Tag Archives: Natural Resource Scarcity

Ukrainians Suffer Gasoline Shortages After Russian Strikes on Fuel Infrastructure

DIDOVYCHI, Ukraine—About two dozen civilians were evacuated Saturday from the besieged steel plant in Mariupol, while elsewhere Ukrainians faced fuel shortages and rising prices following recent Russian missile strikes on oil refineries and storage depots in the country.

On Saturday afternoon, the Mariupol city council announced plans for an evacuation of residents from the occupied city, though it didn’t confirm whether it had gone ahead. Russian state media reported on Saturday that a group of 25 civilians including six children, were evacuated from the Azovstal plant.

Russian media had also shown videos of vehicles from the United Nations and the International Committee of the Red Cross preparing for civilian evacuations in Mariupol. Representatives of the U.N. and the ICRC didn’t respond to requests for comment.

The Azov regiment’s deputy commander, Svyatoslav Palamar, confirmed in a video posted to Telegram that both sides had upheld a promised cease-fire that commenced Saturday morning. He said that at 6:25 p.m. an evacuation team arrived to spirit out civilians. He said they were headed for the city of Zaporizhzhia.

Mr. Palamar added that many more holdouts in the plant still need to be evacuated. “We ask guarantees for the departure not only of civilians but also our wounded service members who require necessary medical help,” he said.

Firefighters put out a blaze at an oil depot near Chuhuiv, Ukraine, following Russian missile strikes last week.



Photo:

sergey bobok/Agence France-Presse/Getty Images

Separately, Ukrainian Deputy Prime Minister

Iryna Vereshchuk

said in a Telegram post that a prisoner exchange took place on Saturday where seven civilians and seven military personnel, including a pregnant fighter, returned to Ukraine. There was no comment on the subject from Russian officials.

Ukrainian officials planned to address the fuel shortages through new contracts from Western Europe.

“The occupiers are deliberately destroying the infrastructure for the production, supply and storage of fuel,” Ukrainian President

Volodymyr Zelensky

said Friday night. “Russia has also blocked our ports, so there are no immediate solutions to replenish the deficit.”

“Queues and rising prices at gas stations are seen in many regions of our country,” he added.

Gasoline shortages were felt by the thousands of Ukrainians traveling across the country to return to homes they left behind when the war began on Feb. 24, now that Russia has shifted its military campaign to the east and south from the capital, Kyiv. People driving from western Ukraine to Kyiv and towns nearby waited on Friday in lines for gasoline that grew as they approached the capital.

A woman puts plastic sheeting over shattered windows in her home near Bucha, Ukraine.



Photo:

Emilio Morenatti/Associated Press

Most gasoline stations were rationing fuel to 10 liters, or a little over 2.6 gallons, for a customer, and some had run out altogether. Some lines stretched for a quarter of a mile, one for each filling pump.

“We have no idea if we’ll get a delivery any time soon,” said Oleksandr Kovalchuk, a gasoline-station attendant off the E40 highway leading from Lviv in western Ukraine to Kyiv.

At another station on the same route, drivers had to provide cellphone numbers to which a code would be sent authorizing them to refill with 10 liters of gasoline. Each customer was allowed one code and would be denied further refills at other stations operated by the same company, West Oil Group SA, a cashier said.

Father Roman Danchivskyi, an Orthodox priest who was en route to celebrate Mass in the capital, had canisters totaling 60 liters of gasoline in the trunk of the minivan he was traveling in with family and friends. He said he had stopped at three stations since leaving Lviv, waiting 40 minutes at the first one he visited outside the city.

“If you plan ahead, you’ll be fine,” he said. “But the war is clearly affecting our lives.”

Ukrainian Deputy Prime Minister

Yulia Svyrydenko

on Friday pinned the shortages on Russian attacks on the Kremenchuk oil refinery and other locations holding fuel reserves. She said the issue would be resolved over the next seven days through Western European contracts, resulting in slightly higher fuel prices. She didn’t explain how the fuel would be delivered to Ukraine but it could potentially enter by rail and truck tankers crossing in from Poland and other neighboring countries.

Ukrainians waited to flee the conflict zone on Friday after the town of Ruska Lozova was recaptured by the Ukrainian army.



