europe are essential to prevent a major gas crunch: Here are 5 immediate measures
Dr. Faith Birol, International Energy Agency, July 18, 2022
The world is experiencing the first truly global energy crisis in history. And as the International Energy Agency has been warning for many months, the situation is especially perilous in Europe, which is at the epicentre of the energy market turmoil. I’m particularly concerned about the months ahead.
The gas crisis in Europe has been building for a while, and Russia’s role in it has been clear from the beginning. In September 2021 – five months before Russia’s invasion of Ukraine – the IEA pointed out that Russia was preventing a significant amount of gas from reaching Europe. We raised the alarm further in January, highlighting how Russia’s large and unjustified reductions in supplies to Europe were creating “artificial tightness in markets” and driving up prices at exactly the same time as tensions were rising over Ukraine.
After Russia invaded Ukraine on 24 February, nobody in Europe or elsewhere could be under any illusions about the risks around Russian energy supplies. Just a week after the invasion started, the IEA released our 10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas, setting out the practical actions Europe could take. It stressed the need to maximise gas supplies from other sources; accelerate the deployment of solar and wind; make the most of existing low emissions energy sources, such as renewables and nuclear; ramp up energy efficiency measures in homes and businesses; and take steps to save energy by turning down the thermostat.
The message was clear: with early and sustained action, it would be possible to reduce the EU’s reliance on Russian gas imports by one-third within a year – and to do so in an orderly manner that would be consistent with the EU’s climate ambitions.
We have seen some progress on this, particularly in terms of diversifying gas supplies – but not enough, especially on the demand side, to prevent Europe from finding itself in an incredibly precarious situation today. Russia’s latest moves to squeeze natural gas flows to Europe even further, combined with other recent supply disruptions, area red alert for the European Union. As we get closer to next winter, we are getting a clearer sense of what Russia may do next. The next few months will be critical.
In my conversations with European leaders, including at the G7 Summit in Elmau, Germany, and in a meeting last week with European Commission President Ursula von der Leyen and all the EU Commissioners, I have been urging them to do all they can right now to prepare for a long, hard winter. It is encouraging to see the readiness of key European leaders to be proactive on this issue. It will require strong resolve and determination to see it through
CMOC’s Congo mine suspends copper and cobalt exports
Reuters/Mining.Com, July 17, 2022
CMOC’s Tenke Fungurume copper and cobalt mine has suspended all exports, logistics companies were told in a notice seen by Reuters late on Saturday, complying with demands by a court-appointed administrator.
A CMOC spokesman did not immediately reply to a request for comment but had said on Friday that the mine, which accounted for more than 10% of worldwide cobalt output in 2021, had not issued any instructions to stop exports.
CMOC has been locked in dispute with the administrator appointed in February to run the mine for six months in response to a lawsuit by Congo state miner Gecamines, a minority stakeholder in Tenke Fungurume.
The administrator, Sage Ngoie Mbayo, this month demanded that CMOC suspend marketing and export of its production because CMOC and Gecamines had not reached agreement this year on how to sell the mine’s output.
CMOC, meanwhile, has denied the administrator access to the mine site.
In the notice to companies that transport the mine’s output, a CMOC unit announced immediate suspension of access to the mine for all copper and cobalt trucks until July 24, adding that companies would be informed if exports could resume on July 25.
Three industry sources confirmed the suspension, speaking on condition of anonymity.
The administrator’s appointment stemmed from allegations by Gecamines that CMOC understated the mine’s reserves to reduce royalties it pays to Gecamines. CMOC denies the allegations.
Congo’s government announced last August that it had formed a commission to reassess reserve levels, a rare instance of Congolese authorities challenging the Chinese companies that dominate its mining sector.
Congo is the world’s top producer of cobalt, which is used in electric batteries and is Africa’s leading copper miner.
Democrats for Murkowski: Alaska Republican counts her fans across the aisle
Burgess Everett, Politico, July 18, 2022
Crossover clout helped her quash a conservative rival 12 years ago. Her Democratic allies today reflect the same broad appeal she may sorely need to win.
Jeanne Shaheen offered to campaign for her. Angus King directed money to her. And Mark Warner’s open to endorsing her whenever it helps most.
No, she’s not a Democrat. She’s Republican Sen. Lisa Murkowski of Alaska.
“I don’t want to get Lisa in trouble … Lisa is one of my very favorite Republicans, and if the Republican Party were comprised of center-right people like her, the country would be much better off,” said Sen. Brian Schatz (D-Hawaii). “She’s a friend. And I think it would be a loss for Alaska if she were no longer serving in the Senate.”
One thing keeping Schatz from endorsing her officially. His state party “calls for the expulsion of anybody who does that sort of thing.”
As Murkowski tries to fend off a challenge from Donald Trump-backed candidate Kelly Tshibaka, the centrist is appealing to a broad home-state coalition that contains many left-leaning Democrats and independents. Murkowski’s Senate Democratic fan club reflects the same crossover clout that helped her quash a tea-party rival 12 years ago — and the fact that many conservatives will support Tshibaka anyway.
Alaska’s new election rules installed an open, top-four primary and a ranked-choice general election runoff, allowing Murkowski to ignore appeals to her party’s right flank and embrace her elevated status among Democrats for her bipartisan positions. And rather than rebuff support across the aisle, Murkowski is hoping for as much of it as possible.
In an interview, she said of Democrats: “I hope they’re going to have my back. Just as I hope the Republicans would have my back.” As she sees it, Democratic support only proves her theory of the case in Alaska’s new Wild West elections system.
It wouldn’t be the first time she prevailed against intra-party haters: In 2010 she won her second term as a write-in by famously running ads that taught voters how to spell “Murkowski.”
West Virginia Sen. Joe Manchin was the first Democrat to endorse her, traveled to Alaska for an event with her this spring and vowed this week to do “whatever I can to help Lisa Murkowski” avoid a loss that would be a “very sad day for America.” And now other Democrats are responding to Murkowski’s wish for across-the-aisle support with enthusiasm.
“She’s an overall badass. The Senate needs more leaders like Lisa, and I’m proud to support her,” said Sen. Kyrsten Sinema (D-Ariz.), who worked closely with Murkowski on last year’s new infrastructure law.
King, an independent Mainer who caucuses with Democrats, endorsed Republicans in the past: In 2014 he backed former Sen. Lamar Alexander (R-Tenn.) and Sen. Susan Collins (R-Maine). But he’s usually closely aligned with Democrats on the Senate floor, and this cycle his leadership PAC has mostly given to endangered Democrats like Maine Rep. Jared Golden, Georgia Sen. Raphael Warnock, Arizona Sen. Mark Kelly, and New Hampshire Sen. Maggie Hassan.