Tag Archives: Oil and gas industry

World

COP27 climate summit: Here’s what to watch

Leave a comment



CNN
 — 

As global leaders converge in Sharm el-Sheikh, Egypt, for the UN’s annual climate summit, researchers, advocates and the United Nations itself are warning the world is still wildly off-track on its goal to halt global warming and prevent the worst consequences of the climate crisis.

Over the next two weeks, negotiators from nearly 200 countries will prod each other at COP27 to raise their clean energy ambitions, as average global temperature has already climbed 1.2 degrees Celsius since the industrial revolution.

They will haggle over ending the use of coal, the dirtiest fossil fuel, which has seen a resurgence in some countries amid the war in Ukraine, and try to come up with a system to funnel money to help the world’s poorest nations recover from devastating climate disasters.

But a flood of recent reports have made clear leaders are running out of time to implement the vast energy overhaul needed to keep the temperature from exceeding 1.5 degrees Celsius, the threshold scientists have warned the planet must stay under.

Reports from the United Nations and the World Meteorological Association show carbon and methane emissions hit record levels in 2021, and the plans countries have submitted to slash those emissions are beyond insufficient. Given countries’ current promises, Earth’s temperature will climb to between 2.1 and 2.9 degrees Celsius by 2100.

Ultimately, the world needs to cut its fossil fuel emissions nearly in half by 2030 to avoid 1.5 degrees, a daunting prospect for economies still very much beholden to oil, natural gas and coal.

“No country has a right to be delinquent,” US Climate Envoy John Kerry told reporters in October. “The scientists tell us that what is happening now – the increased extreme heat, extreme weather, the fires, the floods, the warming of the ocean, the melting of the ice, the extraordinary way in which life is being affected badly by the climate crisis – is going to get worse unless we address this crisis in a unified, forward-leaning way.”

Here are the top issues to follow at COP27 in Egypt.

Developing and developed countries have for years tussled over the concept of a “loss and damage” fund; the idea which suggests countries causing the most harm with their outrageous planet-warming emissions should pay poorer countries, which have suffered from the resulting climate disasters.

It has been a thorny issue because the richest countries, including the US, don’t want to appear culpable or legally liable to other nations for harm. Kerry, for instance, has tiptoed around the issue, saying the US supports formal talks, but he has not given any indication of what solution the country would sign on to.

Meanwhile, small island nations and others in the Global South are shouldering the impact of the climate crisis, as devastating floods, intensifying storms and record-breaking heat waves wreak havoc.

The deadly flooding in Pakistan this summer, which killed more than 1,500 people, will surely be an example the countries’ negotiators point to. And since September, more than two million people in Nigeria have been affected by the worst flooding there in a decade. At this very moment, Nigerians are drinking, cooking with and bathing in dirty flood water amid serious concerns over waterborne diseases.

It is likely loss and damage will have space on the official COP27 agenda this year. But beyond countries committing to meet and talk about what a potential loss and damage fund would look like, or whether one should even exist, it is unclear what action will come out of this year’s summit.

“Do we expect that we’ll have a fund by the end of the two weeks? I hope, I would love to – but we’ll see how parties deliver on that,” Egypt’s chief climate negotiator Ambassador Mohamed Nasr recently told reporters.

Former White House National Climate Adviser Gina McCarthy told CNN she thinks loss and damage will be the top issue at the UN climate summit this year, and said nations including the US will face some tough questions about their plans to help developing nations already being hit hard by climate disasters.

“It just keeps getting pushed out,” McCarthy said. “There’s need for some real accountability and some specific commitments in the short-term.”

People will be watching to see if the US and China can repair a broken relationship at the summit, a year after the two countries surprised the world by announcing they would work together on climate change.

The newfound cooperation came crashing down this summer when China announced it was suspending climate talks with the US as part of broader retaliation for House Speaker Nancy Pelosi’s visit to Taiwan.

Kerry recently said the climate talks between the two countries are still suspended and will likely remain so until China’s president Xi Jinping gives the green light. Kerry and others are watching to see whether China fulfills the promise it made last year to submit a plan to bring down its methane emissions or updates its emissions pledge.

The US and China are the world’s two largest emitters and their cooperation matters, particularly because it can spur other countries to act, too.

Separate from a potential loss and damage fund, there is the overarching issue of so-called global climate finance; a fund rich countries promised to push money into to help the developing world transition to clean energy rather than grow their economies with fossil fuels.

The promise made in 2009 was $100 billion per year, but the world has yet to meet the pledge. Some of the richest countries, including the US, UK, Canada and others, have consistently fallen short of their allocation.

President Joe Biden promised the US would contribute $11 billion by 2024 toward the effort. But Biden’s request is ultimately up to Congress to approve, and will likely go nowhere if Republicans win control of Congress in the midterm elections.

The US is working on separate deals with countries including Vietnam, South Africa and Indonesia to get them to move away from coal and toward renewables. And US officials often stress they want to also unlock private investments to help countries transition to renewables and deal with climate effects.

COP27 is intended to hold countries’ feet to the fire on fossil fuel emissions and gin up new ambition on the climate crisis. Yet reports show we are still off-track to keep global warming under 1.5 degrees Celsius.

A UN report which surveyed countries’ latest pledges found the planet will warm between 2.1 and 2.9 degrees Celsius. Average global temperature has already risen around 1.2 degrees since the industrial revolution.