Photo:

sergey kozlov/Shutterstock

Authorities in Kyiv said drivers should restrict the use of private vehicles except where urgent, as more residents returned to the Ukrainian capital following the withdrawal of Russian forces from the area.

“Today, we have different priorities for fuel,” Kyiv official

Mykola Povoroznyk

said, urging residents who have returned to the capital to use public transit.

The Kyiv administration pointed out that city buses, trams, trolleys and private buses are in operation on a total of nearly 200 routes, and the Kyiv Metro rapid-transit system is running all day.

On April 2, the Russian Defense Ministry said it used high-precision long-range weapons to damage gasoline and diesel fuel-storage facilities at the Kremenchuk refinery, which has supplied Ukrainian troops in central and eastern parts of the country.

The strike came after Russian officials accused Ukraine of firing missiles at an oil depot in Belgorod, a Russian city 20 miles from the Ukrainian border, in a predawn helicopter raid a day earlier.

Thousands of people have died and millions have been displaced since Russia invaded Ukraine, with fears growing that the conflict could spill over into other countries. The war has raised the specter of a wider confrontation between the world’s two biggest nuclear powers. U.S. officials say they aim to see Russia’s military force degraded.

Footage shows explosions rocking Kyiv during the U.N. secretary-general’s visit to the Ukrainian capital; Russian troops have gradually seized more of eastern Ukraine; The House passed a bill to make it easier to send military equipment. Photo: Valeria Ferraro/Zuma Press

On the battlefront, Ukrainian troops on Friday hoisted the country’s flag above the town of Ruska Lozova, north of Kharkiv, the country’s second-largest city. Russian forces had seized Ruska Lozova and pressed into Kharkiv on the first day of the war, using positions there to shell the city’s residential neighborhoods. The recapture of Ruska Lozova follows other Ukrainian advances north of Kharkiv as Ukrainian troops aim to reduce Russia’s ability to strike the city with artillery.

Aiming to stall a Russian advance in the eastern Donbas region, Ukrainian forces Friday blew up a railway bridge near the town of Lyman, according to footage broadcast on national television. Heavy fighting continued across the Donbas front, with both sides releasing videos of destroyed enemy armor.

The head of the Odessa regional military administration, Maksym Marchenko, said that the Odessa airport had been struck Saturday with missiles fired from Crimea, the peninsula Russia annexed from Ukraine in 2014. No one was injured in the attack but a runway was damaged, he said.

Ukrainian officials and Western analysts say the Russian forces are making slow progress.

Back on the road, Sergey Zhelepa, a marketing specialist, was traveling with his wife and 1-year-old daughter, Polina, from Lutsk, a city in western Ukraine where the family relocated for safety reasons after Russia invaded. On Friday, they were heading back to the home they had left behind in Kyiv.

“Before you had so much choice at gas stations, with two different types of diesel and three options for gas,” he said. “Now there’s very little left anywhere.”

For Yury Surinets, who works at a firm that makes electronic security systems, gasoline is also a necessary commodity to power the generator he and his family run at their home in Makarov, a town near Kyiv that was shelled heavily by Russian forces in the early days of the war and has been left largely without power.

Mr. Surinets and his family left Makarov on Feb. 25 as part of a relocation of his company’s staff to the Zakarpattia region in western Ukraine, but were returning to replant their garden and check on their home.

“When you travel, you have to have backup supplies because the situation is even worse in the Kyiv region,” he said. “And we have to be able to get back to the west soon.”

Write to Matthew Luxmoore at Matthew.Luxmoore@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read original article here

Gas Shortage Prompts Power Plants to Switch to Oil, Boosting Demand

Soaring natural-gas and coal prices are pressuring power-generation companies and manufacturers to switch to using oil, a trend that could add half a million barrels a day to global demand, the International Energy Agency said Thursday.

In its monthly market report, the IEA increased its global oil-demand forecasts for this year and the next by 170,000 and 210,000 barrels a day, respectively, but added that the cumulative effect of the energy crisis could be as large as 500,000 barrels a day from September through next year’s first quarter.

That increase means that the IEA, which acts as the energy watchdog for the wealthy nations of the Organization for Economic Cooperation and Development, expects the world’s thirst for crude next year to exceed pre-pandemic levels.

