for Matt Piotrowski | @mattpiotrowski - The Fuse
Given the natural synergies between autonomous vehicles and EVs, the growing interest and recognition of self-driving cars will spur a greater acceptance of electrification.
While there is no doubt that the U.S. has become an energy superpower, the main priority of the country should be strengthening overall energy security. One metric is the level of fuel choice in the transportation sector, which gives options to consumers and businesses so that they are not dependent on only petroleum.
On the agenda at budget hearings this week will be energy innovation, the proper size of the Strategic Petroleum Reserve (SPR), offshore drilling, and oil production on public lands.
Legislators are concerned with balancing safety and innovation, while helping industry accelerate the development and deployment of AVs on U.S. roadways.
One solution to reducing dependence on imports would be to build pipeline capacity connecting the Bakken area to refineries on the East Coast.
Although some hold onto bullish sentiment, traders are skewed toward a downside or rangebound bias in the near term—OPEC has lost credibility, the large inventory overhang persists, shale’s resurgence and a rising rig count continue, and the spat over Qatar didn’t affect the market. None of these factors should change anytime soon.
If refinery utilization remains near current levels, there is the danger of more inventory increases and downward pressure on product prices.
Instead of building its own autonomous cars, Lyft is forming partnerships to help it gain an advantage in the self-driving arena.
While oil and gas supplies have yet to be significantly affected by the current spat surrounding Qatar, it could escalate tensions in the region, home to a majority of the world’s oil reserves, and lead to deeper geopolitical instability.
With domestic production rising and OPEC reducing sales to Asia, the U.S. has taken advantage of shifting market conditions by shipping more crude to customers overseas. The U.S. exported an eye-opening 900,000 b/d of crude during Q1, with volumes going to 24 different countries.
Colorado Governor John Hickenlooper signed autonomous vehicle (AV) legislation on Thursday that ensures uniform regulations across the state. It also promises to bring critical testing and deployment to Colorado.
In the aftermath of the 2014 price fall, producer countries have had to reevaluate policy and economic strategy while contending with a persistent glut that may dampen prices for some time, further undermine their budgets, and possibly cause domestic strife.
While India is making a concerted effort to implement reform in its transportation sector, it is far behind other countries in putting EVs on the road. Despite the government's best intentions, India's oil demand should double by 2040.
Ford's appointment of Jim Hackett as its new CEO makes good strategic sense, given the automaker’s commitment to AVs and the necessity of taking more bold steps in this area. The move further deepens Ford’s commitment to becoming a modern mobility company, and not just a traditional automaker.
The recent ruling by a federal judge in California in the Uber-Waymo dispute is, to some extent, a victory for both sides and serves as a reminder of the high stakes in the race to develop autonomous vehicles.
Venezuela’s current state of affairs is a prime example of why it’s important for economies of both producers and consumers to reduce dependence on oil. The meltdown in Caracas is a precarious situation for the U.S., given that Venezuela is its number three crude oil supplier.
Petchem growth appears guaranteed for the coming decades with demand rising faster than GDP in non-OECD countries and limited substitutes in this area.
Experts disagree on the potential oil market impact from Saudi Aramco's IPO. Some argue that the Kingdom will choose a pump-at-will policy to please shareholders, while others see continued coordination with OPEC.
During Q1 2017, registrations of EVs in the EU jumped by almost 30 percent versus the same time last year, with total alternative fuel vehicles up almost 38 percent. During 2017, both the U.S. and Europe look to smash records of EV sales.
Public officials and a number of businesses touted their efforts to diversify the transportation sector and reduce demand for petroleum at this year's ACT Expo.
Amidst sweeping changes in the landscape for advanced fuel vehicles, automakers expressed confidence that the shift towards non-petroleum fuels will continue rapidly.
Despite constant chatter of rebalancing, oil prices have been weakening, and OPEC has itself to blame for causing market uncertainty and instability.
When considering autonomy in buses and both light and freight trucks, the EIA sees lower demand compared to its base case in all scenarios.