Records were set last year for all three major greenhouse gases: carbon dioxide, methane, and nitrous oxide, according to the World Meteorological Organization.

There is a spot of encouraging news: the adoption of renewable energy and electric vehicles is surging and helping to offset the rise in fossil fuel emissions, according to a recent International Energy Agency report.

But the overall picture from the reports shows there is a need for much more clean energy, deployed swiftly. Every fraction of a degree in global temperature rise will have stark consequences, said Inger Andersen, executive director of the United Nations Environment Program.

“The energy transition is entirely doable, but we’re not on that pathway, and we have procrastinated and wasted time,” Andersen told CNN. “Every digit will matter. Let’s not say ‘we missed 1.5 so let’s settle for 2.’ No. We must understand that every digit that goes up will make our life and the life of our children and grandchildren much more impacted.”

The clock is ticking in another way: Next year’s COP28 in Dubai will be the year nations must do an official stocktake to determine if the world is on track to meet the goals set out in the landmark Paris Agreement.

Read original article here

US

Fact check: Biden’s midterms message includes false and misleading claims

Leave a comment


Washington
CNN
 — 

President Joe Biden has been back on the campaign trail, traveling in October and early November to deliver his pitch for electing Democrats in the midterm elections on Tuesday.

Biden’s pitch has included claims that are false, misleading or lacking important context. (As always, we take no position on the accuracy of his subjective arguments.) Here is a fact-check look at nine of his recent statements.

The White House did not respond to a request for comment for this article.

Biden said at a Democratic fundraiser in Pennsylvania last week: “On our watch, for the first time in 10 years, seniors are going to get the biggest increase in their Social Security checks they’ve gotten.” He has also touted the 2023 increase in Social Security payments at other recent events.

But Biden’s boasts leave out such critical context that they are highly misleading. He hasn’t explained that the increase in Social Security payments for 2023, 8.7%, is unusually big simply because the inflation rate has been unusually big. A law passed in the 1970s says that Social Security payments must be increased by the same percentage that a certain measure of inflation has increased. It’s called a cost-of-living adjustment.

The White House deleted a Tuesday tweet that delivered an especially triumphant version of Biden’s boast, and press secretary Karine Jean-Pierre acknowledged Wednesday that the tweet was lacking “context.” You can read a more detailed fact check here.

Biden said at a Democratic rally in Florida on Tuesday: “And on my watch, for the first time in 10 years, seniors are getting an increase in their Social Security checks.”

The claim that the 2023 increase to Social Security payments is the first in 10 years is false. In reality, there has been a cost-of-living increase every year from 2017 onward. There was also an increase every year from 2012 through 2015 before the payment level was kept flat in 2016 because of a lack of inflation.

The context around this Biden remark in Florida suggests he might have botched his repeat campaign line about Social Security payments increasing at the same time as Medicare premiums are declining. Regardless of his intentions, though, he was wrong.

Biden repeatedly suggested in speeches in October and early November that a new law he signed in August, the Inflation Reduction Act, will stop the practice of successful corporations paying no federal corporate income tax. Biden made the claim explicitly in a tweet last week: “Let me give you the facts. In 2020, 55 corporations made $40 billion. And they paid zero in federal taxes. My Inflation Reduction Act puts an end to this.”

But “puts an end to this” is an exaggeration. The Inflation Reduction Act will reduce the number of companies on the list of non-payers, but the law will not eliminate the list entirely.

That’s because the law’s new 15% alternative corporate minimum tax, on the “book income” companies report to investors, only applies to companies with at least $1 billion in average annual income. (There are lots of nuances; you can read more specifics here.) According to the Institute on Taxation and Economic Policy, the think tank that in 2021 published the list of 55 large and profitable companies that avoided paying any federal income tax in their previous fiscal year, only 14 of these 55 companies reported having US pre-tax income of at least $1 billion in that year.

In other words, there will clearly still be some large and profitable corporations paying no federal income tax even after the minimum tax takes effect in 2023. The exact number is not yet known.

Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, said in a Thursday email that the new tax is “an important step forward from the status quo” and that it will raise substantial revenue, but he also said: “I wouldn’t want to assert that the minimum tax will end the phenomenon of zero-tax profitable corporations. A more accurate phrasing would be to say that the minimum tax will *help* ensure that *the most profitable* corporations pay at least some federal income tax.”

Biden said at the Tuesday rally in Florida: “Look, you know, you can hear it from Republicans, ‘My God, that big-spending Democrat Biden. Man, he’s taken us in debt.’ Well, guess what? I reduced the federal deficit this year by $1 trillion $400 billion. One trillion 400 billion dollars. The most in all American history. No one has ever reduced the debt that much. We cut the federal debt in half.”

Biden offered a similar narrative at a Thursday rally in New Mexico, this time saying, “We cut the federal debt in half. A fact.”

There are two significant problems here.

First: Biden conflated the debt and the deficit, which are two different things. It’s not true that Biden has “cut the federal debt in half”; the federal debt (total borrowing plus interest owed) has continued to rise under Biden, exceeding $31 trillion for the first time this October. Rather, it’s the federal deficit – the annual difference between spending and revenue – that was cut in half between fiscal 2021 and fiscal 2022.

Second, it’s highly questionable how much credit Biden deserves for even the reduction in the deficit. Biden doesn’t mention that the primary reason the deficit plummeted in fiscal years 2021 and 2022 was that it had skyrocketed to a record high in 2020 because of emergency pandemic relief spending. It then fell as expected as the spending expired as planned.

