Mar 9, 2017

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning! I'm still in Houston, where the big CERAWeek conference is moving onto electricity after three days focused on the oil-and-gas industry. The big event today will be the appearance of new EPA administrator Scott Pruitt, while speeches from Royal Dutch Shell's CEO and Canadian Prime Minister Justin Trudeau are also on tap. I welcome your tips and feedbacks at ben@axios.com. Ok, here we go ...

The oil industry’s Trump report card

None of the oil industry execs gathered in Houston have been as overtly political or rah-rah-rah about Donald Trump as Harold Hamm. The billionaire fracking magnate opened a session about North American drilling by declaring Trump "unique in the political world because he keeps his promises."

For the industry overall, the vibe about the Trump era is that it will be positive for their business, but there's a few things that worry them too. Here's what they're psyched about:

  • Trump's promises — and the early evidence — of easier, quicker permitting for pipelines and other infrastructure.
  • The zeal of Trump and the GOP Congress to pull back on Obama-era regulations. But that said, number of analysts have emphasized in interviews that market fundamentals have way, way more to do with drilling and production decisions than regulations.

What they're concerned about:

  • Trade. Trump's protectionism could be a problem for an industry with global supply chains and, for some companies, a global footprint too.
  • The shape of the planned tax overhaul. They want lower rates but they're wary of, if not downright hostile to, the border adjustment tax. "I want to see the U.S. become more competitive, not burdening imports," Chevron CEO John Watson said onstage.
Seriously, not literally, on trade

Let's look a little more at how the energy industry is feeling about Trump's protectionist trade stance. Jack Gerard, head of the powerful American Petroleum Institute, argues that Trump policies tend not to be as blunt as his statements.

"I think some people are reading too much into what the president is saying."

In an interview, Gerard pointed to the White House position that Trump's directive on using American steel in pipelines doesn't apply the Keystone XL. The policy is not a "bright line," he noted. "I think his position is more nuanced and I think we are going to find over time that we are able to work with him."

Sorry to be that guy, but ...

Amid all the optimism here about the oil industry's rebound, prices took a dive yesterday to their lowest levels of the year. U.S. crude prices dropped almost $3 per barrel to close at slightly above $50.

Why? New federal data showed we're swimming in the stuff. Markets got spooked when the federal Energy Information Administration reported that U.S. commercial stockpiles jumped by 8.2 million barrels over the prior week. Per Reuters, that is "stoking concerns a global glut could persist even as OPEC tries to prop up prices with output curbs."

Solar’s big year

The solar industry is out this morning with new numbers on how the industry fared in the U.S. in 2016. The short answer? Quite well. Here are some topline findings from the Solar Energy Industries Association and GTM Research.

  • For the first time last year, solar was the largest source of new electric generating capacity additions (at 39%.)
  • The industry added almost 14,800 megawatts of new capacity, which almost doubles the amount added in 2015. Overall, the report forecasts that installed solar capacity is expected to almost triple over the next five years.
  • Utility solar projects—the stuff that feeds into the grid—were the main driver of the 2016 boom. Residential solar PV saw a slowdown in growth compared to the prior year.

Why it matters: Solar is still a very small share of U.S. electricity, but growing very fast. Politically, the industry's surge and the jobs that come with it could help advocates make the case to the Trump administration that the renewables industry is an important economic driver, and that Energy Department programs to spur both advanced research and market penetration pay off down the line.

Climate change and February’s heat

Last month was the second-warmest February on record in the U.S. Monthly federal data released Wednesday showed it was a 7.3°F above the 20th century average. The Associated Press looks at whether climate change made the hot month more likely:

"An international science team's computer analysis of causes of extreme weather calculated that man-made global warming tripled the likelihood for the nation's unusually warm February."

Well said

That's Environment and Energy Publishing reporter Mike Lee with the smart take on remarks by Canada's minister of natural resources, Jim Carr. Even though the Keystone XL oil sands pipeline project has been revived, Canada is still moving ahead with efforts to diversify its oil export markets beyond the U.S. too. Carr's onstage message: "We love you, but we want to love others too."

Ben GemanAmy Harder

More updates from CERAWeek today in the Axios stream. Oh, and a reminder about something cool happening Monday: the launch of the new Axios tech newsletter Login. You can sign up for all our newsletters here.