Daily Energy Standup Episode #139 – Airline Crisis, Energy Projections, OPEC Tensions, ESG Impact: A World in Flux

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Ukraine war zone villagers flee floods after massive dam destroyed

KHERSON, Ukraine, June 6 (Reuters) – A torrent of water burst through a massive dam on the Dnipro River that separates Russian and Ukrainian forces in southern Ukraine on Tuesday, flooding a swathe of the […]

US Treasuries Blacklisted by German State as ESG Law Takes Hold

(Bloomberg) — For an illustration of how wildly different the debate around ESG is in Europe and the US, look no further than the German state of Baden-Württemberg. One of the richest regions in Europe’s […]

The OPEC-US battle is back on

Saudi Arabia’s surprise June 4 announcement of an oil production cut pushed prices up, a bit. But there’s an important counterweight to Saudi Arabia’s heft in the global energy market: US producers. The rumored death […]

Why You Should Doubt The U.S. Department Of Energy’s Sudden Projection Of Falling Natural Gas Demand

To me, there’s still decent upside to oil demand. Probably not so much here in the U.S., but globally, I’d argue that “more oil” is a pretty safe bet. Airplanes, heavy trucking, and petrochemicals will […]

American Airlines Struggles With Pilot Deficit, Grounds 150 Aircraft – Will this impact jet fuel demand?

Authored by Enrico Trigoso via The Epooch Times (emphasis ours), American Airlines, a leading carrier based in Fort Worth, is currently grappling with a significant challenge. The airline is unable to operate approximately 150 of […]
Highlights of the Podcast

00:00 – Intro
03:28 – U.S. Treasuries blacklisted by German state as ESG law takes hold
07:29 – The OPEC U.S. battle is on
09:55 – Why should you doubt the U.S. Department of Energy’s sudden projection of falling natural gas demand?
14:05 – The Ukraine war zone villagers flee floods after massive dam destroyed
16:17 – American Airlines struggles with pilot deficit grounds a 150 aircraft will this impact jet fuel demand?
18:28 – Market Updates
20:27 – Outro

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Michael Tanner: [00:00:15] What is going on Everybody, Welcome into another edition of the Daily Energy News Beat Stand up here on this gorgeous Wednesday, June 7th, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas, joined by the Executive Producer of the show, the purveyor of the show, the Director and Publisher of the world’s greatest web site EnergyNewsBeat.com Stuart turley, my man, how we doing today? [00:00:40][25.2]

Stuart Turley: [00:00:41] It’s a beautiful day neighborhood and as busy as all get our man absolutely busy. [00:00:45][3.9]

Michael Tanner: [00:00:45] We have some pretty interesting stories today we got to bounce around over the map here and I’m going to I’m going to trust you to weave them all together. First up on the menu, U.S. Treasuries blacklisted by German state as ESG law takes hold. This is an absolutely wild development out of Germany, basically blacklisting US treasuries as we fail to uphold ESG standards Stu, will dive into what’s going on. [00:01:11][25.9]

Michael Tanner: [00:01:11] Next up, The OPEC U.S. battle is back on more fallout from the June 4th decision by Saudi to continue cutting. Next up, Why you should doubt the U.S. Department of Energy sudden projection of falling natural gas demand if it being the US Department of Energy wasn’t enough. We’ll try to give us actual numbers, some actual reasons for why you shouldn’t trust them. But anything with the dot gov email usually you should trust. That’s usually my it’s got a dot gov in the URL probably don’t trust on that being my bet. [00:01:46][34.9]

Stuart Turley: [00:01:47] Im from the government and I’m not here to help [00:01:49][1.5]

Michael Tanner: [00:01:50] Exactly. Next up, Ukrainian war zone villagers flee floods after massive dam destroyed specifically a nuclear facilities so Stu will cover the tragedy going on specifically around this Ukraine nuclear facility, we have our thoughts and prayers out to all those people. [00:02:06][16.1]

