Good morning. Did you catch "Axios on HBO" last night? For one of our stories, I toured America's first offshore wind farm and checked out another spot — Atlantic City, New Jersey — where one of the world's largest such farms are planned.
My latest Harder Line column, which is excerpted below, reports on all this, and then Ben Geman will get you up to speed on other news.
Today's Smart Brevity count: 1,277 words, ~ 5 minutes.
1 big thing: America's offshore wind boom
ATLANTIC CITY, N.J. — In a few years, offshore wind could power the slot machines at this beachside gambling town, as I reported for this week's "Axios on HBO."
Driving the news: Danish company Ørsted, the world’s largest developer of this kind of energy, is planning to put nearly 100 massive turbines 15 miles into the Atlantic Ocean that could power a half-million homes — but opposition and delays could stymie that goal and the industry writ large.
The big picture: With New England and Mid-Atlantic states enacting aggressive clean energy policies, offshore wind promises to help combat climate change and create jobs. The numerous projects in the regulatory pipeline could power nearly 10 million homes.
- But the only offshore wind farm operating in the country, near Rhode Island and operated by Ørsted, is tiny — just five turbines.
- Proposals for far bigger farms are piling up as one project is delayed and the Trump administration conducts a broad review of the cumulative impact of all of them.
Between the lines: Ørsted’s U.S.-based CEO, Thomas Brostrom, said in an interview here that this review is a “speed bump” — but he also acknowledges his company is making contingency plans if delays go on for too long.
“We've seen maybe a speed bump, which creates a little bit of uncertainty but that's following 4 or 5 years of very, very positive development. And obviously this is way too big to fail. We're looking at $70 billion to be invested over the next 10 years.”— Thomas Brostrom, "Axios on HBO"
What they’re saying: But even Sen. Sheldon Whitehouse (D-R.I.), an ardent climate change advocate, quietly signed onto a letter recently urging the Trump administration to conduct more comprehensive reviews.
- Critics say such reviews could slow projects down, but Whitehouse contends they would ultimately speed up the process.
The intrigue: Clouding the bureaucratic fight over process is President Trump’s uniquely strong hatred of wind, possibly stemming from a fight that one of his golf courses in Scotland waged (unsuccessfully) against an offshore wind farm there.
- More than any other type of energy, he regularly bashes wind in rallies, saying (inaccurately) that wind turbines cause cancer and that if it’s not windy, you can’t watch TV.
Yes, but: Trump’s hatred hasn’t (yet) led to any tangible impact on the actual approval of wind farms, per executives, politicians and others following the process closely.
Bonus number of the day: 20
That's the number of U.S. government agencies involved in the permitting of offshore wind farms in America, according to Brostrøm.
By contrast, Brostrøm says in Europe, where offshore wind is booming, there's just one government agency for permitting.
2. Why Big Oil won't embrace Trump's Syria plan
ExxonMobil and other big energy companies will likely be cool to Trump's idea of working with the U.S. to produce oil in Syria, analysts say.
Driving the news: Trump reiterated the idea and name-checked Exxon during remarks this morning on the killing of ISIS leader Abu Bakr al-Baghdadi by U.S. forces.
- "[W]hat I intend to do, perhaps, is make a deal with an ExxonMobil or one of our great companies to go in there and do it properly," Trump said at the White House.
- He raised the same idea at a Cabinet meeting last week. Exxon declined to comment on Sunday.
The big picture: The U.S., despite the pullback from Syria, is reportedly deploying troops to a northeastern region to prevent oilfields from falling into ISIS' hands.
But, but, but: Oil majors are unlikely to take interest in Trump's idea of beginning operations in the region, analysts tell Axios.
- "I doubt there will be a rush by oil companies to work in a region that is a hotspot for military action and civil unrest," says Michael Webber, an energy scholar with the University of Texas at Austin.
