Oct 12, 2018

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Happy Friday!

At this moment in 1989, Soul II Soul were atop Billboard's hip-hop charts with a good song that takes us into the weekend...

1 big thing: "Expensive energy is back"

The International Energy Agency warned Friday that higher prices may bring global economic headwinds — even though crude oil markets are adequately supplied for the moment and the agency has trimmed its demand growth forecast.

What they're saying: "[O]ur position is that expensive energy is back, with oil, gas and coal trading at multi-year highs, and it poses a threat to economic growth," IEA said in its closely watched monthly oil market report.

The big picture: The Paris-based agency revised its oil demand growth forecast downward for 2018 and 2019 by 110,000 barrels per day each year.

  • "This is due to a weaker economic outlook, trade concerns, higher oil prices and a revision to Chinese data," they said. IEA now sees demand rising by 1.3 million barrels per day (mpd) this year and 1.4 mpd in 2019.

What's next: Despite the forces trimming growth, the world still needs lots of oil and several sources are at risk, including Iran, which is seeing exports fall thanks to looming reimposition of U.S. sanctions. Per IEA...

  • Global oil demand is on the cusp of the "historically significant" 100 mbd mark.
  • While the market has enough supplies "for now," Iran's exports are slated to fall even more, Venezuela is deteriorating, and there's the "ever-present" threat of more Libyan disruption.
  • "[W]e cannot be complacent and the market is clearly signalling its concerns that more supply might be needed."

Where it stands: Prices are at their highest levels since 2014, but actually fell by several dollars on Wednesday and Thursday.

  • Traders responded to forces including the stock market slide, OPEC trimming its demand growth forecast on Thursday, and DOE data showing a jump in U.S. stockpiles.
  • Today, prices are ticking back upward slightly and Brent crude reached $80.62 a barrel when we sent this newsletter. But per Reuters, Brent prices are still on course for their biggest weekly drop in roughly four months.
2. Who's backing away from the Saudis

Uber's CEO and the World Bank president are the latest officials to back away from Saudi Arabia's upcoming Future Investment Initiative (FII), a massive conference colloquially known as "Davos in the Desert."

Where it stands: A number of companies and officials are bailing on the event — hosted by Crown Prince Mohammed bin Salman and the kingdom's sovereign wealth fund — over the disappearance and apparent killing of journalist Jamal Khashoggi.

The big picture: If the moves lead to a persistent rift between major companies and Saudi officials who are increasingly seeking partnerships with tech and other industry players, it could create headwinds for the kingdom's efforts to diversify its crude-dominated economy.

Uber CEO Dara Khosrowshahi said in a statement last night:

"I'm very troubled by the reports to date about Jamal Khashoggi. We are following the situation closely, and unless a substantially different set of fact emerges, I won't be attending the FII conference in Riyadh."

World Bank President Jim Yong Kim also isn't going, according to the Financial Times, which broke the news Friday morning.

  • However, their piece cautions that the bank did not say whether the decision came before or after Khashoggi disappeared from the Saudi consulate in Turkey on Oct. 2.

Go deeper:

3. The U.S. is about to hit an EV milestone

Sale of the 1 millionth electric vehicle in the U.S. is likely to occur this month, according to an estimate by the group Securing America's Future Energy (SAFE) that's based on data compiled by Inside EVs.

Why it matters: It's a symbolic threshold that signals growing adoption of the technology, even though it remains a small part of the overall U.S. market.

By the numbers: SAFE said automakers sold more than 110,000 EVs in the third quarter of 2018, a remarkable 108% rise from the same 3-month stretch in 2017.

  • A large majority of those — over 80,600 — were pure electrics, while plug-in hybrid (PHEV) sales were over 29,000.
  • Tesla's Model 3 was by far the top-seller in Q3, followed by its Model S; Model X; the Toyota Prius PHEV; the Chevy Volt PHEV; the Honda Clarity PHEV, the Nissan Leaf and the Chevy Bolt.