Hydrogen vehicles refill in the same short period of time as conventional gasoline vehicles—considered an advantage over natural gas and electric vehicles.
After seeing massive growth so far this decade, natural gas liquids (NGLs) are expected to rise by about 1.2 million barrels in the next five years. Despite the increase in NGLs, a key source of supply for petchems, a global oil supply gap could still form early next decade.
OPEC’s strategy centers around restricting supply to the Atlantic basin since inventory data in the U.S. is the most timely and visible in the world. From February to early April, U.S. imports from Saudi Arabia have plummeted by about 462,000 b/d.
With so much focus on OPEC cuts and shale growth as of late, declines at existing fields and demand increases from low prices mean that a supply gap will eventually form, even if the rosiest scenario pans out in the Permian.
Big merchant traders like Vitol, Trafigura, and Glencore are expected to aggressively explore opportunities to grow in order to diversify their asset and customer bases and mitigate risk.
Many of the same uncertainties that persist in the oil market will remain true for copper and lithium, both of which will see major demand growth as a result of the transition to autonomous vehicles.
Daimler and Bosch are aiming to produce vehicles that will be able to drive autonomously in cities.
Small independent shale producers are dealing with a the possibility of another oil price plunge with aggressive hedging, a development that should allow output to grow.
Even though a large amount of shale production is hedged for this year, the industry is still vulnerable to cost inflation, access to capital markets and investment banks, and fluctuations in the oil price.
A large stock build in the first quarter, rampant producer hedging, and large amount of investor inflows in the futures market created an “unbalancing of the market,” the opposite of OPEC’s stated goal, according to one prominent oil market analyst.
If oil demand were to peak, the industry would likely see a good bit of consolidation, but the situation would not bring about a collapse.
House Panel Highlights the Need for Greater Consumer Education on AV Capabilities, and for a National Regulatory Framework
Both lawmakers and witnesses at a House hearing noted that the transition period to full autonomy holds significant challenges, including integration of semi-autonomous features into the vehicle fleet.
The market’s initial reaction on Monday and its losses of about $7 since the beginning of March indicate that OPEC members can’t use verbal intervention to lift prices as easily as they did last year.
Evangelos Simoudis of Synapse Partners in Silicon Valley speaks to The Fuse about how the transition to on-demand mobility will create a new value chain that produces jobs.
Sharp growth in the downstream sector could simply shift the gigantic surplus of crude to the refined products market, undermining profit margins in all regions.
Despite shale’s resurgence, there are questions about how healthy the U.S. E&P sector is in light of higher price levels since November of last year.
By looking at trip, parking, and demographic data, cities can mark deployment areas where autonomous vehicles will be immediately effective and can push for them to operate in those sections first.
The Mid-term Evaluation for fuel economy standards opens the door to including new vehicle technology, such as autonomy, in federal regulations, a development that could lead to even greater efficiency in the longer term.
The U.S. oil and gas sector is very upbeat with prices above $50 per barrel, but one CEO warns that the industry must manage its growth or the market could collapse again.
Speaking at a major conference in Houston, the Saudi Energy Minister said there is cause for “cautious optimism” for the industry but warned against “irrational exuberance.”
The biggest questions at CERAWeek this year is whether OPEC and its non-OPEC counterparts will recommit to throttling back in May and whether U.S. shale can fully offset these cuts and push down prices.
Despite continued rapid growth in U.S. shale, the global oil market could see price spikes and increased volatility at the beginning of next decade.
Autonomous vehicles are expected to upend the car insurance business as we know it, eventually taking drivers almost entirely out of the equation.
The growing confidence among hedge funds for higher prices and the expectation of a tighter market during the second half of the year make it more likely than not OPEC will continue to manipulate output.
A combination of an extended period of low prices, consumers buying larger vehicles, and strong economic growth has caused demand to soar since it reached its nadir in 2012.
The new Transportation Secretary is calling on the auto and tech industries to rigorously educate the public about the benefits of autonomous cars.