Dan White, senior director of economic research at Moody’s Analytics – an economics firm whose assessments Biden has repeatedly cited during his presidency – told CNN’s Matt Egan in October: “On net, the policies of the administration have increased the deficit, not reduced it.” The Committee for a Responsible Federal Budget, an advocacy group, says the administration’s own actions have significantly worsened the deficit picture. (David Kelly, chief global strategist at JPMorgan Funds, told Egan that the Biden administration does deserve credit for the economic recovery that has boosted tax revenues.)

Biden said at the Florida rally on Tuesday: “Unemployment is down from 6.5 to 3.5%, the lowest in 50 years.” He said at the New Mexico rally on Thursday: “Unemployment rate is 3.5% – the lowest it’s been in 50 years.”

But Biden didn’t acknowledge that September’s 3.5% unemployment rate was actually a tie for the lowest in 50 years – a tie, specifically, with three months of Trump’s administration, in late 2019 and early 2020. Since Biden uses these campaign speeches to favorably compare his own record to Trump’s record, that omission is significant.

The unemployment rate rose to 3.7% in October; that number was revealed on Friday, after these Biden comments. The rate was 6.4% in January 2021, the month Biden took office.

During an on-camera discussion conducted by progressive organization NowThis News and published online in late October, Biden told young activists that they “probably are aware, I just signed a law” on student debt forgiveness that is being challenged by Republicans. He added: “It’s passed. I got it passed by a vote or two, and it’s in effect.”

Biden’s claims are false.

He created his student debt forgiveness initiative through executive action, not through legislation, so he didn’t sign a law and didn’t get it passed by any margin. Since Republicans opposed to the initiative, including those challenging the initiative in court, have called it unlawful precisely because it wasn’t passed by Congress, the distinction between a law and an executive action is a highly pertinent fact here.

A White House official told CNN that Biden was referring to the Inflation Reduction Act, the law narrowly passed by the Senate in August; the official said the Inflation Reduction Act created “room for other crucial programs” by bringing down the deficit. But Biden certainly did not make it clear that he was talking about anything other than the student debt initiative.

Biden correctly noted on various occasions in October that gas prices have declined substantially since their June 2022 peak – though, as always, it’s important to note that presidents have a limited impact on gas prices. But in an economic speech in New York last week, Biden said, “Today, the most common price of gas in America is $3.39 – down from over $5 when I took office.”

Biden’s claim that the most common gas price when he took office was more than $5 is not even close to accurate. The most common price for a gallon of regular gas on the day he was inaugurated, January 20, 2021, was $2.39, according to data provided to CNN by Patrick De Haan, head of petroleum analysis at GasBuddy. In other words, Biden made it sound like gas prices had fallen significantly during his presidency when they had actually increased significantly.

In other recent remarks, Biden has discussed the state of gas prices in relation to the summer peak of more than $5 per gallon, not in relation to when he took office. Regardless, the comment last week was the second this fall in which Biden inaccurately described the price of gas – both times in a way that made it sound more impressive.

You can read a longer fact check here.

Biden has revived a claim that was debunked more than 20 months ago by The Washington Post and then CNN. At least twice in October, he boasted that he traveled 17,000 miles with Chinese leader Xi Jinping.

“I’ve spent more time with Xi Jinping of China than any world leader has, when I was Vice President all the way through to now. Over 78 hours with him alone. Eight – nine of those hours on the phone and the others in person, traveling 17,000 miles with him around the world, in China and the United States,” he told a Democratic gathering in Oregon in mid-October.

Biden made the number even bigger during a speech on student debt in New Mexico on Thursday, saying, “I traveled 17-, 18,000 miles with him.”

The claim is false. Biden has not traveled anywhere close to 17,000 miles with Xi, though they have indeed spent lots of time together. Washington Post fact-checker Glenn Kessler noted in 2021 that the two men often did not even travel parallel routes to their gatherings, let alone physically travel together. The only apparent way to get Biden’s mileage past 17,000, Kessler found, is to add the length of his flight journeys between Washington and Beijing, during which, obviously, Xi was not with him.

A White House official told CNN in early 2021 that Biden was adding up his “total travel back and forth” for meetings with Xi. But that is very different than traveling “with” Xi as Biden keeps saying, especially in the context of a boast about how well he knows Xi – and Biden has had more than enough time to make his language more precise.

Biden claimed at the Thursday rally in New Mexico that under Trump, Republicans passed a $2 trillion tax cut that “affected only the top 1% of the American public.”

Biden correctly said in various October remarks that the Trump tax cut law was particularly beneficial to the wealthy, but he went too far here. It’s not true that the Trump policy “only” affected the top 1%.

The Tax Policy Center think tank found in early 2018 that Trump’s law “will reduce individual income taxes on average for all income groups and in all states.” The think tank estimated that “between 60 and 76 percent of taxpayers in every state will receive a tax cut.” And in April 2019, tax-preparation company H&R Block said two-thirds of its returning customers had indeed paid less in tax that year than they did the year prior, The New York Times reported in an article headlined “Face It: You (Probably) Got a Tax Cut.”

