Jan 3, 2020

Axios Generate

Good morning! Today's Smart Brevity count: 1,158 words, 4.5 minutes.

And tomorrow R.E.M.'s Michael Stipe celebrates a birthday, so they will bring us into the weekend with this beautiful song...

1 big thing: Geopolitical risk storms back into oil markets

Illustration: Sarah Grillo/Axios

Iran's response to the U.S. killing of Qasem Soleimani, a top Iranian military official, could target oil infrastructure and transit in the Middle East, analysts say.

Driving the news: The airstrike in Iraq that killed Soleimani pushed prices sharply upward last night and into this morning.

  • And they would likely go much higher if the conflict escalates, especially if major energy facilities are hit in response, though, needless to say, we don't know the scope of Iran's next steps.

The big picture: "[T]he killing of Soleimani calls for a serious increase of the geopolitical risk premium," Olivier Jakob of the consultancy Petromatrix tells the FT.

Where it stands: Oil prices are up almost 4% in the wake of the U.S. strike. The global benchmark Brent crude is trading at $68.76 per barrel.

Threat level: A note from the Rapidan Energy Group games out Iran's options and concludes the most likely scenario is that Iran will "first look for ways to recoup leverage short of targeting U.S. military personnel."

"That shifts risk back onto oil vessels and facilities. ... [T]he risk of another major attack against Gulf oil vessels or facilities is now above 50%."

What they're saying: Jason Bordoff, head of a Columbia University energy think tank, predicted via Twitter that Iran's response will be "severe" and "deadly" and "certainly may include escalating attacks on energy infrastructure."

But, but, but: Eurasia Group analysts predicted in a note that while Iran will certainly respond, it's "unlikely to immediately attack Saudi or Emirati oil infrastructure or US bases in Saudi Arabia, the UAE, Bahrain, or Qatar."

  • Overall, they're hardly ruling out a major military conflict, but expect "moderate to low-level clashes to last for at least a month" that are likely confined to Iraq.
  • They also expect Iran to harass and even temporarily disrupt commercial shipping in the Gulf.
  • "Prices will likely hold around $70/barrel but could make a run at $80 if the conflict spreads to the oil fields of southern Iraq or if Iranian harassment of commercial shipping intensifies," they write.

Go deeper:

2. Amazon and Big Tech can't escape climate pressure

Illustration: Sarah Grillo/Axios

2020's first battle between Big Tech and climate activists is already here, and I have a not-very-bold prediction: It won't be the last.

Driving the news: Amazon Employees for Climate Justice (AECJ) yesterday alleged management is trying to prevent employees from continuing to publicly criticize corporate policies.

  • The group says two employees were threatened with termination and "a total of four were told in meetings that they were in violation of the company’s policies on workers speaking to the press and on social media," Bloomberg reports.

Why it matters: This is more than an HR dispute. It shows how advocates are increasingly targeting tech giants to act more aggressively — even as Amazon, Google, Microsoft and others have made various commitments and stepped up renewables purchases.

What's next: AECJ's announcement of the allegations shows that more battles await. It looks critically at pledges Amazon CEO Jeff Bezos unveiled in September.

  • While AECJ called them a victory, they want the company's 2040 pledge of net-zero emissions sped up to 2030.
  • They also criticize Amazon Web Services' work with oil companies.

The big picture: Activists are focusing on tech giants for several reasons.

  • Data centers consume immense amounts of electricity.
  • Amazon uses fossil fuels to deliver billions of packages.
  • Companies including Microsoft and Amazon have cloud computing and other business lines tailored to oil-and-gas sector clients.

Why you'll hear about this again: The political environment is ripe. White House hopeful Bernie Sanders has criticized tech companies over their work with the oil sector.

  • And there's a lot of attention right now on corporate policies as the Trump administration has scaled back federal emissions rules.

The other side: An Amazon spokesperson told Axios and other outlets, "Our policy regarding external communications is not new and we believe is similar to other large companies."

Go deeper:

3. Breaking: Tesla reports record Q4 deliveries

Tesla announced it produced almost 105,000 cars in the October–December period and delivered roughly 112,000 — both records for the Silicon Valley electric automaker.

Why it matters: The deliveries substantially beat Wall Street estimates and enabled the company to meet its "ambitious" year-end sales goals, per CNBC.

Meanwhile, the company also plans to start delivering Model 3 sedans built in China to customers there on Jan. 7, Reuters reports.

  • "The Shanghai plant is part of the Silicon Valley automaker’s plans to bolster its presence in the world’s biggest auto market and minimize the impact of the U.S.-China trade war," they report.

More EV news caught my eye...

Ford: Per NBC News, "Ford said it has officially filled all advance orders for the First Edition Mustang Mach-E, a limited version of the Detroit automaker’s first long-range battery-electric vehicle."

Fiat Chrysler: The company plans to show off a plug-in hybrid version of the Jeep Wrangler at the big CES technology conference in Las Vegas next week, the Detroit Free Press reports.

  • "The Wrangler is one of three Jeep plug-in electric hybrids FCA says it will bring to the annual consumer electronics showcase, which runs Tuesday through Jan. 10. A Renegade and Compass are also on tap," they write.
4. The future of ride-sharing

Illustration: Sarah Grillo/Axios

Auto companies, counterintuitively, are trying to get people to give up their cars — by making shared transportation more appealing with vehicles that recognize you, anticipate your needs and customize your ride, Axios' Joann Muller reports.

Why it matters: Ride-hailing apps are making urban congestion steadily worse. In San Francisco, people spent 62% more time sitting in traffic in 2016 than in 2010. Uber and Lyft have admitted they're part of the problem.

Quick take: This is a climate story too because transportation is now the largest source of U.S. carbon emissions. Ok back to Joann's piece...

Driving the news: In Las Vegas next week at CES, the world's largest tech show, carmakers and other suppliers will offer the most advanced look yet at their plans for ride-sharing of the future.

Go deeper: Read Joann's full story here.

5. The daily presence of climate change

The imprint of climate change is now apparent in global weather data at a daily level, according to a new paper in the peer-reviewed journal Nature Climate Change.

Why it matters: "If verified by subsequent work, the findings ... would upend the long-established narrative that daily weather is distinct from long-term climate change," the Washington Post reports.

What they found: "The fingerprint of climate change is detected from any single day in the observed global record since early 2012, and since 1999 on the basis of a year of data," the study states.

What they're saying: "The study’s results also imply that research aimed at assessing the human role in contributing to extreme weather events such as heat waves and floods may be underestimating the contribution," the WashPost's Andrew Freedman reports.