While consumers are expected to warm to self-driving vehicles over time, the auto industry has adapted quickly, embracing autonomous technology and driving innovation.
What gets overlooked sometimes in the discussion on U.S. crude exports is that the country is still importing more than 8 million barrels per day.
Amid the push among cities to reduce emissions and the impetus to lower costs for fuel, the electrification of the bus fleet is set continue, even if the U.S. may take a while to catch other economies, most notably China.
The reasons for the positive demand revisions come from every region of the global oil market, with stronger economic activity the main reason for the more optimistic outlook.
There’s growing evidence of the natural link between autonomous and electric vehicles.
Ford's $1 billion investment in a tech start-up reflects the company's commitment to autonomous vehicles and its attempts to catch up to others in the space, particularly Google and Tesla.
SAFE's Fact Pack summary for Q4 looks at recent trends in oil market fundamentals and transportation while also focusing on how American innovation can help job growth in the transportation and domestic energy sectors, a key development that will lessen the country’s dependence on OPEC imports.
Nothing will change materially in the oil market until there’s a significant stock draw, a development that appears doubtful, which could ultimately force OPEC to change strategy once again.
While new data from California provides some insight to gains for AVs, the real story is the fact that the industry needs consistent monitoring and metrics nationwide to drive a deeper understanding of the technology and its capabilities.
Despite EV sales growing at a rapid clip in China, oil demand there is still expected to rise by more than 60 percent in the next couple of decades.
Lawmakers are mostly in agreement that U.S. infrastructure needs a major overhaul, but how exactly to fund projects will be the sticking point going forward.
David Sidoo is the CEO of Advantage Lithium, a Vancouver-based company that has projects in Argentina and Nevada. He spoke to The Fuse about his firm’s operations, the state of lithium markets, and what challenges lay ahead for the industry.
While U.S. crude production hasn’t fully recovered, it has increased by more than 300,000 b/d since September to average just under 9 million barrels per day. As a result, the OPEC-fueled boom in prices has stalled for the time being.
Although the public has not warmed to the idea of self-driving vehicles, consumers are open-minded about autonomy and willing to change their attitudes.
The group has been adamant about putting together a united front to show that it will follow through with production cuts and counter critics who doubt its willingness or capability to do so.
Exports of refined products and a rebound in gasoline demand have been crucial elements of refiner success as of late.
The OPEC commission would examine whether the cartel’s behavior is designed to disadvantage U.S. oil producers and secure market power through anti-competitive behavior.
There are already signs that OPEC is committed to following through with pledges, even if indicators are contradictory and vague at the moment. The oil market has stabilized in the low-to-mid $50s, indicating the group has indeed put a floor under prices for the time being.
One of the biggest issues for the next Secretary of Transportation will be designing a flexible regulatory framework for autonomous vehicles in which the federal government leads while allowing both industry innovation.
Critics of the EIA's long-term projections can cherry-pick through the different scenarios to justify almost any outlook that suits their bias.
To help guide watchdogs, industry, and lawmakers in this key transition period, Securing America’s Future Energy (SAFE) released its public policy recommendations for dealing with the rollout of AVs in an effort to build public confidence and design a flexible regulatory framework.
Low oil prices and soaring budget deficits have provided motivation for emerging markets to scrap the status quo with regards to fuel subsidies. Despite short-term pain from liberalizing prices, as seen currently in Mexico, longer-run benefits of curbing oil demand growth will emerge.
OPEC has certainly put a floor under the market, but it’s not yet clear how high members can push prices. Oil may simply trade in a range of $45-$60, with shale capping prices on the upside and the cartel's production cuts limiting the downside.
Uber seems to be avoiding compliance with laws for driverless vehicles in order to make a statement to California, and any other state that should follow its example with what the ride-hailing service believes are onerous laws.
Critics may argue that the self-driving car phenomenon is premature, but as choices for drivers and commuters grow, attitudes will eventually shift, particularly with new technology expected to ease congestion, boost efficiency, and reduce traffic accidents.
