May 22, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Welcome back. Today's Smart Brevity count: 1,329 words, 5 minutes.

Housekeeping note: We'll be off for the Memorial Day holiday, so our next edition will arrive Tuesday. Have a nice and safe long weekend!

And finally, with a hat tip to DJ @JakeRudh, yesterday marked the 1977 release date of the Elvis Costello song that's today's intro tune...

1 big thing: A royal plan for a climate-focused economic "reset"

Illustration: Eniola Odetunde/Axios

Axios' Amy Harder has the scoop that dozens of world leaders in business, finance and politics will convene June 3 to discuss how the global economy can be “reset”— with climate change a defining theme — as nations recover from COVID-19.

Driving the news: The online event will be hosted by His Royal Highness Charles, Prince of Wales, and Klaus Schwab, founder and executive chairman of the World Economic Forum.

What they’re saying: “The meeting will see various guests from the public and private sector make contributions on how we can achieve a ‘Great Reset’ of our global economic system in the post-COVID era,” a forum spokesman told Axios.

The intrigue: Others involved include International Monetary Fund Managing Director Kristalina Georgieva and Bank of America President and CEO Brian Moynihan, according to spokespeople.

  • Other top leaders across business, finance and additional sectors are slated to attend, but a forum spokesman said such details, along with a specific agenda, are still being worked out.

But, but, but: Climate change concerns appear near the bottom of a survey the forum itself released this week conducted with nearly 350 senior risk professionals across a variety of sectors.

  • Two climate-related actions — reducing emissions and adapting to a warmer world — barely broke the top 20 out of a list of 31 concerns (check out the appendix charts on page 51-53 of the survey.)
  • Respondents were asked to assess what areas of society would face the most fallout due to the pandemic, which are the greatest concerns for the world and which are the greatest concerns for their businesses.

Flashback: The World Economic Forum has increasingly focused on climate change, and this year’s annual Davos confab saw a greater emphasis. Prince Charles delivered a speech on the issue and created a sustainability initiative with executives to focus more on climate going forward.

One level deeper: While the event is broadly about the economy, multiple people involved told Axios that climate change is a core part of the mission.

“When the public health emergency recedes, the obvious biggest crisis you have to address is climate change,” said one person involved, who would only speak on the condition of anonymity because the event was still being planned.

“The understanding of this group is that this public health crisis reveals that you also have an enormous social and economic crisis in terms of inequity.”

Reality check: A healthy dose of scrutiny is always needed for rhetoric-heavy moves like this.

  • In addition to the lack of priority among risk professionals surveyed, it’s also unclear whether political leaders — especially outside of Europe — will have the appetite to prioritize clean-energy and climate-change policies as they seek to recover from the pandemic.
  • This effort also faces heightened scrutiny of the concept of globalism, as nations have literally closed borders and looked inward to handle the pandemic’s wrath.
2. Gasoline is cheap as driving returns
Expand chart
Data: U.S. Energy Information Administration; Chart: Axios Visuals

Pump prices are at their lowest point in years heading into the long holiday weekend, but it's hard to say how many people will take advantage of them.

Driving the news: The average U.S. price of gasoline as of early in the week was $1.88-per-gallon, per the U.S. Energy Information Administration. It's the lowest overall price since early 2016.

The group AAA, which provides similar but not identical pricing data, says it's the first time average prices are under $2 heading into Memorial Day weekend since 2003. The average price today is $1.94-per-gallon, per AAA.

One big question: That's how many people will be traveling over the long weekend. Driving nationwide has bounced back a lot in recent weeks.

Nonetheless, AAA is declining to estimate holiday weekend travel for the first time in 20 years "due to COVID-19 impacts on the underlying economic data used to create the forecast," the group said.

3. Facebook and the future of oil

Illustration: Eniola Odetunde/Axios

Facebook CEO Mark Zuckerberg said the company is planning to shift the majority of its workforce to be able to work remotely in the next 5-10 years, Axios' Sara Fischer reports.

