Editors: Tom Whipple, Steve Andrews
Quote of the Week
“The historically severe economic impact of this crisis means even when travel demand starts to inch back, it likely will not bounce back quickly. We believe that the health concerns about COVID-19 are likely to linger, which means even when social distancing measures are relaxed, and businesses and schools start to reopen, life won’t necessarily return to normal.”
United Airlines CEO Oscar Munoz and President Scott Kirby, in memo to employees
Graphic of the Week
1. Energy prices and production
2. Geopolitical instability
3. Climate change
4. The global economy
5. Renewables and new technologies
1. Energy prices and production
The global demand for oil is expected to be down by nearly 30 million (or maybe even 40 million) b/d in April, according to the latest estimates. Some forecasts still optimistically assume that demand will bounce back in the second half of the year in a “V-shaped” recovery. Most of these forecasts, however, come from financial institutions that want customers to believe that normalcy will return soon or, in the case of government agencies, are influenced by politicians who wish to remain in office. The more pessimistic forecasts come from the oil trading firms who make money by getting the numbers right.
The IEA’s latest Oil Market Report released last week paints a dire portrait of global demand, but it nevertheless assumes that there will be a resurgence close to normal levels by the end of the year. There are, however, many reasons that the pandemic and economic contraction is far from over and that demand will continue to be well below the “normal” 100 million b/d for months or into next year. The economic damage already done to the world economy has many saying that recovery will take a long time, and parts of the economy will never be the same.
The pace of new coronavirus infections in parts of Europe, Asia, and the US has flattened, sparking calls to lift stay-at-home restrictions. The concern is that most countries have an overall infection penetration below 5 percent. The moment restrictions are relaxed, daily infection rates almost certainly will spike back up again. We will then have moved from a draconian “lock-down” into a semi-lock-down with repeated stop and starts as governments try to balance some semblance of an economy with demands to hold down infection rates.
The much-hyped OPEC+ 10 (or maybe even 20) million b/d production cut is turning out to be the all-time “too little, too late.” As oil prices continued to fall last week, it has become difficult to determine just what a barrel of oil is selling for these days. A lot depends on the grade of the barrel and where the barrel is. Oil futures fell after the OPEC+ deal was announced a week ago. At the close Friday, NY futures were down to $18 a barrel in New York and $28 in London. The reason for such a wide spread in pricing is that there is so much oil sloshing around in the US that running out of storage is in sight. Imports that were ordered months ago continue to arrive in the US, and some pipeline companies have told their shippers they can’t take anymore.
This situation has resulted in a wide gap emerging between the futures and the physical oil markets with some physical oil selling below $10 a barrel. Needless to say, oil production, especially US shale oil, is imploding with the rig count dropping and tens of thousands of oilfield workers being laid off. Numerous bankruptcies are expected during the next few weeks. With the demand for gasoline down by some 45 percent, several refineries have closed as there is no place to store oil products. WTI reached an 18-year low last week after EIA data showed US crude stocks posted their largest-ever weekly build of 19.25 million barrels the week before last.
New developments ranging from extended virus-induced shutdowns to new lows for world prices make it hard to keep track. Some of the forecasts for oil demand made last week now seem quaint. As the US shale oil industry implodes, it is difficult for government agencies and the industry press to keep track of demand and production. It will be weeks or even months before the situation clarifies.
Everyone seems sure that an oil glut is going to overwhelm storage somewhere along the line, but there is a debate as to how soon this will happen. When it does, oil production will have to be curtailed quickly – damaging the prospects for some wells. President Trump says he will lease 23 million barrels of oil storage space in the strategic petroleum reserve to nine US oil companies. At current rates of overproduction, that will only accommodate a week or two of production. A partial lifting of the shutdowns in some of the rural states during the coming month could help consumption rebound a bit off the emerging bottom.
2. Geopolitical instability
As the coronavirus settles around the world, several of the world’s geopolitical conflicts seem to have quieted down as governments deal with the rapidly spreading sickness. Little has been reported from Libya and Venezuela in the past week except that people are still getting sick, and there is very little gasoline available.