What they're saying: Ben Prochazka, VP of the Electrification Coalition, a sister organization to SAFE, said in a statement...

The imminent sale of the one-millionth electric vehicle (EV) is a major milestone and brings us one step closer to reducing our transportation systems dependence on oil. This a direct result of the tireless efforts by communities and advocates throughout the 'EV ecosystem.
While this momentum is a great moment in the push for the accelerated adoption of EVs, we need to continue to push for policies and support ongoing efforts to make the future of transportation electric.

Go deeper: SAFE analyst Paul Ruiz has more on the data here.

4. Finding hope (or not) in dire climate news

Illustration: Rebecca Zisser/Axios

Axios' Andrew Freedman spoke with several scientists about the major UN report on the vast difficulty of holding global warming to 1.5°C, or 2.7°F, above preindustrial levels.

The big picture: The interviews veer from the discouraging and disturbing parts of the report (and there are many) and strike some more hopeful notes.

Here are a few snippets...

The big question: Kate Marvel, a NASA climate scientist, discussed the need for facing climate change courageously, rather than getting depressed or scared.

  • "It makes no sense to give up now, even though the future seems very scary," Marvel said. She's unique in climate science for talking about how it feels to be studying this issue.
"It's OK to grieve over the things we've lost and will lose. But grief isn't the same as despair. We need to be brave enough to do the right thing."
— Kate Marvel

Reality check: Katharine Hayhoe, a climate scientist at Texas Tech University, said climate change is relevant to the here and now. She says...

"What the 1.5°C report brings home is that the future is now. The choice is upon us. ... We don’t have all the Jetson-era technology we imagined we’d have when the chickens came home to roost. But the world is already changing."
"And yes, it is an opportunity — an opportunity to transform the very fabric of our society, from its current patterns of consumption that will soon exceed our planetary boundaries to one that is able to sustain our human civilization for millennia to come."

Read more of Andrew's piece here.

But, but, but: This short new Eurasia Group analysis is pessimistic that national leaders worldwide can summon the political will to force seismic energy and emissions changes that the report calls needed.

5. Even climate skeptics like renewables mandates

The University of Michigan and Muhlenberg College are out with a new report that compiled a decade's worth of their polling on state-based renewable electricity mandates, which are common nationwide.

The big picture: The policies — which require a growing share of state power to come from wind, solar and other renewables — are consistently popular, with support bouncing around from 72%–84%.

The intrigue: One interesting question broke down support levels based on respondents' views on climate change.

  • It found growing support among people who think global warming is caused by natural patterns (not by humans), rising to 86% in their polling last fall.
  • In 7 of the 10 times they've polled this question, there was net support even among those who say climate change isn't happening at all.

(Standing reminder: The overwhelming scientific consensus is that human activities have been the dominant cause of observed warming since the mid-20th century.)

Go deeper: The report has a wealth of polling data about renewable portfolio standards that are in place in roughly 30 states. Check out the whole thing here.

6. On my screen: gas report, lobbying, Tesla

Natural gas: Via AP, a preliminary National Transportation Safety Board report blamed explosions and fires in 3 Massachusetts communities last month on over-pressurized gas lines.

  • "The five-page, preliminary report found that utility workers contracted by Columbia Gas had failed to account for critical pressure sensors as they replaced century-old cast-iron pipes in Lawrence on Sept. 13."

Lobbying: The American Petroleum Institute — the oil-and-gas industry's biggest trade group — has added the CGCN Group to its stable of outside lobbyists, a newly posted filing shows.

Personnel: The Hill reports, "The Senate voted Thursday to confirm a climate change skeptic and former industry attorney to lead the Department of Justice’s (DOJ) environment division."

Tesla: Per TechCrunch, "Tesla customers who want the full $7,500 federal tax credit have until October 15 to order a Model S, Model X or Model 3 electric vehicle, a new deadline posted on the company’s website that could spark a flurry of sales."

Ben GemanAmy Harder