My thought bubble: It's the latest sign that remote work could become a permanent fixture of the post-pandemic landscape for substantial numbers of people whose jobs enable that luxury.

  • That, in turn, is among the things that may act as a drag on long-term oil demand if many large employers go the same route.
  • Twitter and Square, both run by Jack Dorsey, announced last week that people could work from home indefinitely if they wanted to.

But, but, but: Gaming out whether coronavirus, which has sharply reduced oil consumption, is a blip or inflection point is really hard.

Demand is already coming back significantly since last month when it was down by roughly 30%.

What they're saying: Via S&P Global Platts, BP chief economist Spencer Dale points out that while people are traveling less, the crisis could boost consumption in other ways.

  • From their piece on his interview with IHS Markit: "Dale said it...remains unclear whether social behavior changes post-pandemic might mitigate any slide in oil intensity from less travel."
  • "More home deliveries of food and goods in addition to greater private car use to avoid public transport could push demand in the other direction," he said.

The big picture: Overall, Dale sees the pace and degree of economic recovery having a vastly larger effect on future oil demand than new travel patterns.

Go deeper: Coronavirus leaves experts pondering if the planet already hit peak oil demand

4. Crude's bumpy and uncertain recovery

Oil prices fell substantially Friday before regaining some ground, ending their big upward march of late as traders responded to new friction between the U.S. and China and fresh questions about the Chinese economy.

Driving the news: Prices for West Texas Intermediate, the U.S. benchmark, are down roughly 3.5% this morning to around $32.70-per-barrel, while Brent crude is down by roughly the same percentage, trading in the high $34-per-barrel range.

Nonetheless, U.S. oil prices have more than doubled in the last month.

What they're saying: "It's been a good run for oil prices but rising US-China tensions have proven a step too far," OANDA analyst Craig Erlam said in a note.

  • He called the $30-per-barrel mark a "test" for WTI. "If this can hold, it could reinvigorate the rally while a break could cast real doubt once again," he said.
  • Erlam said the outlook remains "highly uncertain" and concludes: "There'll be nothing normal or straightforward about this recovery."

Why it matters: The speed and extent of oil's price recovery have huge stakes for companies facing dire market conditions.

Producers and contractors are shedding workers and more bankruptcies are expected despite as prices remain very low despite the recent revival.

Go deeper: Oil Retreats From Two-Month High With Doubts Over China Economy (Bloomberg)

5. Catch up fast: Amazon, royalties, LNG

Renewables: "Amazon will add 615 megawatts of solar projects to its existing and announced renewables portfolio of more than 2.9 gigawatts, the technology and shipping giant said on Thursday." (Greentech Media)

Oil-and-gas: "The Trump administration has lowered royalties for several drilling companies producing oil and gas on federal lands, according to a government database, as the industry seeks help weathering low energy prices." (Reuters)

Natural gas: "A federal agency on Thursday certified the Alaska LNG project for construction and operation, a vital achievement for an uncertain effort that has been in the works for years." (Anchorage Daily News)

6. Helping cities adapt to COVID-19

A national group of urban transit officials hopes to make it easier for city planners to adapt their streetscapes to the shifting pressures of the COVID-19 pandemic.

Driving the news: The National Association of City Transportation Officials has released a document called "Streets for Pandemic Response and Recovery."

It offers technical guidance on revamping spaces for expanded pedestrian and bike access, outdoor dining and markets, new delivery patterns and more.

Why it matters: The scope and duration of the changes could affect urban air quality, carbon emissions and could even influence post-crisis oil demand.

Mass transit systems, for the foreseeable future, will be forced to run at greatly reduced capacity, even as driving starts to return.

The big picture: "City transportation officials around the world have quickly implemented new street design and management tools to keep essential workers and goods moving, provide safe access to grocery stores and other essential businesses, and ensure that people have safe space for social/physical distancing while getting outside," the group said.

The new document "compiles emerging practices from around the world and includes implementation resources for cities and their partners."

Go deeper: Coronavirus is reshaping urban mobility

Ben GemanAmy Harder