Oil prices added to early gains on Thursday following the release of the IEA’s report, with Brent crude rising 1.2% to $84.16 a barrel in early trading. U.S. crude futures climbed 1.1% to $81.35 a barrel, on course to close at fresh seven-year highs. Both benchmarks have increased more than 60% this year, accelerating in recent months due in part to tight supply elsewhere in the energy market.

“An acute shortage of natural gas, [liquefied natural gas] and coal supplies stemming from the gathering global economic recovery has sparked a precipitous run-up in prices for energy supplies and is triggering a massive switch to oil products and direct crude use for power generation,” the Paris-based organization said in its report, adding that power-generation plants, fertilizer producers, manufacturing operations and refineries are all affected.

The shortage of relatively low-carbon but expensive natural gas—analysts say the commodity is two to three times more expensive than the equivalent amount of oil—and the trend of switching to more emissions-intensive fuels such as crude products comes weeks before leaders from around the world descend on Glasgow for United Nations-led climate negotiations.

Analysts say the IEA’s forecast of an extra 500,000 barrels a day in demand from the energy crisis may be conservative.

“We have never had a situation like this where oil is extremely cheap [versus gas] so we just don’t have empirical evidence” for how much oil demand may increase, said Bjarne Schieldrop, chief commodities analyst at SEB Markets. “It could very well be more than a million barrels,” he added.

Relatively weak natural-gas inventories for the time of year and low wind levels in Europe have coincided with the post-pandemic economic recovery, coal shortages in China and the possibility of a cold Northern Hemisphere winter to send fossil-fuel prices soaring. Benchmark European gas prices have leapt 184% in the past three months.

IEA Executive Director

Fatih Birol

said Wednesday that extreme weather events—such as Hurricane Ida in the Gulf of Mexico, droughts stymieing hydroelectric power in China and Brazil, and widespread flooding—have also contributed to the energy crunch. He added that supply choke points, including pandemic-delayed maintenance work, meant that natural-gas outages are currently 40% higher than average.

As a result, analysts have already observed a rise in the trend known as gas-to-oil switching, whereby power plants that run on oil are fired up or ones that can be converted to run on crude products are being switched over.

Goldman Sachs

cited this in raising its oil-price forecasts late last month, while energy consulting firm Rystad Energy said it expects the Asian power sector to use 400,000 more barrels a day of oil than it previously did in the next six months.

In its report, the IEA observed a similar trend, citing provisional data showing “unseasonably high demand for fuel oil, crude and middle distillates for power plants” across China, Japan, Germany, France and Brazil.

Even so, supply from oil-producing nations remains constrained. The IEA trimmed its supply forecasts for this year and next for countries outside of the Organization of the Petroleum Exporting Countries and its allies, citing outages from Hurricane Ida and maintenance-related outages in Canada and Norway.

Meanwhile, despite increased production from OPEC+, the IEA said the alliance would produce 700,000 barrels a day fewer than the world’s appetite for its crude in the fourth quarter of 2021, but added that if the producer group continues to unwind its production curbs then it may shift back to supplying more than needed in 2022.

Long-term reports in recent weeks from OPEC and the IEA have shone a spotlight on the cartel’s influence over the global energy system. While the IEA said on Wednesday that clean-energy spending must triple to avoid further power-market turbulence, OPEC’s report said that developing-world population growth and wealthier nations’ aversion to fossil fuels leaves the cartel well-positioned to profit from selling oil for decades to come.

Write to David Hodari at David.Hodari@dowjones.com

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read original article here

Apple and Tesla Suppliers Hit By Global Energy Crisis. What to Know.

  • Markets

  • The Barron’s Daily


  • Order Reprints

  • Print Article

A sign outside an Esso filling station informs the public that it has no fuel on Sept. 25, 2021 in London, England.


Getty Images

Text size

A worldwide energy shortage is threatening to develop into a full-blown crisis.

The scenes in the U.K. over the weekend were reminiscent of the 1970s, as drivers queued at thousands of filling stations amid fears of a fuel shortage, sparked by a lack of truck drivers. But the panic at the pumps is really a sideshow. Natural-gas prices in Europe and around the world have skyrocketed amid shortages, leading to higher household bills and suppliers collapsing.

China is experiencing its own energy crunch as shortages have led to record coal prices and soaring natural-gas costs. It’s beginning to have an impact; production at a number of factories—including some supplying


Apple

and


Tesla

—has been halted.


Nomura

and


China International Capital Corp

have already downgraded Chinese growth forecasts as a result.

