Apr 28, 2020

Axios Generate

Good morning. Today's Smart Brevity count: 1,263 words, < 5 minutes.

Reminder: World Central Kitchen is working to feed vulnerable people and help the badly distressed restaurant sector at the same time. Donate here.

🎸And Saturday marked the birthday of late blues guitarist Albert King, who brilliantly plays us into the edition...

1 big thing: "Demand destruction" hammers BP

A New Zealand BP petrol station showing the decline in prices on April 11. Photo: Hagen Hopkins/Getty Images

Oil-and-gas giant BP reported an extremely steep decline in quarterly profits on Tuesday in a stark sign of how the collapse in demand and prices is affecting the world's biggest producers.

Driving the news: The London-based multinational posted a quarterly profit of roughly $800 million, a two-thirds drop from $2.4 billion in the same period last year.

  • The results reflect lower prices, and "demand destruction" in March, among other forces. “The environment is brutal," CEO Bernard Looney told the Financial Times.

Why it matters: The report provides fresh detail into how the sector is planning to navigate a tough new landscape.

  • "I think we’re in this for quite some time," Looney told Reuters. The company reported an increase in debt.
  • BP, which has already announced a deep spending cut, said it's taking other steps to shore up its finances, including a new $10 billion credit facility.
  • The company said it's planning for a breakeven point below $35-per-barrel (Brent) in 2021.

What's next: More tough reports. Shell posts its results on Thursday, followed by ExxonMobil and Chevron on Friday.

  • And looking ahead, the second quarter is likely to be even tougher. The International Energy Agency sees far greater demand loss during this period, with the trough coming in April and only slight recovery in May.
  • BP expects its production to fall next quarter, and demand for refined fuels will be "significantly lower in BP’s key European and North America businesses."
2. How a power giant intends to hit climate goal

Illustration: Sarah Grillo/Axios

Duke Energy proposed Tuesday that its future electricity mix rely heavily on renewables and nuclear power to reach its 2050 goal to be carbon neutral, Axios' Amy Harder reports.

Why it matters: As one of America’s largest utilities, Duke’s sketch of this potential future is a bellwether for how a range of companies and states hope to achieve their similarly aggressive goals in the next 30 years.

Where it stands: Duke said in a report that huge leaps in innovation must happen in order to achieve its carbon-neutral goal by 2050, a target roughly in line with the Paris climate agreement.

  • The utility also said natural gas, which is increasingly opposed by some environmentalists due to its heat-trapping contents, is essential to help balance out variable wind and solar, even as its role in the energy mix decreases out to 2050.
  • The company provides electricity to more than 7 million customers in the Carolinas, the Midwest and Florida.

But, but, but: Duke's 2050 scenario also relies heavily on a vague bucket of low-carbon technologies that aren’t commercially viable yet, which could include small modular reactors or equipment that can capture carbon emissions from natural gas plants.

By the numbers: Duke’s 2019 → 2050 generation mix...

  • Coal: 24% → zero.
  • Renewables (wind and solar mostly): 5% → 36%.
  • Natural gas: 31% → 6%.
  • Nuclear: 31% → 28%. This relies on an assumption that federal regulators grant Duke additional operating licenses to allow their existing reactors to run 80 years, a move numerous utilities are making. Just a few reactors at other companies have been approved so far. (Duke hasn't yet officially requested its extensions.)
  • By 2040, the report includes the catch-all category of to-be-determined low-carbon technology for 16% of its mix. By 2050, it’s projected to be up to 30%.

Read more

3. Early signs show driving returns but not transit
Data: Apple; Chart: Naema Ahmed/Axios

One thing that will affect post-pandemic oil demand and carbon emissions is how quickly — and how much — driving ultimately bounces back compared to other modes of moving around.

Driving the news: Rough proxy data via Apple provides early signs that driving is starting to come back in a number of U.S. cities, while light rail and bus use basically isn't (yet).

  • The chart above shows a few cities I looked at using this interactive online tool from Apple that shows the results of changes in the number of requests for directions to Apple Maps.