In just the past two weeks since OPEC announced it plans to cut output, the cartel has significantly altered market sentiment and shifted the oil market outlook for next year.
There’s a natural paradox when it comes to innovation—it often brings unexpected benefits to society, but it can also cause disruptions and upheavals, creating particular risks in the labor market. Experts discuss the risks and rewards of autonomous vehicles on the country's economy.
A major consultancy says that the oil market will still take longer to rebalance than many analysts had reckoned because of supply-side trends both in OPEC and outside the group. A slew of new non-OPEC fields will ramp up to increase the global crude oversupply to a massive 1.8 mbd for 1H 2017.
Republicans have pushed back hard against energy and environmental action Obama has taken after the election, and they will likely try to overturn his decisions once he leaves office.
Given the dire straits of OPEC countries’ fiscal situations, the cartel may ultimately take action at its meeting on November 30 to lift prices, a move that would hurt consumer countries. But a production cut isn't a forgone conclusion.
Last year, consumers globally saved 870 million barrels of oil as a result of efficiency improvements since 2000. Germany and China have been more successful in maintaining fuel economy gains during low oil prices.
Growth in refining capacity, high downstream utilization, and flexibility provided by cheap feedstock thanks to the shale boom have all boosted U.S. energy security and lowered pump prices for consumers.
Maintaining CAFE Standards and EV Tax Credit Consistent with Trump's Plan to End Dependence on OPEC Oil
The 2016 election could turn out to be a big win for the oil and gas industry, as Trump has championed deregulation and a rollback of a number of environmental measures.
Despite improvements in charging infrastructure and battery technology, consumers may still be hesitant to buy EVs based on outdated preconceptions.
The commercialization of energy and transportation technologies can be very expensive and risky, so given the enormous task of reducing oil dependence, partnerships established through ARPA-E projects will be very vital.
The recent Fact Pack from Securing America's Future Energy (SAFE) contains a number of data points that highlight OPEC’s dilemma and discuss energy issues that surfaced during the 2016 presidential campaign.
Rather than focus on midstream infrastructure, environmentalists should focus their energy on reducing oil demand if they want to reduce consumption.
One major sector of the economy, the trucking industry, promises to see enormous changes from autonomy, many of which will be for the better.
The substantive discussion gave insights into how energy policy would take shape in either a Clinton or Trump administration.
Over the past couple of years, there’s been a string of comments from executives and ministers who want and need higher prices making the case for a tighter market even though there’s little to no evidence of that reflected in the fundamentals.
Given the controversy surrounding Tesla's Autopilot after it was possibly at fault for a deadly accident earlier this year, the recent announcement that all of the company’s vehicles will have fully autonomous hardware will likely stir up even more debate.
The oil merchants have typically resorted to operating in the shadows of the markets, exploiting opportunities under the radar, as they moved cargoes from a point of surplus to a point of deficit. But recently, they have become more open and transparent about their financial status, their outlooks on oil prices, and their operations across commodity markets.
Although shifts are taking place with EVs, autonomy, and more stringent fuel economy, it is not inevitable that we’ll shortly be in a post-oil world and that demand will peak sooner rather than later.
Polling data on driverless cars is contradictory and indicates mixed feelings among consumers, and just as important, some surveys highlight the fact that Americans don’t know much about autonomy in general.
OPEC is expected to finalize the details of its production cut next month, but in the meantime, the entire arrangement looks like a mess, with hole after hole being punctured before it’s even been fully agreed upon and implemented.
Both Trump and Clinton make misstatements on energy, but Clinton points to role Middle East producers play in managing oil prices.
Fully autonomous vehicles on roads and highways could virtually eliminate traffic accidents, but it’s uncertain when such a scenario will occur. Right now, the country is in a midst of a crisis from car crashes, as reflected in recent government data showing a sharp rise in fatalities this year.