Meanwhile, oil prices and energy stocks are gaining early on Monday.


Goldman Sachs

raised its year-end Brent crude price forecast to $90 from $80, also lifting its West Texas Intermediate forecast to $87. Most notably, the bank’s analysts said Hurricane Ida should prove to be “the most bullish hurricane in U.S. history.” They added that the global oil supply-demand deficit is larger than they expected, with the recovery in demand from the Delta coronavirus variant impact faster than anticipated. Throw in the global gas shortage and winter oil demand is firmly skewed to the upside, they said.

The bigger question is whether the energy disruptions will derail the economic recovery or not. In any case, for all the talk of a green energy transition, the unfolding events show the economy is still very much powered by traditional fossil fuels.

Callum Keown

***Join Barron’s senior managing editor Lauren R. Rublin and deputy editor Ben Levisohn today at noon to discuss the outlook for financial markets, industry sectors, and individual stocks. Sign up here.

***

In Congress This Week: Debt Ceiling, Infrastructure Spending

Congress faces several major initiatives this week, including Monday’s Senate vote on federal government funding and the debt ceiling, a House vote on the $1 trillion bipartisan infrastructure bill later this week, and ongoing negotiations on the $3.5 trillion bill Democrats expect to pass by reconciliation.

  • House Speaker Nancy Pelosi said the first priority is to avert a government shutdown on Oct. 1. Senate Republicans vowed to block a vote on the House-approved bill to extend government funding through Dec. 3 and suspend the debt limit until late next year.
  • An alternative is to pass a short-term government funding extension—something Republicans could support—and address the debt ceiling in the $3.5 trillion bill, which is focused on President Joe Biden’s social spending and climate change agenda.
  • Pelosi told ABC’s “This Week” that the House will pass the $1 trillion infrastructure bill this week. She also said it’s “self-evident” the $3.5 trillion bill will get smaller during negotiations. Even some Democrats oppose the bill’s size.
  • Pelosi said that despite clashes over details, Democrats “overwhelmingly” support Biden’s economic agenda, including lowering middle class taxes, measures to fight climate change, and tax rises on corporations and the wealthy to pay for it.

What’s Next: The House voted to suspend the debt limit through December 2022, but Republicans want to absolve themselves of the matter, saying Democrats pushed through $1.9 trillion in spending without GOP votes this spring. Democrats say raising the debt limit should be a bipartisan effort, as it was in the past.

Janet H. Cho

***

German Elections Leave No Clear Winner to Succeed Merkel

Germany’s Social Democrats seemed to have won a narrow plurality of votes in Sunday’s parliamentary election, but months of tough negotiations with other smaller parties lie ahead for a coalition government to be formed.

  • Olaf Scholz, the current finance minister and Social Democratic candidate for chancellor, led his SPD party to a 26% victory, according to the latest results. He said he would now attempt to form a government before Christmas with the Green and the Liberal parties, which received 15% and 11.5% of the votes, respectively.
  • Angela Merkel will step down when her successor is appointed. Her conservative party only received 24% of the vote, its worst-ever election result. But conservative candidate Armin Laschet nonetheless hinted he might also try to form a government supported by a majority of the Bundestag, the lower house of Parliament.
  • The various parties have different stances on taxes, fiscal policy, the green transition and economic reforms, so analysts think workable compromises will take weeks, if not months, of tough bargaining.

What’s Next: One of the first results of the election might be that Merkel’s 16-year rule is extended until the end of the year. And that the SPD, if Scholz becomes chancellor, will have to row back on some of its proposals on taxes, and the way to finance the fight against climate change.

Pierre Briançon

***

Chinese Agencies Take Steps to Shield Consumer Funds from Evergrande Crisis

Local governments in China are taking control of


Evergrande
’s
property sales revenue amid an unfolding liquidity crisis at the developer, the Financial Times reported. Stalled development projects this summer sparked complaints and public protests.