Iran, which has one of the worst coronavirus situations in the world, has decided to bite the bullet and lift many restrictions on movement and business despite the likely consequences. Since the first case was confirmed in late February, Iran has reported about 79,500 infections and 4,958 deaths. In an attempt to contain the virus, the government ordered stores and businesses across the country to shut down on March 18th. A parliamentary report released last week, however, suggests the coronavirus death toll might be almost double the figure announced by the health ministry, and the number of infections eight to 10 times more.
What Tehran calls low-risk businesses – including many shops, factories and workshops – resumed operations across the country last week, except for Tehran, where they reopened this past weekend. President Rouhani warned that “Easing restrictions does not mean ignoring health protocols … Social distancing and other health protocols should be respected seriously by people.” High-risk businesses, including theatres, gyms, saunas, beauty salons, and shopping centers, have yet to reopen, and restaurants are open only for take-away orders. Schools and universities remain closed, and a ban on cultural, religious, and sports gatherings has been imposed.
The return to work by a large part of the business establishment undoubtedly will result in a surge in coronavirus cases. Still, the modified shutdown is deemed necessary to prevent a complete economic collapse. With oil prices approaching single digits and the US sanctions severely restricting Tehran’s ability to carry out foreign trade, the country is in terrible shape.
Despite the country’s hardships, government hardliners seem intent on playing political games. Last week Iran temporarily seized a tanker transiting the Straits of Hormuz. Iranian patrol boats harassed a group of US warships transiting the Straits and the government announced with much fanfare that it now has an armed drone capable of striking targets 1000 miles away. These actions seem intended to remind the world that despite all their problems, Iran is a force to be reckoned with.
Iraq is still trying to find a new prime minister; however, the prime minister-designate, Mustafa al-Kadhimi, faces an uphill fight to form a government. Two previous PM candidates failed to secure enough support from political rivals. Kadhimi, who has led the Iraqi National Intelligence Service since 2016, was officially nominated by Iraqi President Salih the week before last. His nomination marked the end of the previous prime minister-designate Adnan al-Zurfi’s attempts to form a cabinet.
One of Iraq’s most significant problems at the minute is the stigma associated with contracting the coronavirus. The stigma is so strong that few are willing to be tested or seek medical help until they are very ill. As a result, out of a country of 39 million, only some 1,500 cases and 80 deaths have been officially reported. In contrast, Iran, with 82 million people, the infection count is now approaching 80,000, with 5,000 deaths. There is considerable cross border traffic between parts of Iraq and Iran as they share the Shiite religion and shrines.
This suggests that the number of COVID-19 cases in Iraq could be some 30 times higher than the official figures. The lack of modern medical help for much of Iraq means that the death toll could have an impact on the country’s economic viability.
3. Climate change
A study in the journal Science says a “megadrought,” equal to the worst to have hit the western US in recorded history, is already underway. The current megadrought is a naturally occurring event that started in the year 2000 and is still ongoing. According to the authors of a new paper, a megadrought is a multi-decade event that contains periods of very high severity that last longer than anything observed during the 19th or 20th centuries. There have been around 40 drought events over the period from 800-2018 in the western US.
The authors say that undoubtedly the current drought situation is a natural event but is being made much worse by climate change. The climatological event triggering the drought seems to have been the El Niño/La Niña weather phenomenon. “We know from many lines of evidence that when you have La Niña type conditions in the tropical Pacific Ocean, then the southwestern US and northern Mexico get dry. But climate change has super-charged the current drought.”
In the western US, temperatures have gone up by 1.2C since 2000. Hotter air holds more moisture and that moisture is being pulled out of the ground. Some say that it is also way too early to declare that a megadrought is ongoing. But even those who disagree with the study acknowledge there is water stress in the region, and this is likely to get worse in the future.
The two most important water reservoirs in the region, Lake Powell and Lake Mead, have both shrunk dramatically during the drought. Wildfires across the region are growing in size. “At any given year, there are over ten times more forest area burns than would have been expected, 40 years ago. What has helped to mitigate the impact of the drought has been water held underground in aquifers. However, this has increasingly been used for agriculture. The longer the drought goes on, the deeper into these reserves that people are digging, and they take a long time to replenish.”