The UAE recently announced that it rolled out draft standards for fuel economy in order to reduce emissions. This action follows the emirate's Gulf neighbor Saudi Arabia, which implemented similar measures earlier this year.
OPEC's past cuts were successful in tightening the global oil market and lifting prices, but the agreement last week in Algiers may not be sufficient to rebalance fundamentals, particularly since U.S. shale is poised to rebound.
Snapping up refining capacity in the U.S. and elsewhere allows the Saudis to develop guaranteed outlets for its crude supply at a time the oil market is oversaturated and becoming more competitive.
With the country enjoying a period of energy abundance and low prices at the pump, voters aren’t as concerned about what’s happening in the global oil market. That showed in the first presidential debate between Hillary Clinton and Donald Trump.
With autonomous cars, China has to deal with some of the same hurdles as the U.S., but so far surveys show a greater willingness among the public there to use the new technology.
OPEC, along with Russia, will take another stab at figuring out a strategy to support prices at an informal meeting in Algiers next week, and traders are split on what the outcome will be.
Smartphones, cell phones, and the Internet aren’t perfect proxies for extrapolating penetration of autonomy, but they can provide a basis for discussion about what might happen with self-driving technology.
Experts say that relatively low prices for natural gas and high domestic production provide the right conditions to bring about a greater penetration of NGVs in the country’s automobile fleet.
Many consumers, once they see the benefits of giving up the steering wheel, will embrace the extra time for themselves or for work. Autonomous vehicles have the potential to significantly increase productivity for Americans as they are on the road.
Although some states like Michigan have adopted policies to advance autonomous vehicles, it’s clear that a patchwork of regulations could emerge, reinforcing the need for leadership at the federal level.
An expert commission has been established by Securing America’s Future Energy (SAFE) that will recommend best practices for testing and deployment of autonomous vehicles.
Despite the DOE and others making the case for a slimmer Strategic Petroleum Reserve, the U.S. is still vulnerable to wild price swings and global supply outages.
Rhetoric aside, OPEC exports to the U.S. are up 20 percent year over year. U.S. production has fallen by more than 1 million barrels per day over the past 18 months, creating a supply gap that has been filled with OPEC oil.
Tech giant Google is launching a ride-sharing service this fall that will allow commuters in San Francisco to link up with each other to essentially carpool together. If it takes off and spreads to other cities, it could go a long way in weeding out inefficiencies in our transportation system.
In order for prices to break out of the current range of $40-$50, there needs to be a sharp drawdown in crude stocks, but so far that hasn't happened.
A study from a major research group finds that the transition to autonomous cars will bring about a sharp increase in fuel efficiency and hasten the use of alternative energy sources, both of which will slice demand for petroleum.
Picking Ken Salazar and John Podesta for high-level positions provides little clarity regarding energy and the environment policy since both advisers have different philosophies and it’s unclear which side would win out under a Clinton administration.
OPEC’s talk about an agreement on a production freeze in late September has dominated headlines, scaring financial investors with short positions. But more important than the rhetoric about capping production is the possibility of more supply from the cartel returning to the market.
Ford shifts from lagging others on autonomous vehicles to attempting to be one of the first to market a fully driverless car.
Hillary Clinton articulated her philosophy on energy security in comments she made as Secretary of State. They could serve as a guide to her priorities if she wins the presidency.
When prices were high, OPEC members benefited from any speculative-driven rally. Now, however, the tables have turned—OPEC members, already suffering from low prices, are jittery that speculators will sell the market down again toward previous lows.
Transportation services like Uber and Lyft are already reducing the number of deaths from drunk driving. Autonomous vehicles can accelerate this trend, and benefit the food and beverage industries in the process.
Market conditions had been mostly kind to U.S. refiners over the past five years, but current oversupply of refined products, excess downstream capacity, and tight spreads between the two major benchmarks have considerably changed the outlook.
Hedge fund sentiment in the oil markets has turned considerably bearish as of late. While it may be premature to say prices have already peaked for the year, a sustained bull run for the rest of 2016 appears less and less likely.