- "International oil and gas companies aren’t looking for risky places to operate, they are looking for safer places to operate — which is one reason why west Texas has been enjoying a boom in production," Webber tells Axios.
3. California fires singe the 2020 race
Big fires and power outages are wreaking havoc in California and spreading into the 2020 elections, too.
Where it stands: "Millions of Californians had no power Sunday as Pacific Gas and Electric Co. implemented its largest-ever blackout to prevent wildfires during a fierce windstorm, " the San Francisco Chronicle reports.
The big picture: Gov. Gavin Newsom "declared a statewide emergency Sunday as wildfires spread throughout California, burning tens of thousands of acres and forcing evacuations of more than 180,000 people," per L.A. Times.
The intrigue: The fires, PG&E's controversial shut-offs, and criticism of the power giant have spilled into the presidential race.
- "It is time to begin thinking about public ownership of major utilities," Sen. Bernie Sanders said via Twitter yesterday.
- He also noted, "Climate change is real, and when I am president, we are going to treat this like the existential crisis it is."
- Flashback: Sanders' climate plan calls for expanding the system of federal Power Marketing Administrations and focusing them on renewables and storage.
Meanwhile, Sen. Elizabeth Warren said via Twitter that California's wildfires "will only grow more dangerous and destructive until we act to stop the climate crisis."
4. Big Oil is about to shows its financial cards
The world's largest publicly held oil-and-gas companies are slated to report third-quarter earnings this week.
What's next: BP reports tomorrow; Total SA reports Wednesday; Royal Dutch Shell's comes Thursday; and U.S.-based giants Exxon and Chevron arrive Friday.
Why it matters: It provides the latest window into how the companies are handling modest oil prices and sluggish global demand growth.
Threat level: Per Bloomberg, the companies are expected to post an average 42% drop in earnings.
- That decline stems not only from oil prices, but also weakness in the petrochemicals market, maintenance keeping facilities at below capacity, and other forces, they report.
But, but, but: It's not just the biggest multinationals facing a tough earnings season.
- "Investors are bracing for weaker results from U.S. shale players in coming days as lower oil and natural gas prices and cost-cutting measures have weighed on third-quarter operations," Reuters reports.
And one more petro-note...
Aramco IPO: The Financial Times has the latest look at headwinds facing the effort, noting Crown Prince Mohammed bin Salman is clinging to his goal of a $2 trillion valuation.
- "[S]ome foreign investors that Saudi Aramco has sought out believe it is worth no more than $1.2tn," they report.
- "That big gap in valuation expectations has fed uncertainty over whether the kingdom will proceed with the long-awaited listing."
5. GM saga shows automakers' energy gambles
GM's deal with the United Autoworkers — formally approved Friday after a 6-week strike — is a calculated bet on a vision for the auto industry that's far from certain, Axios' Joann Muller reports.
Why it matters: GM can afford the rich contract terms negotiated with the union — as long as nothing goes wrong.
- Higher gas prices, an economic downturn or a new president with different priorities could throw off the entire equation and put GM and other domestic automakers in a financial bind.
The intrigue: Joann's whole piece is worthy of your time, but in particular, check our her look at how the deal underscores how GM is on a dual-track...
GM is more aggressive than most in the push toward the future with its plan to introduce 20 EV models by 2023 and its recent decision to take a majority stake in self-driving startup Cruise Automation.
Yes, but: The automaker is sustained by the fat profits from traditional pickup trucks and SUVs.
- To pay for the R&D on future technologies, GM needs to keep pushing those gas guzzlers for the foreseeable future.
- "They're really trying to run two auto companies," says Barclays automotive analyst Brian Johnson.
Plus, a new president could alter the landscape. Sen. Elizabeth Warren, for example, has pledged to halt fracking, which would likely drive up oil prices.
- That would make those thirsty trucks and SUVs less appealing to consumers, squeezing Detroit's primary profit source.
- Trade policy and emissions standards are also wild cards, depending on who is elected to the White House.