Clear skies and more sunlight over Greenland last summer resulted in the most significant drop in the ice sheet’s mass ever recorded, new research shows. The phenomenon was linked to an exceptional high-pressure system that prevented the formation of clouds, according to a study by Columbia University’s Lamont-Doherty Earth Observatory. The research suggests climate models that don’t incorporate atmospheric data could be underestimating future melting by about half. “These atmospheric conditions are becoming more and more frequent over the past few decades…. Simulations of future impacts are very likely underestimating the mass loss due to climate change.”
Overall, the Greenland ice sheet lost an estimated 600 billion tons in 2019, representing a sea-level rise of about 1.5 millimeters. However, this is a global average, and sea level rises are expected to be higher in some areas.
Global coal production is expected to grow only marginally in 2020, from 8.13 billion tons in 2019 to 8.17 billion tons in 2020, a growth of only 0.5 percent after three consecutive yearly increases, says GlobalData. The spreading coronavirus pandemic may be too much for the already struggling coal miners in the United States, with three companies announcing a halt due to measures to contain the spread of the disease.
Disruption to coal production has been most significant in China. Production declined by around 6 percent in the first two months of 2020 as workers could not return to mine sites due to the coronavirus. However, by March 4, 83 percent of China’s coal mining capacity was operational again, and production is now expected to recover over the remainder of 2020.
4. The global economy
The coronavirus crisis will exact the biggest toll on the global economy since the 1930s Great Depression, according to a warning from the IMF. The fund’s estimates expect the pandemic to leave lasting economic scars, with the economies of most countries booking 5 percent smaller than planned, even after a recovery in 2021. The IMF had to look back 90 years to the 1930s Great Depression to find a deeper recession.
While avoiding some of the more pessimistic assumptions in the private sector, the IMF expects advanced economies to contract by 6.1 percent and emerging economies to shrink by 1 percent this year. If extensive lockdowns continue into the second quarter and the virus returns in a second wave in fall or next year, the overall economic hit would be much larger.
As political leaders argued last week over how and when to restart the American economy, the pandemic’s devastation became more evident, with more than 5.2 million workers added to the tally of the unemployed. In the last four weeks, the number of unemployment claims has reached 22 million — roughly the net number of jobs created in a nine-and-a-half-year stretch that began after the previous recession and ended with the pandemic’s arrival. Layoffs have occurred across an array of industries: hotels and restaurants, travel industry, mass retailers, manufacturers, and even professional accounting and law firms.
On Wednesday, the US Commerce Department reported the steepest monthly drop in retail sales since record-keeping began nearly 30 years ago, and the Federal Reserve said industrial production had recorded its most significant decline since 1946. Retail sales, a measure of purchases at stores, gasoline stations, restaurants, bars, and online, fell by a seasonally adjusted 8.7 percent in March from a month earlier, the most significant month-over-month decline since the records began in 1992. Sales at clothing stores plunged by more than 50 percent, while spending on motor vehicles, furniture, electronics, and sporting goods fell by double digits.
Some economists now see the jobless rate surging to 20 percent as soon as this month — and there’s no guarantee it would stop there. If initial jobless claims don’t begin leveling off, a 30 percent unemployment rate moves from “the realm of possibility” to “the most likely forecast,” said Sahm, a former Federal Reserve economist.
The mounting unemployment numbers have added to the pressure to ease stay-at-home orders despite the danger that such actions will expand the epidemic. “A national shutdown is not a sustainable long-term solution,” President Trump told reporters at a briefing Thursday evening, emphasizing that it was time for restrictions to be lifted where the virus has been less prevalent. While many Americans have chafed at the lockdowns and damage to their livelihoods, others, including business leaders and governors, have warned that more testing and protective gear are needed first.
The US may need to endure social distancing measures until 2022, according to researchers at the Harvard School of Public Health. “Intermittent distancing may be required unless critical care capacity is increased substantially, or a treatment or vaccine becomes available.” The death toll in the US from the virus stands at more than 35,400 as of Saturday.