The Tax Policy Center did find in early 2018 that people at the top would get by far the biggest benefits from Trump’s law. Specifically, the think tank found that the top 1% of earners would get an average 3.4% increase in after-tax 2018 income – versus an average 1.6% income increase for people in the middle quintile, an average 1.2% income increase for people in the quintile below that and just an average 0.4% income increase for people in the lowest quintile. The think tank also found that the top 1% of earners would get more than 20% of the income benefits from the law, a bigger share than the bottom 60% of earners combined.

The distribution could get even more skewed after 2025, when the law’s individual tax cuts will expire if not extended by Congress and the president. If there is no extension – and, therefore, the law’s permanent corporate tax cut remains in place without the individual tax cuts – the Tax Policy Center has estimated that, in 2027, the top 1% will get 83% of the benefits from the law.

But that’s a possibility about the future. Biden claimed, in the past tense, that the law “affected” only the top 1%. That’s inaccurate.

This wasn’t the first time Biden overstated his point about the Trump tax cuts. The Washington Post fact-checked him in 2019, for example, when he claimed “all of it” went to the ultra-rich and corporations.



Read original article here

World

Peru oil spill protest: tourists held by indigenous group are freed, says official

Leave a comment



CNN
 — 

A group of tourists traveling in the Peruvian Amazon, who were detained on Thursday by an indigenous community demanding government action over an oil spill, were freed on Friday, according to Abel Chiroque, head of the ombudsman office in Loreto.

Chiroque told CNN on Friday that 140 travelers in total were released.

Earlier, Wadson Trujillo, leader of the Cuninico community, confirmed to Peruvian local media RRP that his community stopped the boats in a bid to pressure the government to take action over the oil spill, which has disrupted their water supply. They were demanding the government declare a state of emergency over the oil spill.

Among the freed tourists on Friday was Angela Ramirez, a 28-year-old woman from Trujillo, Peru. She told CNN in a phone call that around 20 foreigners and dozens of local travelers were held on boats along the Marañon river in Cuninico by the indigenous community.

She said we were all freed at approximately 2 p.m. local time (3 p.m. ET) and were headed towards the town of Nauta, in the Loreto province, in the upcoming hours.

“We hope to arrive there tomorrow morning; we had to change boat because the boat we were traveling with remains detained by the indigenous groups, but we were allowed to leave on another vessel,” Ramirez said.

Their release came after more than 28 hours of negotiations, she said. “Finally it’s over, I am very happy, very relieved,” she told CNN.

Ramirez was traveling with a group of tourists consisting of women, children, and foreigners. She added among the passengers “were children, including a month-old baby, pregnant women and the elderly.”

On Friday, Peru’s vice minister for the environment, Marilu Chahua, traveled to the area to mediate with the indigenous groups who have been protesting against an oil spill along the Marañon river for almost two months.

The government announced the expansion of an environmental emergency decree to address the oil spill and persuade the indigenous groups to release the tourists.

Read original article here

World

America and Saudi Arabia are locked in a bitter battle over oil. The stakes are massive

Leave a comment


New York
CNN Business
 — 

The relationship between the United States and Saudi Arabia is one of the most important on the planet. And lately, it’s also been one of the most awkward.

Angry officials in Washington vowed “consequences” after Saudi-led OPEC sharply cut oil production earlier this month, driving up pump prices just weeks before the midterm elections.

US lawmakers are threatening steps that were unthinkable not long ago, including banning weapons sales to Saudi Arabia and unleashing the Justice Department to file a lawsuit against the country and other OPEC members for collusion.

Riyadh has been caught off guard by the thirst for revenge from US politicians. And Saudi officials are hinting at payback – including dumping US debt – that could have huge ripple effects in financial markets and the real economy.

Neither side is even trying to hide the tension. After a top Saudi official suggested the kingdom has decided to be the more mature party, a top White House official responded by saying, “It’s not like some high school romance here.”

What happens next is critical.

If this decades-old relationship devolves into a full-blown break-up, there could be enormous consequences for the world economy, not to mention international security.

“This is a new low. We have seen a degradation in the US-Saudi relationship for years but this is the worst it’s been,” said Clayton Allen, director at the Eurasia Group.

The spat is linked to one of the biggest sore spots among voters during the Biden era: Inflation and high gas prices.

After trying and failing to persuade OPEC to ramp up oil production, President Joe Biden reversed his 2020 campaign promise to make Saudi Arabia a “pariah” over its human rights record. Biden visited Saudi Arabia over the summer and even fist-bumped Crown Prince Mohammed bin Salman.

US officials thought they reached a secret deal with Saudi Arabia to finally boost supply of oil through the end of the year, The New York Times reported this week.

They were wrong.

OPEC and its allies, known as OPEC+, responded by increasing oil production by a measly 100,000 barrels per day – the smallest increase in its history. The move was widely viewed as a “slap in the face” of the Biden administration.

What came next was worse.

In early October, OPEC+ announced plans to slash oil production by 2 million barrels per day – a move that briefly drove up oil and gasoline prices at a time of high inflation and infuriated US politicians.

“Neither side seems to understand each other,” Allen said. “Riyadh underestimated the severity of the US backlash. And the US assumed we had an unspoken agreement.”

Fatih Birol, executive director of the International Energy Agency, described the move as “unprecedented” and “unfortunate” in an interview with CNN International on Thursday.

“When the global economy was on the brink of a global recession, they decided to push the prices up,” Birol said.

The tensions haven’t eased, and officials from both sides have sharpened their criticism of each other in recent days. In one telling episode, a top Saudi minister went from defending Biden’s energy strategy to slamming it.