Why it matters: Shelter-in-place restrictions worldwide have radically cut down on travel during the pandemic, but it's not yet clear if post-crisis travel patterns and decisions will ever be completely the same.

Where it stands: A much clearer picture will emerge in the months and years ahead. But already there are other signs that car travel is beginning to come back.

  • Data provided to Axios by the Google-owned navigation app Waze is another proxy for driving levels in the same cities charted above.
  • The reductions on April 22 were less severe in all the cities than peak declines from a February baseline. (Peak declines occurred from late March through mid-April, depending on the city.)

The intrigue: There's all kinds of variable and uncertainties. We're in the early stages. But the future could mean...

  • Some people avoiding mass transit, at least for a time, which adds to vehicle use and traffic.
  • Yet working from home and other behaviors that put downward pressure on car travel could remain post-crisis.
  • Some cityscapes in Europe and elsewhere are becoming more walking- and bike-friendly during the crisis, and I'm watching to see if those changes could stick around too.

Go deeper: The post-pandemic landscape may favor cars

4. Visualizing the crude oil glut

Photo by Petty Officer 3rd Class Aidan Cooney, U.S. Coast Guard

Oil tankers are parked off the California coast instead of unloading — a stark sign of the global glut now that demand has collapsed and storage is filling up.

Driving the news: There are 20 oil tankers anchored off Southern California ports, with 15 that may remain for an unknown and extended period, while five are slated to offload in the next several days.

  • That's according to Captain Kip Louttit of the Marine Exchange of Southern California, which operates vessel traffic in the region on behalf of the U.S. Coast Guard.

The big picture: "About three dozen massive oil tankers are anchored from Los Angeles and Long Beach up to San Francisco Bay, turning into floating storage for crude oil that is in short demand because of the coronavirus," NPR reports.

Go deeper: 13 stunning photos of supertankers and storage tanks reveal the global oil glut in epic proportions (Business Insider)

5. Poll: People worried about climate also tend to wear masks

U.S. adults worried about human-induced climate change report wearing face masks in public in substantially higher percentages than people who are not concerned about it, new Morning Consult polling shows.

The big picture: 54% of adults who are concerned about climate and agree with the scientific consensus on human causation said they "always" wear a mask over the past month due to the coronavirus pandemic.

  • In contrast, among adults who say they're not concerned about climate change, the share who self-report always wearing a mask drops to 30%.
  • "This trend was replicated across questions on social distancing and disinfecting, though with somewhat smaller margins," they report in a story alongside the polling conducted in mid-April.

Why it matters: Let's clear the decks by noting that correlation is not causation! But Morning Consult quotes experts who see some psychological overlap between views on climate change and behavioral responses to COVID-19.

What they're saying: Emma Frances Bloomfield, an expert in science communication and controversy with the University of Nevada, Las Vegas, sees several potential reasons for overlap.

  • "These include a general skepticism of authority — specifically authority associated with science, health and medicine — as well as an outlook concerned more with individual than community-level well-being," they report in a summary of her comments.
  • Ed Maibach, a George Mason University expert on public opinion on climate, says the difference may be related to partisan divides in views on both climate and the pandemic.

Methodology: "The poll surveyed 2,200 U.S. adults and has a margin of error of 2 percentage points. The climate-concerned and climate-unconcerned cohorts have 3- and 4-point margins of error, respectively."

6. Catch up fast: coal, politics, EVs

Coal: "As silent factories and deserted offices hobble demand for electricity worldwide, the biggest loser is coal. ... Even in China and India, where coal still dominates, it’s losing market share during the pandemic." (Bloomberg)

Politics: "Joe Biden's campaign recently met with the Sunrise Movement and other progressive groups amid efforts by the presumptive Democratic nominee to unify the party's base and potentially expand his climate plan." (E&E News)

Electric cars: "On Monday, Tesla reversed course and canceled requests to bring workers back to production lines in Fremont, California, this week." (CNBC)