China’s economy shrank in the 1st quarter for the first time since current record-keeping began almost three decades ago, as the coronavirus shut down factories, shopping malls, and put millions out of work. Gross domestic product fell 6.8 percent in January-March year-on-year, reversing a 6 percent expansion in the fourth quarter of 2019. On a quarter-on-quarter basis, GDP fell 9.8 percent in the first three months of the year.
Industrial output fell by a less-than-expected 1.1 percent in March from a year earlier. Highlighting the challenges in consumption, however, there was a 15 percent fall in retail sales, which was larger than expected. Fixed asset investment dropped 16.1 percent in January-March from a year earlier. Domestic demand has not fully recovered as consumption related to social gatherings is still banned, while external demand will be much lower as the pandemic spreads across China’s export customers. March exports sank 6.6 percent from a year earlier to $185.1 billion, an improvement over the 17.2 percent contraction in January and February.
As a result of China’s lockdown in the first quarter, demand for energy likely dropped in March. Chinese oil imports held up during the first two months because volumes had contracted weeks before the first public announcement of the virus and because Chinese refiners typically stock up on crude before the Chinese Lunar New Year.
Beijing first reported zero new local COVID-19 infections in mid-March, and only a few cases were disclosed in subsequent weeks. In the past week, however, dozens of transmissions within the country have been confirmed, the vast majority in Heilongjiang province, which borders Russia. The government’s health commission on Saturday said it recorded double-digit domestic infections for four days in a row. By Sunday, the country had disclosed 1,041 active cases in total, most of which are imported, while it has revealed 82,725 cases since the outbreak began. This is a suspect number for a country the size of China after four months of exposure to the virus.
China’s ambassador to Washington said the two countries were still working to implement their trade deal despite the recent strains in their relationship prompted by the COVID-19 outbreak. Beijing is still purchasing some agricultural products from the US and removing some of the restrictions on foreign companies in its financial markets. However, China was due to release an intellectual property action plan 30 working days after the phase one trade deal came into force on February 15th, but this has yet to happen. US officials are said to be ‘frustrated,’ but content with progress on agricultural purchases and market access.
For weeks, the coronavirus pandemic had the makings of a Kremlin propaganda coup. As Western countries succumbed one by one, Russia appeared invincible, recording fewer than 100 new cases a day through late March despite its tightly packed cities, global travel connections, and 2,600-mile land border with China. But it appears that Russia is unlikely to escape a severe hit by the pandemic. Moscow is now admitting to some 40,000 cases, but like everywhere else, there is widespread under-reporting. Last week, even President Putin admitted that his country risks being overwhelmed by the virus.
Moscow’s second disaster is that its oil revenues are tanking due to the oil price crash and the nature of its tax system. Due to the monthly recalculation of Russia’s oil export duty based on the average price of its primary export grade, Urals, for the previous month, Russia’s oil export duty in May is expected to be about to be 87 percent lower than in April, according to Bloomberg. Add in rapidly falling oil prices and Moscow’s share of the OPEC+ production cut, and Moscow has some real problems ahead.
In the new OPEC deal, Russia’s target for oil production is 8.5 million b/d in May and June. However, it’s not clear if condensate is included. Including condensate, Russia’s share of the cuts should be 2.8 million b/d; without condensate, the reduction would be around 2 million b/d, according to the Oxford Institute for Energy Studies.
Over the longer term, Russia’s oil industry has even more problems. In the mid-2000s, West Siberian conventional fields revitalized the Russian economy, producing vast amounts of low-cost oil at a time of rapidly rising global demand. But 15 years later, many of these fields have since plateaued or begun to decline. New fields have the potential to offset this decline but developing these areas come with higher upfront costs and will also eventually progress to a stage of declining production.
A 21-day lockdown started March 25th and was due to end on April 14th, but Indian Prime Minister Narendra Modi said Tuesday that a further extension until May 3rd was needed to stem spreading of the virus. New Delhi has laid out plans for a gradual reopening of its economy, which will permit some manufacturing, agricultural work, and other activities to resume on a limited basis after April 20th, provided they are not in designated coronavirus hotspots. The government is reporting some 16,000 cases, but this is too low for a country of 1.3 billion.