Brynne Kelly, an independent portfolio manager, speaks to The Fuse about Twitter, oil and gas prices, and the evolving nature of oil markets.
Two major executives this past week gave differing views on this year's election. Continental's Harold Hamm spoke at the RNC in favor of Donald Trump, while Pioneer's CEO noted how the industry has performed better under Democratic administrations.
Although new regulations will improve efficiency and curb pollutants, the electrification of the vessels on the water and the growth of autonomy in shipping, similar to changes in the auto industry, can bring about widespread benefits.
Like presidents before him dating back to Richard Nixon, Barack Obama pledged to reduce dependence on crude oil imports and sever the country’s reliance on OPEC oil. But unlike others, Obama saw overall energy security improve markedly during his presidency.
Libya's oil production has the potential to rise now that there’s been a merger of the two national oil companies and a likely re-opening of two major ports. But a swift rebound will be difficult, not least of all because of competing groups vying for control of the country and oil facilities remaining vulnerable to attack from ISIS.
Sharper-than-expected decline rates as a result of limited investment and a major cutback in capital expenditures for brand new projects are setting the stage for a dramatic market shift by 2018, according to a major consultancy.
NHTSA's recent numbers showing a rise in traffic fatalities, along with the recent crash of a Tesla vehicle that was using a semi-autonomous feature, underscore the need for a balanced regulatory approach to bring about the full safety benefits of self-driving technology.
An extended period of upstream investment cuts and the fact that petroleum products still fuel more than 90 percent of the transportation sector could mean we’re headed for another price spike. But slower economic growth and structural shifts on the demand side could keep another bull market from occurring.
A general consensus has emerged that upstream investment cuts will eventually push prices upward, resulting in a potentially dramatic correction that rattles the global economy. A price spike, while possible, is not yet a forgone conclusion.
The contradiction of proposed increases in fuel efficiency standards for large trucks is that although they will reduce oil consumption, they will also discourage the adoption of alternative vehicles that run on natural gas and make them less competitive in the trucking sector.
While crude and products will see only modest changes from the expansion of the Panama Canal, the effects for LNG and propane will be much greater. The U.S. LNG industry will now have access to a transit route that can accommodate larger tankers at a time the industry is primed to export volumes to Asia.
Consultancy Wood Mackenzie says EVs could slice gasoline demand by as much as 20 percent by 2035. Highly optimistic forecasts of EV market penetration have drawn scrutiny in the past, so it’s worth considering, what, if anything, has changed to put Woodmac’s projections closer to reality.
Meg Jacobs, a Research Scholar in the Woodrow Wilson School at Princeton University, spoke with The Fuse about her new book, "Panic at the Pump," which explores why the U.S. government has failed to put together long-term energy solutions.
Autonomous vehicles have enormous potential benefits for society, particularly with regards to safety, but one major question is who will be legally responsible when there is an accident. Tech expert Adam Thierer talks to The Fuse about this issue.
Lost in the talk about the decrease in upstream spending is how Middle East producers, most notably Saudi Arabia, have not cut back in investment, setting the stage for them to see sharp gains in market share when tighter fundamentals are realized.
Three “synergistic technological developments”—the rise of autonomous cars, the popularity of ride-sharing services, and the electrification of the car fleet—will have enormous implications for fuel demand, perhaps slicing it by as much as 50 percent.
With global GDP growth having fallen by .3 percentage points last year, it’s clear that low oil prices, which were sustained throughout all of 2015, were the main factor behind the rise in gasoline consumption, the largest growth in 35 years.
Weak oil and gas prices have been a boon for consumers and have fostered overdue reforms in producer countries in the Americas, but reduced investment on the supply side and the economic meltdown in Venezuela raise a number of open-ended questions about regional stability and security going forward.
More and more experts are turning bullish on autonomous vehicles. In what has been seen as a distant prospect, wide-scale deployment of autonomous cars is closer than most originally thought.
