Good morning, and welcome back. Ben Geman is also back, and we tag-teamed today's edition. Let's get to it.
1 big thing: Trump flexes America’s energy muscles
President Trump is seeking to aggressively invoke America’s oil and natural gas resources to influence geopolitics.
Driving the news: White House officials are citing America’s surging oil production as reason to end sanctions waivers today for several countries that still import Iranian oil, per Reuters.
Meanwhile, in meetings in Brussels, Energy Secretary Rick Perry and European officials are touting a record-setting amount of U.S. LNG entering Europe, helping to lessen that region’s dependence on Russian gas.
The big picture: America’s oil production has more than doubled over the last decade, going from 5 million barrels a day in 2008 to more than 12 mbd this year. Amid a parallel boom in natural gas, exports of that fuel in liquefied form have shot up from essentially zero since 2015. America is now the world’s biggest producer of both oil and gas.
Where it stands: Perry and the European Commission are touting a 272% increase of LNG imports to Europe from the U.S. since July of last year when Trump and European Commission President Jean-Claude Juncker agreed to collaborate on the issue.
Between the lines: Trump and other top officials are connecting the dots — on Twitter, in official negotiations, and speeches — between U.S. oil and gas production and its geopolitical influence more aggressively than Obama administration officials did.
- These latest moves follow the stark message Secretary of State Mike Pompeo delivered to an oil and gas conference earlier this year, urging the industry to help the government with its geopolitical goals.
But, but, but: Experts say America’s oil and gas is having big geopolitical consequences, but that’s not thanks to actions or pronouncements by Trump.
“The stunning surge in U.S. oil and gas output has significant geopolitical implications, but those result from market forces not from government decisions about how that abundance is deployed.”— Jason Bordoff, director, Columbia University's Center on Global Energy Policy
One level deeper: Carlos Pascual, who as President Obama’s energy envoy at the State Department was closely involved with that administration’s Iranian sanctions and LNG issues in Europe, shared his thoughts by email with me.
- Russian gas often remains cheaper than U.S. sources, but even the presence of American gas helps Europe with leverage, Pascual says.
- Referencing Trump’s tweet in April in which he said Saudi Arabia will increase production to ensure adequate supply to counterbalance U.S. sanctions on Iran, he writes...
“It is quite extraordinary that a U.S. president felt that he could announce Saudi Arabia’s intentions on oil markets.”
2. Breaking: Tesla plans $2 billion capital raise
Tesla announced plans today to raise roughly $2 billion as it prepares new product launches and grapples with disappointing earnings, Ben writes. The company's stock is up 5% in pre-market trading.
The big picture: "Tesla intends to use the net proceeds from the offerings to further strengthen its balance sheet, as well as for general corporate purposes," the company said in announcing the offering of stock and debt.
Why it matters: It comes a week after the Silicon Valley electric automaker announced a $702 million first-quarter loss. The capital-raise includes a $10 million stock purchase from CEO Elon Musk.
- It arrives as Tesla seeks to speed up sales and deliveries of its Model 3 sedan, while planning to begin deliveries of the Model Y crossover in the fall of 2020. The company is also developing an electric semi-truck.
Go deeper: Tesla's profitability winning streak is over
3. Beto signs "no fossil fuel money" pledge
Democratic White House 2020 hopeful Beto O'Rourke has signed an activist-backed pledge to refuse contributions over $200 from fossil fuel industry executives and return donations received to date, Ben writes.
What he said: O'Rourke, citing the "enormity" of the climate challenge and danger of extreme weather events, said he made the decision after input from students and young activists.
- "We don't want there to be any real or perceived conflicts of interest," he said in a video released via Twitter last night, while emphasizing that his campaign already refuses any PAC donations.
The big picture: A number of green groups are pushing candidates to sign the pledge, including Oil Change U.S.A, the Sunrise Movement, 350 Action and others.
- To date, 12 White House hopefuls have signed the pledge, including Sen. Bernie Sanders, Sen. Elizabeth Warren, Sen. Kirsten Gillibrand and Mayor Pete Buttigieg.
Where it stands: The move comes just days after O'Rourke released a wide-ranging climate plan that calls for, among other things, an "enforceable" standard of reaching net-zero U.S. greenhouse gas emissions by 2050 (and getting halfway there by 2030).
The intrigue: The decision marks a shift for O'Rourke, the Texas Tribune reports, noting the former Texas congressman has received frequent questions while on the stump, and criticism from activists.
Go deeper with these items from Tuesday's Generate :
4. Shell's profits fall but stock rises
Royal Dutch Shell joined other majors in reporting a drop in Q1 profits, but the company's stock ticked upward Thursday after the performance came in ahead of expectations, Ben reports.
The bottom line: Shell reported $5.3 billion in profits on a current cost of supplies basis, which is 7% lower than Q1 of 2018.
- The company pointed to lower margins in its chemical and refining business and lower oil prices.
- But that was partially offset by the performance of its trading division and higher LNG prices, among other factors.
The big picture: The company's shares are up by over 2% in London.
- "Shell gives a positive ending to a mixed Big Oil earnings season, which showed companies mostly recovering from a worst-in-a-generation downturn but unable to fully insulate themselves against volatile markets," Bloomberg writes.
5. Crude markets shake off Venezuela bounce
Oil prices fell yesterday, as we indicated yesterday morning, mainly because fears of an escalation in Venezuela's political crisis faded and U.S. inventories posted a surprise increase, adding to global supply.
Axios' Dion Rabouin reports that crude prices have largely wiped out the politics-driven rally that began on April 22 after the U.S. decided to end sanctions waivers for countries importing Iranian oil.
What's happening: U.S.-backed opposition leader Juan Guaido attempted to seize power from President Nicolás Maduro on Tuesday, but has not been able to declare victory.
- Whether or not the push to oust Maduro succeeds will "depend on the opposition’s ability to win over enough of the armed forces," writes Allison Fedirka, an analyst at Geopolitical Futures.
- "There are signs that members of the military are publicly supporting Guaido, but it hasn't yet reached a critical mass," according to Fedirka.
What they're saying: Fund managers tell Axios that they've started to lose faith in the opposition's ability to topple Maduro alone, given an apparent increase of support from Russia, China and Cuba. Oil traders look to be coming to the same conclusion.
6. Two climate things: Arctic and drought
Secretary of State Mike Pompeo is scheduled to visit two places in the Arctic in the coming days, where it could be difficult to ignore or downplay the reality and consequences of human-caused global warming, Axios' Andrew Freedman writes.
Why it matters: The Arctic is warming at more than twice the rate of the rest of the globe, setting in motion a transformation of a once-frozen region into a new state.
Melting sea ice is quickly making the Far North more accessible, and marine traffic is becoming more common, particularly in Russian and Canadian waters. As one of 8 Arctic nations, the U.S. plays a key role in setting regional policy.
The big picture: On May 7, Pompeo will be in Rovaniemi, Finland, where he will join foreign ministers from other Arctic nations to discuss issues of concern in the region within a forum known as the Arctic Council. Finland, the meeting's host, has put climate high on the agenda.
But, but, but: Pompeo is likely to be more interested in regional security issues, given a recent Russian military buildup and growing interest in Arctic oil and gas resources. China, too, has been increasingly eyeing the Arctic.
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Research: Scientists have detected the "fingerprint" of human-caused global warming on drought patterns around the world dating back as long ago as 1900, according to a new study published Wednesday.
Why it matters: The research shows how various human influences, from greenhouse gas emissions to pollutants that contribute to smog can influence soil moisture on a global scale, Andrew writes.