India’s schools and educational institutes will stay closed, as will any public spaces such as religious sites, malls, cinema halls, sports facilities, and most hotels – unless they are providing emergency shelter. Gatherings such as weddings, or other religious or social functions remain banned.
S&P Global Analytics expects Indian oil demand to contract by 405,000 b/d year on year in the second quarter before posting positive growth in H2, taking the whole year demand decline to 110,000 b/d year on year. And on the gas side, the lockdown extension would impact Indian LNG demand and put imports at risk of falling below year-earlier Q2 levels at 93 Mcm/d. As with so many forecasts being made these days, the prospects for the coronavirus’s impact being considerably lower in the second quarter seem over-optimistic as the virus continues to spread.
5. Renewables and new technologies
For the last decade, the production of renewable energy seemed to have accelerated at a ferocious pace. Every other day you could read about a new technological breakthrough or another incredible milestone being achieved. Yet, overall, energy consumption continues to be dominated by fossil fuels.
The single most crucial issue when it comes to integrating renewables into our energy mix is the lack of energy storage. Our national power grids must consistently and reliably balance supply and demand, a task that is made difficult by the tendency for renewable supply to surge or crash along with the sunlight, wind, and waves. Sufficient and efficient energy storage would take care of that problem, but it is proving difficult to produce at competitive prices.
The first issue, of efficient and cheap energy storage, is currently seen by many as the holy grail of energy advancement. Tesla is already doing its part on this front, having built the world’s largest lithium-ion battery in Australia. Around the world, flywheels, redox flow batteries, thermal storage, compressed air storage, and hydroelectric pump storage are all making the flow of renewable energy into our power grids more reliable. However, to date, none of these electric storage devices has been widely deployed.
One of the more exciting developments announced recently was a new type of cheaper redox flow battery. Scientists from the University of Southern California say they have developed a redox flow battery that uses cheap, sustainable materials. Energy Storage News reports that despite a slow start, redox flow batteries are now gaining on lithium-ion as technology advances. If redox flow batteries turn out to be economically viable, it could lead to faster development of cheap solar and wind energy.
A new analysis by the Finnish engineering firm Wartsila concludes that the coronavirus could accelerate the transition to non-polluting fuels by a decade. “Electricity demand across Europe has fallen due to the lockdown measures; however, total renewable generation has remained at pre-crisis levels with low electricity prices, combined with renewables-friendly policy measures, squeezing out fossil fuel power generation, especially coal. This sets the scene for the next decade of the energy transition.”
Heavily polluted cities across the world are seeing blue skies and stars at night. Across northern India, people can see the snow-capped Himalaya mountains for the first time in a decade.
On the downside, the widespread industrial shutdowns are slowing the production of wind and solar generating equipment. Many are predicting that the momentum toward electric cars will stall due to the virus and cheap gasoline prices.
An interesting sidelight to the oil price crash is that the technology used to drill oil wells is similar to that used to drill geothermal wells to harvest heat from below the ground. The US Department of Energy said in a report last year that “Geothermal is America’s untapped energy giant.” The report highlighted that this energy resource could grow 26-fold to generate 8.5 percent of US electricity by 2050. Unlike wind and solar, geothermal energy is a 24/7 energy resource, but the technologies to drill for and build facilities make geothermal energy more expensive than other renewables. Technology improvements and cost cuts in geothermal energy could come from the rapidly shrinking oil industry.