During the OPEC+ press conference in early October, Saudi Energy Minister Prince Abdulaziz bin Salman seemed to praise Biden’s decision to release unprecedented amount of emergency oil reserves from the Strategic Petroleum Reserve.

“I wouldn’t call it a distortion. Actually, it was done in the right time,” Prince Abdulaziz told reporters. “If it didn’t happen, I’m sure that things might be different than what it is today.”

Flash forward three weeks, and that same Saudi minister sang a very different tune.

“People are depleting their emergency stocks, had depleted it, used it as a mechanism to manipulate markets while its profound purpose was to mitigate a shortage of supply,” Prince Abdulaziz said during a conference in Saudi Arabia this week. “However, it is my profound duty to make it clear to the world that losing emergency stock may become painful in the months to come.”

The criticism is noteworthy, especially given that OPEC openly manipulates markets in many ways by withholding supply to support prices.

The risk is that the tension devolves into a tit-for-tat cycle of retaliation that undermines global economic stability, or whatever economic stability there is at the moment.

Lawmakers from both sides of the aisle have stepped up their calls to enact NOPEC (No Oil Producing and Exporting Cartels) legislation that would empower the Justice Department to go after OPEC nations on antitrust grounds. Although NOPEC isn’t new, it seems more possible now than at any point in recent memory. Eurasia Group pegs a 30% chance of NOPEC enactment and a 45% chance of a watered-down version of the bill.

“You can’t overstate how upset a huge number of lawmakers are,” said Allen.

Lawmakers aren’t only upset, they realize OPEC is not exactly endearing itself to voters.

“This is popular. American sentiment is anti-Saudi. This now has domestic political utility for American politicians. That’s where we are now,” said Karen Young, senior research scholar at Columbia University’s Center on Global Energy Policy. “NOPEC would be harder to veto than in the past.”

Saudi Arabia could respond to penalties from Washington with drastic steps of their own, ratcheting up the conflict further.

Saudi officials have privately warned that the kingdom could sell US Treasury bonds if Congress passes NOPEC, The Wall Street Journal reported this week, citing people familiar with the matter.

At a minimum, dumping US debt would create uncertainty in markets at an already-perilous moment. A fire sale would drive up Treasury rates, destabilizing markets and raising borrowing costs for families and businesses.

And of course, Saudi Arabia’s own holdings would be damaged in such a fire sale.

Saudi Arabia is sitting on roughly $119 billion of US debt, according to Treasury Department data, making it the world’s 16th largest holder of Treasuries.

Another risk is that Saudi Arabia, the de facto leader of OPEC+, could remove further supply from world oil markets – or at least refuse to respond to future price spikes as the West continues to crack down on Russia.

Further curbs on OPEC supply would lift gasoline prices and worsen inflation, raising already-high recession risks.

All of this explains why a full-blown breakdown in relations between the United States and Saudi Arabia may be the last thing the fragile economy needs right now.

Read original article here

Business

America’s emergency oil stockpile is at a 38-year low but it’s still got firepower left

Leave a comment


New York
CNN Business
 — 

Presidents don’t have magic wands to make inflation disappear. But they do have a powerful tool that can help ease the pain of high gas prices: The Strategic Petroleum Reserve.

More than any of his predecessors, President Joe Biden has aggressively leaned on this emergency oil stockpile to knock down the high pump prices that voters despise.

The SPR is a series of underground storage caverns holding vast amounts of crude oil that can be released during wars, hurricanes or other break-the-glass moments. And Biden has not been shy about doing just that, especially since Russia invaded Ukraine in February.

The amount of oil in the SPR is down by roughly a third — 36% to be exact — since Biden took office in January 2021. That has left this emergency oil stockpile at its lowest point since June 1984 — a time when both the US economy and energy demand was significantly smaller than today.

And Biden is not done yet. The president plans to announce the sale of another 15 million barrels from the SPR on Wednesday, a senior administration official said Tuesday evening.

Biden has made clear to his advisers that he is prepared to authorize future releases to balance the oil market, if necessary.

Importantly, this latest sale to be announced Wednesday is not entirely new. It’s part of the previously announced plan to release 180 million barrels of oil over six months. That record-setting emergency release, detailed in late March, was running a bit behind schedule. It now appears the administration will reach its 180 million target, it will just take longer than expected.

The SPR headlines are rattling an energy market already on edge over a potential recession. US oil prices dropped 3% to $82.82 on Tuesday, returning to levels last seen before rumors swirled regarding OPEC+’s controversial production cuts. Analysts pinned the blame for the selloff on the SPR news.

This oil price selloff alone should help keep a lid on gasoline prices, which analysts say were already heading lower without Biden taking further action.

Although it’s hard to pin down precisely how much of an impact the SPR release has had on prices, oil industry veterans tell CNN that Biden’s strategy has been effective, helping to cushion the blow for not only the war in Ukraine but lackluster supply from both OPEC+ and US oil producers.

“Kudos to them. They’ve done a tremendous job achieving their goal of trying to get energy prices lower,” said Michael Tran, managing director of global energy strategy at RBC Capital Markets.

Gas prices aren’t cheap — a gallon of regular fetched an average of $3.87 nationally on Tuesday — but they are well below the record high of $5.02 set in June.

“It has been effective, so far,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service, who noted that oil prices have not taken out the all-time highs set in 2008. “You have to credit the SPR for that. The administration is laser-focused on gasoline.”

