Good morning doesn't seem quite right given what's going on in the world right now.
Today's Smart Brevity count: 1,437 words, 5.5 minutes.
I'll share a glimpse of my latest column where I look at the concept of risk, and then Ben Geman will get you up on the latest oil market chaos and more.
Illustration: Sarah Grillo/Axios
Forget black swans. We’re getting run over by two gray rhinos: coronavirus and climate change.
The intrigue: A gray rhino is a metaphor coined by risk expert Michele Wucker to describe “highly obvious, highly probable, but still neglected” dangers, as opposed to unforeseeable or highly improbable risks — the kind in the black swan metaphor.
The big picture: The novel coronavirus spreading infections and fear around the world is prompting black swan references from the media and investors alike, as is climate change’s impact on financial markets.
Why it matters:
“It matters immensely that decision makers view risks as gray rhinos instead of obsess in vain about black swans, because we can see gray rhinos in front of us, but black swans by definition only appear in the rearview window. That means we have a chance to do something about gray rhinos. And, in fact, most so-called black swans happen because people ignored the gray rhinos.”— Michele Wucker, author of the 2016 book "The Gray Rhino," to Axios
Yes, but: While coronavirus and climate change are both gray rhino risks, their differences explain why the world — and stocks and oil prices — is in a tailspin.
Risks rarely come in isolation or operate in a vacuum. There's the risk of unintended consequences responding to an initial risk.
The bottom line: So what happens when you have multiple gray rhinos coming at you? A group of rhinos is — fittingly and alarmingly — called a crash.
The global oil landscape has undergone a stunning and tectonic shift since our Friday edition.
Where it stands: Prices have collapsed following the surprise rupture between OPEC and Russia and the demand shock from the spreading novel coronavirus.
Catch up fast: The OPEC+ group failed to reach a deal in Vienna Friday to deepen or even extend their production-limiting deal, which now expires at the end of March.
What's new: This morning the International Energy Agency slashed 1.1 million barrels per day from its 2020 oil demand forecast as COVID-19 crimps travel and economies.
"With a combination of a massive supply overhang and a significant demand shock at the same time, the situation we are witnessing today seems to have no equal in oil market history."— IEA executive director Fatih Birol, via Twitter
Illustration: Aïda Amer/Axios
There's a million dimensions to this, but here are a few things I'm watching in light of the OPEC+ collapse and new price wars...
1. A break or a breakup: It's not clear whether or when the OPEC+ alliance might resume cooperation.
2. Shale patch pain: The price collapse will hurt U.S. shale producers, who are already facing tough economics and Wall Street pressure to show returns, not just boost output.
3. U.S. political fallout: My nuclear-hot take is ... it's really hard to say! But it's certainly a new wrinkle in the 2020 election.
Another big question now that oil markets have blown up: Will this affect oil majors' investments in low-carbon energy projects and acquisitions?
Why it matters: The industry is under intense pressure to boost investments in clean energy and climate initiatives, but the price collapse is a new wild card as it crimps revenues. It's also making petroleum products cheaper.
What's next: I asked Eurasia Group analyst David Livingston about this.
The big picture: "If a combination of a prolonged oil price war, plus coronavirus fallout, leads oil industry leadership to view this as a 'lower for longer' situation, then it could lower the expected returns of future oil investment, and in fact make investments in clean energy more attractive on a comparative basis," he said.
Transportation: "The California Air Resources Board is now developing the world’s first regulations to reduce the climate impacts of ride hailing. The rules, expected by year’s end, seek to rein in traffic and pollution from an industry that has quickly risen to overtake taxis, in large part by avoiding regulation to begin with." (Los Angeles Times)
Natural gas: "U.S. natural gas terminal developer Tellurian Inc. has cut roughly 40% of its workforce in a massive restructuring effort aimed at slashing costs and rescuing a struggling, $29 billion export project." (Bloomberg)
Renewables: "Offshore wind companies are beefing up their presence on K Street as the Trump administration sidesteps and delays federal reviews of sprawling projects off the East Coast." (E&E News)