6. The Briefs (date of the article in the Peak Oil News is in parentheses)
Demand for transport fuels such as jet fuel and gasoline in 2020 will dive by 26 percent and 11 percent respectively exacerbated by the coronavirus pandemic, according to the IEA. (4/16)
Container megaships provide significant operating-cost savings on major trade lanes in periods of high demand. Still, critics say they also box in ship owners, giving them little flexibility to shift vessels around in response to changing markets. (4/18)
Some refineries in Africa are halting production or considering reducing throughput due to reduced demand from the coronavirus pandemic and soaring inventories. (4/16)
In Nigeria, more than 50 million barrels of crude oil for late April and May 2020 loading are still unsold, while the overhang is forcing down the value of Nigeria’s crude oil. Nigerian crudes, which are mainly low in sulfur and yield a generous amount of diesel, jet fuel, and gasoline, are finding it very difficult to attract interest from refiners in a market where demand has been battered due to the coronavirus pandemic. (4/17)
Brazil has suspended its 17th licensing round, which would have seen the state oil regulator ANP offering 128 offshore exploration blocks throughout the country. The government fears that plummeting oil prices and unprecedented declines in global crude demand entailing double-digit-percent CAPEX cuts will set the stage for another fiasco. (4/16)
Petrobras has started shutting down production at 62 offshore platforms in the shallow waters off its coast, adding that the cuts will amount to 23,000 b/d. Petrobras said earlier that as part of a global effort to support oil prices, it would cut some 200,000 b/d from its daily production. (4/17)
Argentina’s Vaca Muerta shale is on life support just weeks after the meltdown in global crude oil prices. Argentina’s partially state-owned YPF suddenly cut production by 50 percent at its Loma Campana oil field – the flagship project for the much-hyped Vaca Muerta shale – because demand collapsed, and the company has insufficient storage for its oil. (4/13)
Mexico’s successful hedging strategy has not gone unnoticed. Today, a researcher for China’s largest state-owned oil company CNPC floated the idea of copying the Mexican model. While China is a significant importer of crude oil, the country’s oil companies produced 3.78 million b/d in December 2019, most of which is unhedged. (4/16)
Investment in Mexico’s offshore oil sector is set to plunge by 21 percent between 2020 and 2025 compared to previous expectations, as the price crash and the financial issues of state oil firm Pemex will stall some projects, despite the government pledge to turn around the declining Mexican oil production, IHS Markit said in an analysis. The loss in investment will mainly be concentrated during 2022 and after that. (4/18)
While Mexico’s leftist President Andrés Manuel López Obrador wants to make state oil firm Pemex the pillar of a turnaround in the country’s declining oil production, hundreds of Pemex workers haven’t been paid for months and haven’t had health insurance and vacation days covered. (4/16)
Canada crude price crash: The current price of a barrel of Western Canadian Select (oil sands) is $4.47 versus a 12-pack of Coke at a Walmart for $5.08. What a deal…eh? (4/16)
The US oil rig count declined by 66 last week to 438 rigs, while the gas rig count fell by 7 to 89 rigs, according to Baker Hughes Co. At 529 total rigs, the complete oil and gas rigs are clocking in at 483 fewer than this time last year. It is the most significant single-week drop in five years. Over the previous five weeks, oil and gas rigs combined have shed a total of 263 rigs. (4/18)
US commercial crude inventories surged 19.25 million barrels to 503.62 million barrels during the week ended April 10th, EIA data showed. The build was the largest ever on record, eclipsing the previous record-build of 15.18 million barrels realized the week prior. Nationwide crude inventories now stand at 6.2 percent above the five-year average. (4/16)
Shale oil bankruptcies: Only weeks ago, scores of rating agencies sounded the alarm that the coronavirus credit crunch would set in motion a wave of corporate bankruptcies that would make the 2008 credit crisis look like child’s play. And now we are beginning to see a big wave of bankruptcies sweep through the US oil and gas industry, with takeovers–not the usual restructuring–the first chapter in the new playbook. (4/16)
Baker Hughes Co. said it is pursuing a restructuring plan that will result in about $1.8 billion in charges and expects to book a roughly $15 billion goodwill impairment charge for the first quarter as the company faces the coronavirus pandemic and declines in oil and gas prices. (4/14)