Michael Tanner: [00:02:06] And finally, American Airlines struggles with pilot deficit grounds 150 aircraft for the time being will this impact jet fuel demand? We will see. The answer is probably yes but I think there are some other factors there still will then toss it over directly to me. I will cover briefly what’s going on in the oil markets. Really, We saw kind of a choppy day for oil, 71, 71, not much movement. We did get a EIA estimate of the EIA numbers. So we will cover what that crude oil inventory draw looks like on the other side, guys. [00:02:39][32.3]

Michael Tanner: [00:02:39] But first check us out online world’s greatest website EnergyNewsBeat.com It’s where all the stories come from hit the description below for timestamps. You could jump around if you automatically want to jump and figure out what’s going on with American Boom! Hit it there are a lot of climatically hear us talking about it. [00:02:55][15.8]

Michael Tanner: [00:02:55] You can also find articles, the articles that we will cover in the description below. Courtesy Stuart is a great job of curating that, so does the team usually hit Dashboard.EnergyNewsBeat.com the best place for your data and energy news combo, get it while you still can definitely going behind a paywall, so you got to do that. [00:03:12][17.1]

Michael Tanner: [00:03:12] Questions@EnergyNewsBeat.com keep you coming we appreciate everybody tuning in. Where do you want to begin Stu this is is an interesting show you’re going have to convince me how these all weave together. [00:03:22][9.6]

Stuart Turley: [00:03:23] Yeah they may not but they’re going to be fun. The first one coming out of the block is U.S. Treasuries blacklisted by German state as ESG law takes hold, there are like six German states, if I remember correctly. And when you sit back and take a look, one of the richest regions in Europe’s biggest economy. [00:03:44][21.6]

Stuart Turley: [00:03:45] And it’s even home to the Mercedes Benz group, as well as that Robert Bosch group adopted a new law investing sustainably on par with traditional criteria as profitability and liquidity. So it kind of leveled the playing field. It’s a decision that may affect as much as one fifth of the states 17 billion or 18 billion U.S. holdings as it pivots away from ESG laggards. [00:04:17][31.8]

Michael Tanner: [00:04:18] Well, the reason why is it’s they’ve added U.S. Treasuries on to the list of banned products, which is makes up the majority of that 17 billion or excuse me, it makes up a fifth as most of that fit of 17 billion, which is kind of crazy, is U.S treasuries are now not ESG friendly. [00:04:40][22.5]

Stuart Turley: [00:04:41] That is correct. It’s getting worse and when you take a look at the energy policies of the Biden administration, they were considered ESG for so long because of the Porkulus bill. I mean, the Inflation Reduction Act, they can’t it’s not holding up around the world. [00:04:59][18.3]

Michael Tanner: [00:05:00] Yeah, these articles at one point goes we have dollars 24 trillion around the world wrapped up in U.S. treasuries. So now that’s all not. [00:05:08][8.0]

Stuart Turley: [00:05:08] Trillion. [00:05:08][0.0]

Michael Tanner: [00:05:09] Trillion with the we’ll take one of them. Stu and I will take one of them and we’ll just. [00:05:13][3.8]

Stuart Turley: [00:05:13] What’s a trillion between friends you and I started three years ago we were saying, what’s a billion between friends? Holy smokes. [00:05:19][6.1]

Michael Tanner: [00:05:20] It’s a billion chump change at this point. Oh, yeah. [00:05:23][2.7]

Stuart Turley: [00:05:23] The gap between and then Biden inflation hit the gap between EU and U.S. policymakers continues to widen, said Maria Dodman, a sustainable finance researcher at Bloomberg A.F.. EU policymakers are now convinced that ESG risks are financially material. Why the U.S. such a premise will still vividly be debated. In fact, some U.S. policymakers see ESG investment strategy is only a way to push forward a liberal political agenda. [00:05:59][35.5]

Michael Tanner: [00:06:00] You know what sustainable finance is code for Single Digit IRRs [00:06:04][4.0]