Kloza said he thinks there is a better than 50/50 chance that gas prices drop back down to their recent low of $3.67 a gallon. But rather than crediting US policy, Kloza cited market forces, recession fears and the reopening of refineries sidelined by maintenance.

“I don’t think they need to do anything until 2023. The market is doing most of the work for the White House,” Kloza said. “I think gasoline is destined to go lower.”

It’s not lost on oil market observers that this latest announcement of SPR sales is occurring just weeks before voters head to the polls before the critical midterm elections.

“Given that we are only weeks away from midterm election and the OPEC cut, the Biden administration is trying to ensure that energy prices are not top of mind,” said Andy Lipow, president of consulting firm Lipow Oil Associates.

But Lipow noted frustration in the oil industry that despite complaints about high energy prices, the SPR releases have “done nothing to encourage additional oil production.”

Not only that, but the aggressive emergency releases from Biden have diminished the SPR, potentially limiting the government’s ability to respond to future shocks.

The reserve is not a bottomless pit of oil. It’s more of a rainy-day fund and each release leaves less oil for the next crisis, whatever and whenever that might be.

That’s why the administration plans to detail efforts to refill the emergency reserve, laying out an important marker for market participants given the scale of the federal action over the course of the last six months.

Biden will announce that the administration intends to repurchase crude oil for the emergency reserve when prices are at or below between $67 and $72 per barrel.

The senior official said this will serve as “an important signal for producers” by helping to “moderate and stabilize” prices, not only when they are going high but when they are low.

The plan also serves the purpose of countering criticism about the unprecedented scale of Biden’s reserve releases, one that officials said underscores the administration’s intent to refill when market conditions make it most advantageous.

“We view the SPR is an incredibly important national security asset and we want to make sure that it serves its purpose well into the future,” the official said, noting that it is still the largest reserve in the world.

Despite recent emergency sales, the SPR still holds more than 400 million barrels of oil, considerable firepower that could be used in the coming months to respond to disruptions caused by the war in Ukraine.

“400 million barrels is a lot of barrels,” the official said.

Kloza, the OPIS analyst, said he’s not concerned by the shrinking SPR in part because more so than decades ago, the United States and Canada have the ability to sharply ramp up production, if needed (and if incentivized by higher prices).

“Sometimes reserves become archaic,” Kloza said. “I wouldn’t worry about it until it drops quite a bit lower.”

– CNN’s Alison Kosik contributed to this report

Read original article here

Business

White House plans on announcing additional oil reserve sales in wake of OPEC+ cut

Leave a comment



CNN
 — 

President Joe Biden on Wednesday will announce the sale of an additional 15 million barrels from the Strategic Petroleum Reserve in December, a senior administration official said, as his administration seeks to counter market pressures created by the OPEC+ decision to cut oil production targets just three weeks from the midterm elections.

The announcement of the sale is the latest step in the White House’s unprecedented plan to balance global markets and dampen soaring gas prices. It marks an extension of the six-month program that was designed to provide a bridge for domestic producers to ramp up their own production as the global market faced spasms in the wake of Russia’s invasion of Ukraine, even as the release is composed of barrels earmarked in his March announcement.

That action, which has rolled out in regular sales over the last several months, combined with global economic concerns to help drive gas prices down for nearly three months straight.

“The price of gas is still too high, and we need to keep working to bring it down,” Biden said at an event in Los Angeles last week, adding that he planned to announce additional actions in the coming days.

The planned action would fulfill the administration’s announcement in March to release a historic 180 million barrels from the SPR over a six-month period to counter soaring energy prices triggered by Russia’s invasion of Ukraine. The action, which has rolled out in regular sales over the last several months, combined with global economic concerns to help drive gas prices down for nearly three months straight.

Biden has also made clear to his advisers that if the conditions merit, he is prepared to authorize future releases to balance the market. The President, the official said, directed his energy and economic teams to be prepared to authorize “significant additional sales in coming months” if the global market conditions require it.

The President on Wednesday will also detail the administration’s plan to refill the emergency reserve, which is now at its lowest level in nearly 40 years, laying out an important marker for market participants, given the scale of the federal action over the course of the last six months.

Biden will announce that the administration intends to repurchase crude oil for the emergency reserve when prices are at or below between $67 and $72 per barrel.

“We think that’s an important signal for producers that the SPR will be part of helping to helping to moderate and stabilize price flows – not only when prices are going high but when prices are going low,” the official said.

As part of this, the administration will also be finalizing a rule to permit the US government to enter into fixed price contracts with suppliers through a competitive bid process, which will facilitate the future repurchasing of crude.

The plan also serves the purpose of countering any criticism about the unprecedented scale of Biden’s reserve releases, one that officials said underscores the administration’s intent to refill when market conditions make it most advantageous.

“This administration is very committed – and we’re going to reiterate this commitment – to replenishing the SPR,” the official said. “We view the SPR is an incredibly important national security asset and we want to make sure that it serves its purpose well into the future.”

The official noted that the reserve, which has roughly 400 million barrels, is still the largest in the world and that the US remains positioned to deal with any crisis or challenges that would require its use.

“It’s important to understand and underscore, 400 million barrels is a lot of barrels,” the official said.

US officials strategically slowed the size of sales as the six-month program neared its deadline in an effort to ease the market transition until the decision by OPEC+, which set off furious pushback from US officials and an intensive effort inside the administration to produce options to counter any resulting increase in gas prices.