United Airlines said on Wednesday that it has cut its flight schedule by 90 percent in May and expects similar cuts for June as a result of the coronavirus pandemic. The company warned that travel demand that is now “mostly at zero shows no sign of improving in the near term.” (4/16)
Ethanol issue: The governors of five oil-refining states have asked the US Environmental Protection Agency to waive biofuel blending mandates. At the same time, refiners confront plunging fuel demand as a result of the coronavirus pandemic. The governors of Louisiana, Texas, Oklahoma, Utah, and Wyoming said refiners in their states need hardship waivers to the Renewable Fuel Standard to weather the financial turmoil. (4/17)
Electricity usage down As stay-at-home orders keep businesses shuttered across much of the US, electricity demand has fallen to a near 17-year low. Over the week ending April 11th, US power output fell to just 64,177-gigawatt-hours—down 6.1 percent from the same week last year and the lowest weekly production since mid-2003. This drop-in power demand is coinciding with a drop in prices as well, leading to a sell-off in wholesale US electricity markets. It will mean a smaller bottom line for power companies, which some suggest may shift demand away from fossil fuels and toward wind and solar. (4/17)
Blackout problems: By mid-Monday morning, storms sweeping north from the Gulf Coast had left more than 1.3 million out of power in the US. Under normal circumstances, this would have called for the mass mobilization of crews to get the lights back on. Due to government-issued stay-at-home orders and the overhanging threat of COVID-19, however, utilities that would typically come in from surrounding areas had to curtail or even suspend longstanding mutual assistance pacts. (4/15)
Mercury emission rules changing! Despite the objections of public health advocates and even the US electric industry, the US EPA, on April 16th, released a final rule rescinding the legal basis for the Obama-era Mercury and Air Toxics Standards. Also known as the MATS rule, the 2012 regulation drove a wave of coal plant retirements by requiring those units to either retrofit with mercury-curbing pollution control technologies or shut down. (4/18)
The Virginia Clean Economy Act, signed into law on April 12th by Governor Northam, requires “all coal-fired electric generating units operating in the Commonwealth” to be retired by the end of 2024 with limited exceptions. The governor also signed legislation that will lay the groundwork for the state to join the Regional Greenhouse Gas Initiative. (4/14)
US coal carload originations fell to a 10-year low of 52,468 in the week ended April 11th, down 8.8 percent from 57,504 a week earlier and 36.1 percent lower than the year-ago week. The latest total was also down 34.8 percent from the five-year average and was the lowest for the corresponding week in over ten years. Coal carloads represented 12.7 percent of all the traffic on US railways. (4/16)
Worldwide thermal coal demand is declining and forcing cutbacks of imports and production, driven by lower power-sector coal demand resulting from the coronavirus pandemic. (4/15)
In India, seaborne thermal coal traders stressed the importance of imported material in the nation’s energy mix even as the Indian government urged end-users to keep seaborne cargoes at bay and consume domestic stockpiles amid the coronavirus pandemic. (4/13)
Belarus/Lithuania nuke dustup: Officials in Minsk say a nuclear power plant being constructed in western Belarus will be finished during the summer and start producing electricity in the autumn. The plant is being built in the town of Astravets near the border with Lithuania. It is just 40 kilometers from Lithuania’s capital, Vilnius. In January, Lithuanian Energy Minister Zygimantas Vaiciunas told RFE/RL that the Belarusian plant is “a threat to our national security, public health, and environment.” (4/15)
US retail sales plummeted 8.7 percent in March, an unprecedented decline, as the viral outbreak forced an almost complete lockdown of commerce nationwide. The deterioration of sales far outpaced the previous record decline of 3.9 percent that took place during the depths of the Great Recession in November 2008. Auto sales dropped 25.6 percent, while clothing store sales collapsed, sliding 50.5 percent,
US factory output dropped in March by the most since 1946 as a rolling wave of shutdowns related to the coronavirus crippled the manufacturing sector. Production slumped 6.3 percent from the prior month following a 0.1 percent decrease in February. Federal Reserve data showed Wednesday. The median forecast in a Bloomberg survey of economists called for a 4.1 percent decline. (4/16)
Supply chain differentials: The rapid shutdown of much of the US economy delivered unprecedented shocks to the mostly separate systems that supply businesses and consumers. Both rely on vetted networks of producers and distributors and other middlemen to deliver goods in ways that are tailored to specific markets. Experts say the gap between the industrial and consumer supply chains grows larger at virtually every step of the process. (4/16)