Stuart Turley: [00:06:05] Yes. Print money. [00:06:06][1.1]

Michael Tanner: [00:06:07] Single Digit IRRs less returns for more capital. [00:06:10][3.2]

Stuart Turley: [00:06:11] Here are some bullet points that are in this article Michael Municipal Bond Performance on Track for Worst May since 1986. Sweet Jupiter Shorts Most Dangerous Treasuries Builds the Cash Pile PIMCO BlackRock Call into ERA a stable borrowing costs Sweet Sweet GOP’s anti ESG theater draws coordinated retort from academia. [00:06:35][24.8]

Michael Tanner: [00:06:37] Nice! Nice! All things I love BlackRock academia you know. [00:06:41][3.8]

Stuart Turley: [00:06:41] Myself. [00:06:41][0.0]

Michael Tanner: [00:06:42] Fiscal Bonds I mean this is that state that’s a plethora of stuff I love. [00:06:46][4.1]

Stuart Turley: [00:06:46] Oh yeah. But here’s the thing our article yesterday that we talked about was Nvidia when the ESG fund went over there and they in these years. Oh, absolutely the chip maker. Hogwash. I’m going to call it early on this is not. So we’re seeing ESG hypocrisy investing at its finest. [00:07:06][19.4]

Michael Tanner: [00:07:06] If Nvidia ESG in this show is ESG, if they can even Nvidia, can get an ESG stamp, we should get a sustainable stamp. [00:07:14][8.1]

Stuart Turley: [00:07:15] I’m trying to think of something funny, but all I could envision was Gavin Newsom floating next to a penguin in an oil slick with his hair that he just. [00:07:23][7.6]

Michael Tanner: [00:07:23] Down the Amazon. [00:07:24][0.4]

Stuart Turley: [00:07:24] Down the Amazon. [00:07:25][0.5]

Michael Tanner: [00:07:26] Arlight What’s Next? [00:07:27][0.5]

Stuart Turley: [00:07:27] Let’s go to the next one here. The OPEC U.S. battle is on. This one is a nutty, nutty story. Saudi Arabia’s surprise June 4th announcement of an oil production cut pushed prices up a little bit. But there is an important counterweight to Saudis heft in the global energy market the U.S. producers. [00:07:49][22.0]

Stuart Turley: [00:07:50] The rumor death of American fossil industry was premature while Biden talks up a green energy with policies, Biden also has acknowledged the importance of carbon fuel and softened his rhetoric toward an industry he once liked in like an unwelcome dinosaur kind of like one of my college dates. [00:08:10][19.6]

Stuart Turley: [00:08:11] When you sit back and take a look, the Saudi cuts are due to take in July could pull 1 million barrels from the market. Michael, there’s some other nuances that we covered in yesterday’s show about all of those. [00:08:23][12.4]

Stuart Turley: [00:08:24] Oil prices ticked up on the news to about $77 a barrel for Brant here’s where crude production in the U.S. peaked at 13 million barrels per day at the end of 2019. And we kind of stuck around, I believe it was 11 and then Continental was providing 2 million of those barrels a day. So when you take a look now, we were at a 4.7. [00:08:50][25.6]

Michael Tanner: [00:08:51] Watts, a billion barrels between friends? I don’t know do we trust the EIA? I think what’s interesting is this Saudi clearly wants to keep prices high. And in keeping prices high, you encourage U.S. shale and it’s going to be a game between WTI and Brant. The interesting part is WTI, as we covered on the show last week, is now merging with Brant. So Brant is now going to include WTI in a basket of goods which is only going to lower that Brant price a little bit. [00:09:18][27.4]

Stuart Turley: [00:09:19] Here’s what you’re also going to see and I’m sorry for jumping in here, but we had the Biden administration rape and pillage the SPR. And what I can see happening is instead of encouraging drilling, I could see them taking it down even further. [00:09:37][18.4]

Michael Tanner: [00:09:38] Yeah, I mean. [00:09:39][0.9]