That included additional releases from the reserve, and officials have closely eyed Biden’s ability to trigger new releases within the bounds of the initial program as Election Day looms.

This headline and story have been updated with additional developments Tuesday.

Read original article here

World

Israel and Lebanon reach historic agreement, settling a years-long maritime border dispute

Leave a comment



CNN
 — 

Israel and Lebanon have reached a historic agreement, leaders on each side said separately on Tuesday, settling a years-long maritime border dispute involving major oil and gas fields in the Mediterranean.

The United States has been trying to broker a deal between the neighboring countries over the 860-square-kilometer (332-square-mile) area of the sea that has been under dispute for years.

It includes the Karish oil and gas field and a region known as the Qanaa prospect, which are expected to fall into Israeli and Lebanese waters respectively under the deal. Israel has said it would begin extracting oil and gas from Karish and exporting it to Europe imminently.

“The final version of the offer is satisfactory to Lebanon and meets its demands and preserved Lebanon’s rights of this natural wealth,” Lebanon’s President Michel Aoun said in a statement hours after receiving Israel’s final offer through US mediator Amos Hochstein.

Aoun said he hopes the agreement, which is yet to be signed, will be announced “as soon as possible.”

Israeli Prime Minister Yair Lapid said: “This is an historic achievement that will strengthen Israel’s security, inject billions into Israel’s economy, and ensure the stability of our northern border.”

The draft agreement meets all the security and economic principles laid out by Israel, Lapid said.

The Israeli prime minister will convene the security cabinet on Wednesday followed by a special meeting of the government, he said.

Lebanese officials have said the deal does not mean any “treaty” will be signed with Israel and this agreement is not a step toward normalization of relations between the two countries, which are technically at war.

Earlier Tuesday, Lebanese negotiator and deputy parliament speaker Elias Bou Saab told CNN that “Lebanon felt that [the deal] takes into consideration all of Lebanon’s requirements and we believe the other side should feel the same.”

Meanwhile, Israeli chief negotiator Eyal Hulata said: “All our demands were met, the changes that we asked for were corrected. We protected Israel’s security interests and are on our way to an historic agreement.”

On Tuesday, Lebanese Energy Minister Walid Fayyad also said the French energy company Total, which owns the contract to explore Lebanese waters, would start working on the Qanaa prospect “immediately.”

Talks gained momentum after London-based oil and gas exploration company Energean arrived in June to begin development of the Karish field on Israel’s behalf. Although the Energean ship is well south of the disputed area, part of the field is in an area Lebanon had claimed.

Hezbollah, the powerful Iran-backed Lebanese Shiite milita, had threatened Energean’s gas rig if they started producing gas before a deal had been struck.

On Tuesday, Hezbollah declined to comment when contacted by CNN, but the Iran-backed armed group has previously said it would abide by any agreement signed by the Lebanese government.

The historic agreement does not affect land borders, but it is likely to ease security and economic tensions for both nations.

Lebanon’s caretaker Prime Minister Najib Mikati said on Thursday that an agreement “will circumvent us from a definite war in the region.”

Read original article here

World

Biden has a big oil problem. Here’s what you need to know about the recent OPEC+ decision.

Leave a comment

A version of this story appeared in CNN’s What Matters newsletter. To get it in your inbox, sign up for free here.


Washington
CNN
 — 

With just weeks to go until the November midterms, four letters are haunting President Joe Biden and the Democrats: OPEC.

Last week, the Organization of Petroleum Exporting Countries (OPEC) and its allies, led by Saudi Arabia and Russia, said that it will slash oil production by 2 million barrels per day, the biggest cut since the start of the pandemic, in a move that threatens to push gasoline prices higher just weeks before US midterm elections.

The group announced the production cut following its first meeting in person since March 2020. The reduction is equivalent to about 2% of global oil demand.

The Biden administration criticized the decision in a statement, calling it “shortsighted” and saying that it’s harmful to some countries already struggling with elevated energy prices the most.

The production cuts will start in November. OPEC+, which combines OPEC countries and allies such as Russia, will meet again in December.

For one perspective on the OPEC+ decision and to better understand how it affects everyone, we turned to Hossein Askari, who teaches international business at The George Washington University.

Our conversation, conducted over the phone and lightly edited for flow and brevity, is below.

WHAT MATTERS: Can you walk us through this recent OPEC decision? What’s happening exactly?

ASKARI: So when the war in Ukraine started, sorry to tell your audience, but the United States was not very well prepared in what it was going to do. It sanctioned Russia for this and for that. And so the price of oil started going up. And at the same time, the United States actually put sanctions on Russian oil, not on gas, on oil. And so there was less Russian oil in the Western markets.

Russia actually started selling its oil more and more to China and to India and cutting its prices to those countries. So they would buy Russian oil, but there was a shortage of oil.

Another reason why the shortage had developed was America basically sanctions like a mad cowboy, if I may say that. It has sanctioned Venezuela for many years.

But Saudi Arabia, with the new effective ruler who’s known as MBS, he has cozied up to Putin. And so when President Biden went and saw him a few months back and kind of asked him to increase oil production – I’m sorry to say this, I have to throw in this bit of politics – I think America really shamed itself by doing that.

Of course, MBS did not respond positively. But now he, in fact, has gone over the top. He has agreed within OPEC – and of course he’s the main spokesman in OPEC with Russia – that they will cut back.