  • In a district near Guangzhou, a housing agency asked an Evergrande subsidiary to put presale proceeds from the stalled Sunshine Peninsula residential development into a state-owned custodia account, the report said.
  • An agency in Zhuhai, near Macau, also asked Evergrande to put sales revenue in a government account. As many as eight other provinces have asked Evergrande, since August, to put presale revenue into custodial accounts as it put hundreds of unfinished developments on hold.
  • Evergrande has $300 billion in debt, including $20 billion held offshore. Last week, Evergrande missed a payment on $2 billion of debt, reports said. Separating presale revenue prevents it from being used for debt payments.
  • Federal Reserve Chair Jerome Powell has said China is highly levered for a developing economy but that there isn’t a lot of derelict U.S. exposure to Evergrande debt.

What’s Next: Wall Street is worried how an Evergrande failure would affect markets. Property contributes a quarter of China’s economic activity and is a major source of household wealth there. A drop in property prices could hurt consumer confidence and worsen China’s economic slowdown.

Liz Moyer

***

Congestion at Busiest U.S. Ports Causing Shipping Delays Nationwide

The busiest U.S. ports at Los Angeles and Long Beach, Calif., are experiencing unprecedented backlogs, with thousands of shipping containers to move and more than 60 ships waiting to dock, contributing to shipping delays nationwide, The Wall Street Journal reported.

  • Shipping demands have increased as businesses replenish their pandemic-depleted inventory, but supply shortages are worsening at apparel maker


    Nike
    ,
    and retailer


    Costco
    ,
    which is limiting paper towel sales.

  • Unlike ports in Asia and Europe that are open around the clock, U.S. ports operate in two shifts on weekdays, because overnight or Saturday shipping is more expensive. Trucking companies are short of drivers to haul boxes, or to load or unload containers from freight trains.
  • In the U.K., thousands of gas stations ran dry Sunday and supermarket shelves were sparsely stocked after a truck driver shortage delayed the delivery of fuel and groceries. The government will issue 5,000 temporary visas for foreign drivers. The British Retail Consortium called it “too little, too late.”
  • To attract more supply-chain workers, logistics providers are raising pay, increasing shift flexibility, and bringing in robots to help with surging e-commerce volumes.


    Walmart
    ,


    Amazon

    and


    United Parcel Service

    are offering signing bonuses, including college tuition help.

What’s Next: Worker shortages are speeding up automation in what were largely manual warehouse and fulfillment operations.


GXO Logistics

added 40% more robotics and automation systems in North America in 2021, with plans to open nine new automated U.S. sites this year for e-commerce.

Janet H. Cho

***

WHO Reviving Investigation Into Origins of Covid-19 With New Scientists

The World Health Organization is reviving its investigation into the origins of Covid-19, which has killed more than 4.7 million people worldwide, assembling a new team of about 20 scientists to search for new clues in China and elsewhere before critical evidence disappears.

  • The U.S. and its allies have urged the WHO to proceed with the investigation, while China has argued that new inquiries should focus on other countries. A previous WHO-led inquiry that visited Wuhan, China, said data from Chinese scientists could not determine when, where and how the virus began.
  • Previous WHO-led teams urged their Chinese counterparts to analyze blood banks, test farmworkers, and study the earliest cases. China and its allies say the investigation should scrutinize other possible sources such as Italy, or a U.S. military bioresearch facility in Fort Detrick, Md.
  • Columbia University professor Jeffrey Sachs disbanded a task force of scientists investigating the origins of Covid-19, saying its links to the nonprofit EcoHealth Alliance risked perceptions of bias, because it used U.S. funds to study bat coronaviruses with the Wuhan Institute of Virology.
  • Demand for and questions about boosters have increased since the Centers for Disease Control and Prevention recommended them for people 65 and older, those with underlying medical conditions, and those at higher risk of infection who received the


    Pfizer


    BioNTech

    vaccine. More than 2.6 million Americans have received boosters.

What’s Next: New York Gov. Kathy Hochul may bring in the National Guard and out-of-state medical workers to fill hospital staffing shortages, as thousands of unvaccinated workers could lose their jobs with Monday’s mandated healthcare worker Covid vaccination deadline looming.

Janet H. Cho

***

MarketWatch Wants to Hear From You

My 76-year-old mother recently moved into assisted living, and she may need to sell her house to cover her expenses. Is there something we can do now to reduce the capital gains on the house in the future, should she outlive her savings?

A MarketWatch correspondent will answer this question soon. Meanwhile, send any questions you would like answered to thebarronsdaily@barrons.com.

***

—Newsletter edited by Liz Moyer, Camilla Imperiali, Steve Goldstein, Rupert Steiner

Read original article here