Stuart Turley: [00:09:40] And. [00:09:40][0.0]

Michael Tanner: [00:09:40] Probably will draw it down I mean, they’ve they’ve shown no apparent reason to want to. [00:09:44][3.9]

Stuart Turley: [00:09:45] Build it up or even consider for national security reasons. [00:09:49][3.9]

Michael Tanner: [00:09:50] Okay, what’s next? [00:09:50][0.8]

Stuart Turley: [00:09:51] I’m going to go shoot myself in the foot on this next one here let’s go over here. Why should you doubt the U.S. Department of Energy’s sudden projection of falling natural gas demand? Oh, I believe you tease this one up just a minute ago on that other discussion. Right? Did you read ahead? Just kidding. [00:10:12][21.2]

Stuart Turley: [00:10:12] The world to green in this this article is pretty you did because I don’t trust the EIA you know they were they had the rumors that they were miss doing numbers to help the election. This is some very big hard points right here. The two world’s greenest governments, Germany and California, are using more gas than people realize despite literally decades of trying to get off of this. [00:10:38][25.9]

Stuart Turley: [00:10:39] Bloomberg reports how Germany is deepening its push to expand its capacity to import LNG. Reuters reports how the worst of its heat wave last September, natural gas generated over 60% of California’s electricity wildfires blocked the sun line. Here’s a bizarre tidbit Why are there so many fires? Because the Sierra Club would not let them do forest management. [00:11:09][29.6]

Michael Tanner: [00:11:12] The Sierra Club what’s interesting, though, is you’ve got to scroll down a little bit further in the article here Stu and you see the chart that basically shows the projections of natural gas demand? This is what they had in 2020,2021. [00:11:25][13.4]

Stuart Turley: [00:11:26] This is right here. [00:11:27][1.4]

Michael Tanner: [00:11:28] In 2022, in 2023 and what you see is all of them from 2020, You know, Andy, if you could fly up four people who are listening, Go ahead and take this this graphic here and fly it up before those you listening. You’ve got the 2020 projection, the 2021 projection and the 2022 projection all positively sloped, starting in 2022 out towards 2027. Well, now their new update as demand dropping from 2022 to 2026. [00:11:57][29.8]

Stuart Turley: [00:12:01] I’m going to pull a Scooby on this one there is no way, especially with coal being shut down, gas is going to be going up. [00:12:07][6.6]

Michael Tanner: [00:12:08] What do they know? Is it COVID round two? [00:12:10][2.3]

Stuart Turley: [00:12:11] Now there’s a conspiracy. [00:12:12][0.8]

Michael Tanner: [00:12:13] I was going to say, where’s the conspiracy around this? The EIA knows something we don’t know. [00:12:17][4.4]

Stuart Turley: [00:12:18] Well, they don’t know energy. [00:12:19][1.0]

Michael Tanner: [00:12:20] We know that. We know that they don’t know energy so it’s hard to know anything. It’s just natural gas demand is going to go… [00:12:28][8.3]

Stuart Turley: [00:12:28] The article let me read this one part, Michael. You nailed it and that’s where I was going with this thing, because you see that one green line just liberated fall off the cliff like a lemming when you dig into the numbers on the AEO23 it all comes down to one thing our Herculean expectation that solar, not just in capacity, it literally explodes in actual generation, not going to happen. [00:12:53][25.2]

Stuart Turley: [00:12:54] Per year the U.S. Department Andrea said solar generation booming over 9% and wind rising over 3.5 and now natural gas is declining by 1.6. Somebody sat down in a board room with a crayon, broke the crayon, and then tried to draw something else again, on this, we need to send them a new box of crayon. [00:13:17][22.7]

Michael Tanner: [00:13:17] They let the intern have the access to the model, and then he they forgot to double check their the budget so low the intern pushed the model out and they didn’t do any quality checks. And now all of a sudden they’re like, Huh, natural gas demand down? Woops. [00:13:30][13.0]