WHAT MATTERS: What does the OPEC decision mean for the average American?

ASKARI: From where we are now, crude oil prices by the end of the year, my guess, maximum, they’ll go up by $5 a barrel. Now, a lot of people think they’re gonna go up more than that. I don’t believe that, because I think the world economy is going to grow less and I think that we are going to see some Venezuelan oil come on the market, and I think we may see some deals made so some more Iranian oil may come on the market.

For gasoline, I think Americans can see maybe prices going up from where they are today, if nothing else happens, by about another 30 to 50 cents a gallon.

However, there is also another problem for Americans that is home heating oil, and that can also go up. So for the average American, they’re going to pay, no matter what, something more per gallon of gasoline at the pump. And I think there’s going to be more of an impact, actually, on the fuel oil that they heat their houses with. So it’s gonna put on the squeeze on the average American. There’s no two ways about it.

WHAT MATTERS: What should the US do now?

ASKARI: I think the United States should be much, much tougher with Saudi Arabia because we have bent over backward to accommodate them in every way. And we have looked the other way with what they’ve done. And now it’s the time to be tough. They’ve been tough with us. I think the President of the United States should be tough with Saudi Arabia.

WHAT MATTERS: What else can the US do in terms of helping with oil prices in the immediate term?

ASKARI: I think undoubtedly this administration has very bad rapport with US oil companies and energy companies. I think that there should be more behind-the scenes cooperation with the oil companies and the administration because you really need them now to cooperate.

I know a lot of people don’t believe in fracking, but maybe it’s time to do some more fracking. Maybe it’s time to increase output. They can increase output elsewhere too. I think that would be extremely, extremely helpful.

And I think the US oil companies – and I’m not a backer of oil companies, please don’t misunderstand – but I think they feel that the administration basically just wants to drive them out business.

WHAT MATTERS: Anything else you’d like to add?

ASKARI: Some people think that OPEC decisions are purely economic. Some people think purely political. It has always been both, especially for Saudi Arabia.

It is really Saudi Arabia and the United Arab Emirates driving OPEC’s decision. I think Americans should understand it’s not the other members, it’s not Nigeria or Iran. I feel Americans should understand who are our friends and who are not our friends.

Read original article here

Business

Exxon illegally fired two scientists suspected of leaking information to WSJ, Labor Department says

Leave a comment


New York
CNN
 — 

ExxonMobil has been ordered to reinstate two scientists who were fired after being suspected of leaking information to The Wall Street Journal, the US Labor Department said Friday.

A federal whistleblower investigation found the oil and gas giant terminated the two computational scientists illegally in late 2020. The Labor Department’s Occupational Safety and Health Administration also ordered ExxonMobil to pay the two employees back more than $800,000 in back wages, interest and compensatory damages.

An article in The Wall Street Journal last year claimed ExxonMobil might have inflated its production estimates and the value of oil and gas wells in the Texas Permian Basin, where much of US production is located. The story scrutinized the company’s assumption in its 2019 SEC filings that drilling speed would increase substantially in the next five years.

Exxon denied the allegations at the time, maintaining that it was reaching its drilling targets. “The claims made about drilling rates are demonstrably false,” an ExxonMobil spokesperson said.

The two unidentified employees “raised concerns about the company’s use of these assumptions in late 2020,” according to the Labor Department’s release. Exxon claimed it fired one scientist for “mishandling proprietary company information,” the Labor Department statement said, and the other for “having a ‘negative attitude,’ looking for other jobs, and losing the confidence of company management.”

In a statement to CNN Business, Exxon denied the allegations and said that it will “defend itself accordingly.”

“The terminations in late 2020 were unrelated to the ill-founded concerns raised by the employees in 2019,” an ExxonMobil spokesperson said.

Though neither employee was revealed as a source for the Journal’s story, OSHA learned that the company knew one of the scientists was a relative of a source quoted in the WSJ article and had access to the leaked information.

“ExxonMobil’s actions are unacceptable. The integrity of the US financial system relies on companies to report their financial condition and assets accurately,” said Assistant Secretary for Occupational Safety and Health Doug Parker.

Read original article here

World

Ireland petrol station explosion leaves 10 dead

Leave a comment



CNN
 — 

Ten people, including two teenagers and a young child, were killed in Friday’s explosion at a gas filling station in the northwest of Ireland, local authorities said.

Irish police said that among the 10 dead in the blast in Donegal ere four men, three women, a teenage boy, a teenage girl, and another younger girl. Police said earlier that eight people had been injured.

The explosion happened shortly after 3 p.m. local time on Friday in County Donegal at the Applegreen petrol station on the outskirts of the village of Creeslough.

Police said they believed it was a “tragic accident,” and the largest number of civilian casualty seen in decades in the region.

Superintendent David Kelly said: “This is a tragedy for our community. There are families left devastated.

“I want to offer, on behalf of myself and my colleagues that attended the scene, our very sincere condolences.

Speaking on Saturday morning to the national broadcaster RTE, Irish Prime Minister, known as the Taoiseach, Micheál Martin expressed his condolences.

Martin said: “It is absolutely devastating and quite shocking in terms of the enormity of this tragedy, the scale of it. An explosion ripping through the normality of a community, with people going to the shop, the normal toing and froing of life.

“Community is what defines our people and we are witnessing a terrible tragedy in a wonderful community,” he said.

Read original article here