Major US banks are anticipating a flood of loan defaults as households, and business customers take a big financial hit from the coronavirus pandemic. JPMorgan Chase, Wells Fargo, Bank of America, Citigroup, and Goldman Sachs raised funds set aside for bad loans by nearly $20 billion combined in the first quarter. (4/16)
Asia’s economic growth this year will grind to a halt for the first time in 60 years, as the coronavirus crisis takes an “unprecedented” toll on the region’s service sector and major export destinations, the International Monetary Fund said. (4/16)
More than 160 South Koreans have tested positive a second time for the coronavirus, a development that suggests the disease may have a longer shelf life than expected. Many had volunteered for re-examination after exhibiting symptoms such as coughing. Others submitted to extra testing on little more than a hunch despite not showing symptoms. So far, these patients—all of whom needed to twice test negative before leaving medical supervision—haven’t spread the virus to others. (4/18)
The Kremlin said on Saturday a “huge influx” of coronavirus patients was beginning to put a strain on hospitals in Moscow as Russia’s death toll rose to more than 100. Moscow and many other regions have been in lockdown for nearly two weeks to stem the contagion, but hospitals in the capital are still being pushed to their limit. (4/13)
Japan urged its citizens on Wednesday to stay home, as media reports warned that as many as 400,000 of them could die of the coronavirus without urgent action. Prime Minister Shinzo Abe came under pressure to hand out more cash. Japan, which tests only people with symptoms of the coronavirus, has so far recorded more than 9,000 infections, including a passenger who caught the virus on a cruise ship, with nearly 200 deaths. (4/16)
India will be under lockdown for nearly three more weeks. A day after extending a nationwide lockdown, India has relaxed restrictions on farming, banking, and public works, but transport services and most businesses remain closed. The lockdown, which began on March 25th to contain the spread of the coronavirus, will now end on May 3rd. India has reported 9,756 active cases and 377 deaths so far. (4/15)
If India experiences the same kind of outbreak that better-prepared nations are struggling to manage, the South Asian giant soon could find itself with millions of deaths and a ravaged economy…. India’s accelerating COVID-19 crisis risks quickly overwhelming its health care system and dramatically thwarting Prime Minister Narendra Modi’s attempts to reinvigorate the country’s economy. (4/15)
After India’s health ministry repeatedly blamed an Islamic seminary for spreading the coronavirus — and governing party officials spoke of “human bombs” and “corona jihad” — a spate of anti-Muslim attacks has broken out across the country. Young Muslim men who were passing out food to the poor were assaulted with cricket bats. Other Muslims have been beaten up, nearly lynched, run out of their neighborhoods or attacked in mosques, branded as virus spreaders. (4/13)
Oil’s climate commitments: Royal Dutch Shell plans to eliminate all net emissions from its operations and the bulk of greenhouse gases from the fuel it sells to customers by 2050. The energy giant is following in the footsteps of its peers BP and Repsol, which have already set similar targets. Shell’s move indicates that, despite the turmoil caused in the industry by the coronavirus, major oil and gas companies aren’t abandoning the transition to cleaner energy. (4/16)
Rising water: By 2040, projections by the Virginia Institute of Marine Science show, the Lafayette River will overflow its banks and flood streets twice daily during high tides. Norfolk plans to protect the city with $1.8 billion in storm-surge barriers and floodwalls, but those projects — if built — won’t stop the rising tides in Larchmont. Will Larchmont “retreat?” (4/15)
Climate shift: Florida is caught between a climate change-induced sauna of extreme spring temperatures and a steam bath caused by warming oceans. The result has been record-setting heat that has turned April into summertime across the peninsula, raising the risk that early season Atlantic storms could blossom off the coast. Miami reached 93 degrees Fahrenheit on Wednesday, a record for the date and 10 degrees above normal, according to the National Weather Service. The combination of temperature and humidity has made many places in Florida feel closer to 100 degrees for weeks. To the west, the Gulf of Mexico has never been hotter: water temperatures reached 76.3 degrees Fahrenheit, 1.7 degrees above normal in charts that go back to 1982. (4/18)