Stuart Turley: [00:13:31] Oh, no, it’s natural gas demands actually up they just are having their computers fail. [00:13:37][5.9]

Michael Tanner: [00:13:38] All right. What’s next? All right. [00:13:39][1.5]

Stuart Turley: [00:13:40] You can trust a lot of never mind. Okay. Ukraine this one is a little bit our hearts and prayers go out to all the folks in Ukraine. I’m tired of the Ukraine war. [00:13:49][9.7]

Michael Tanner: [00:13:50] Even as Stu running Putin’s 2024 campaign, he still is, his thoughts and prayers are still with Ukraine. [00:13:57][6.6]

Stuart Turley: [00:13:57] Absolutely I think war the only people that I think war is terrible and I think our administration is looking to get us into one. The Ukraine war zone villagers flee floods after massive dam destroyed. This was a hydroelectric dam that was generating. And if you take a look and if you would also fly in on this, the map, the Volk Dam blown up in Ukraine, It’s down at the bottom. [00:14:23][25.2]

Stuart Turley: [00:14:23] Michael, if you remember that lake house that you were out in the summer of, that’s almost looks like the same lake on a map and there’s the dam. But you can see as it’s going all the way up to the nuclear power plant, the Zephyr Nuclear Power Plant that’s where it gets its water. The cooling towers are funneled out of that that dam up there. [00:14:46][22.4]

Stuart Turley: [00:14:46] Now, if you look and you go from the Quebec dam all the way down to Pearson, that dam now is filling up in between there. Do you remember when we talked about when the war started? This is actually the land bridge now he’s got a geographic, he’s going to be keeping the Russian occupied and right over Crimea. This was brilliant by the Russians so if the Russians are saying they didn’t do it, I’m calling hogwash, the Russians did it in order to keep their land. [00:15:16][30.4]

Michael Tanner: [00:15:17] You don’t think it was the same team that got Nord Stream? [00:15:19][2.0]

Stuart Turley: [00:15:19] Oh, come on. Well, you know, the same team might have. [00:15:23][3.5]

Michael Tanner: [00:15:24] What was it? The Ukrainian SEALs? [00:15:27][3.2]

Stuart Turley: [00:15:28] Yes. On a yacht, on a sailboat that was as big as my bathtub. [00:15:34][5.3]

Michael Tanner: [00:15:35] Was Kraft mustard with the candlestick. [00:15:36][1.3]

Stuart Turley: [00:15:37] Right. Where this is really going to come in to is the U.N. nuclear watchdog said the nuclear power plant upriver on the reservoir’s Russian-held bank should have enough water to cool its reactor for some months in a separate pond. Okay. Cooling a nuclear reactor from a separate pond does not mean it’s got water. You have to read between the lines on this. Okay. Let’s go to the next one here. [00:16:05][27.7]

Michael Tanner: [00:16:05] I got nothing. Yeah, I got nothing. Okay? I got nothing. [00:16:09][3.5]

Stuart Turley: [00:16:09] Hey, it’s nuclear power, baby in a war zone. [00:16:12][2.6]

Michael Tanner: [00:16:12] The reactors. [00:16:12][0.1]

Stuart Turley: [00:16:13] Hey, this one I got a little bit of concern on American Airlines struggles with pilot deficit grounds a 150 aircraft will this impact jet fuel demand? Michael, this is not only just in American Airlines pilots this is across the entire industry it’s also in our military we’re sure thousands of pilots for the military we got planes that can’t fly because we don’t have any pilots. [00:16:39][26.4]

Stuart Turley: [00:16:40] So when you take a look at American Airlines and they cut 150 airplanes just because they can’t man this crazy now is what’s that going to do? It’s going to drive the prices up on the tickets so people less people are gonna fly. I think the same number of people are still going to fly it just means that there’s going to be fewer flights. What other airlines are also going to ground planes because of not having pilots? I don’t know. [00:17:16][35.5]

Michael Tanner: [00:17:17] Yeah, I mean, I think it’s you know, they claim in this article, by 2032, we’re going to face a deficit of 80,000 pilots, that’s insane. [00:17:26][9.1]

Stuart Turley: [00:17:27] Oh, yeah. [00:17:27][0.2]

Michael Tanner: [00:17:28] 80,000 pilot shortage. [00:17:29][1.7]

Stuart Turley: [00:17:30] Right. Well, you know, the Biden administration wants us to live within 15 minutes of everything that we need. [00:17:36][5.5]

Michael Tanner: [00:17:36] When do planes turn into drones and you have people operating them from not in the cockpit? [00:17:40][4.3]

Stuart Turley: [00:17:41] I’m not getting in one. [00:17:42][0.8]

Michael Tanner: [00:17:43] Youre pilot’s got to be in the sea? [00:17:44][1.3]

Stuart Turley: [00:17:45] You bet I got in fact, my dad, I would love to fly my dad’s 90. I would fly with him and two and a half seconds. [00:17:51][6.2]

Michael Tanner: [00:17:51] Well, yeah, over some yeah, of course, over some of these pilots they’re going to get it now I’m with you, so. [00:17:57][5.4]

Stuart Turley: [00:17:57] No, I’m sorry. [00:17:58][0.7]

Michael Tanner: [00:17:58] It’s as always, the consumer’s going to get it in the drive thru on this one. What this is going to happen to jet fuel? I mean, you know, obviously jet fuel demand is going to go down, but you’re also going to see more flights. Jet demand could go up I think it’s a toss up, but I don’t know. [00:18:14][15.6]

Stuart Turley: [00:18:14] But that’s why the questions there. [00:18:15][1.3]

Michael Tanner: [00:18:17] Tune in emails, Questions@EnergyNewsBeat.com. You got anything else? [00:18:22][4.9]

Stuart Turley: [00:18:23] No. I’m going to go build me a nuclear plant, though. [00:18:26][2.5]

Michael Tanner: [00:18:26] Oh, Fun have fun with that. But as we look at oil price financed stuff from 7172 for WTI, here is we sit at about 641 here on June six, fairly choppy on the day you know as as the the sort of at home economic fears are really out shadowing what Saudi’s doing and specifically as we talk about their lollipop you know. [00:18:48][21.7]

Michael Tanner: [00:18:49] US dollars up to its highest level in ten weeks is against you know a myriad of currencies. You know we do have an upcoming June meeting with the Fed. The real question is will they raise interest rates? Will they not? Who knows Stu we don’t really know. U.S. service sectors had a fairly weak day we expected some strong numbers out of them and we did miss projections there. [00:19:11][22.7]

Michael Tanner: [00:19:12] So, again, all around their bad home economic woes seemed to sort of overshadow whatever Saudi does but they looked at Brant. We did see the EIA or the the API come out and announce that they see about a 1.7 million barrel draw from the strategic from my the crude oil reserves on the EIA will confirm or deny that number. I’ll probably as you listen to this it’s out now so go check EIA.gov if you trust them but as we sit now we’ll cover that tomorrow show. [00:19:39][27.2]

Michael Tanner: [00:19:39] Otherwise things are they’re calmed down a little bit I think people are kind of waiting to see, you know, we’re entering the summer where we’re relatively you see a little bit depressed prices, meaning that M&A action picks up Q1, Q3. So I think we’re in a little a little bit of a stalemate right now. And I think some of the the Q3 earnings, Q3 will kick up in earnest but what else should people be scared about Stu? [00:19:59][20.2]

Stuart Turley: [00:20:01] Be very afraid is, as Yoda would say. [00:20:04][2.9]

Michael Tanner: [00:20:05] Be very afraid you will be. Well, we have appreciate it everybody tuning in we’ll let you get out of here. You know, again, emails, Questions@EnergyNewsBeat.com but for Stuart Turley, I’m Michael Tanner we’ll see you tomorrow, folks. [00:20:19][13.8]

Stuart Turley: [00:20:19] Maybe. [00:20:19][0.0]




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