Crude export deals so far have been “opportunistic” and isolated in nature and have gone to a wide variety of buyers. Cargoes will continue to trickle out, but a gusher won’t happen unless domestic production rebounds significantly.
Gunvor is one of the largest commodity traders in the world. David Fyfe, Gunvor's Head of Market Research and Analysis, talked to The Fuse about current oil market dynamics, shifting trends in global trading, and the status of OPEC.
Although global balances have tightened lately, the oil market should remain in surplus for the rest of this year and throughout 2017. Fundamentals will see some periods of draws, but on average, over the next year and a half, supply is expected to remain ahead of demand, according to analysts at JBC Energy.
Trump threw his full support behind fracking and said that if the U.S. were to ban it, the country would be “back into the Middle East begging for oil again.”
Although OPEC is not taking action to shore up prices in the current environment, the situation is likely to be more in OPEC’s favor in the medium to long term. Conditions will change to give it more market share and influence over prices in the coming decades.
Business executives and former military leaders launched recommendations this week for reducing dependence on oil and fostering the development of technological advancement in the transportation sector.
In order to achieve greater energy security, it’s important that the country prioritizes its potential in tapping all of its natural resources, particularly with crude output gains stalling with oil prices being so low.
The latest long-term projections from the EIA regarding the U.S. oil market are certainly plausible, but they will likely face a lot of skepticism because of how both supply and demand have reacted in the current low oil price environment.
Widespread hedging among U.S. producers and OPEC increasing its volumes even as some members deal with unexpected supply cuts have the potential to cap prices, or possibly bring about another leg downward.
Although vehicle safety has improved a good bit over the decades, there are still too many accidents, most of which are caused by human error. But autonomous technology is set to be so disruptive that it will take the driver out of the equation and redefine mobility and safety.
Although the EIA’s International Energy Outlook (IEO) has had a mixed record with its long-term projections, it’s important as a basis for analysis and discussion about the future of the oil market and energy security in general.
With prices having rallied and with expectations for a stronger market next year, will drilled but uncompleted wells (DUCs) be able to stabilize U.S. shale output or bring about another wave of supply online?
While the number of vehicles ordered in the Google-Fiat Chrysler deal is relatively small and will be used for testing purposes, it is an important milestone in the normalization of self-driving cars.
Saudi Arabia’s spot crude oil sale last month to a Chinese teapot refinery is the latest maneuver in the market share battle between the Kingdom and Iran. The sale is not only a symbolic move in that it is the first of its kind; it is also a deepening of the competition for buyers in Asia, as Saudi Arabia looks for new outlets.
Even though the oil market has risen considerably since February, bankruptcies, staff layoffs, capital expenditure cuts, and falling productivity continue to be commonplace during the price downturn that has so far lasted for seven straight quarters.
Fracking and fuel economy standards have improved U.S. energy security, but the campaign dialogue has missed important energy policy challenges as consumers are complacent with low oil prices.
There's a clear opportunity for new downstream capacity in North Dakota, but intensely high capital costs, oil price volatility, complex regulatory hurdles, and the uncertain outlook for shale could derail refining projects in the state.
While autonomous vehicles are on the cusp of taking off in the U.S., other areas are also making headway, with China, Japan, Western Europe and Singapore emerging as main markets of the new technology.
A number of supportive elements should keep a floor under prices, while the market will be capped by the ongoing oversupply. For the time being, oil markets are set to remain volatile and range-bound with many competing factors pushing prices in both directions.
With international events happening at a quick pace and relationships with allies and enemies in flux, the next president will have a long list of foreign policy challenges, with major oil-producing countries as top concerns.
MIT's recent projection of an intersection without traffic lights has captured the public's imagination. In an exclusive interview, we discuss "slot-based intersections" with the concept's principal architect.
With many of the biggest shale industry players struggling, a select few firms took the IPAA OGIS conference as an opportunity to show their relative strengths.
The Panama Papers are another reminder of the extreme wealth, corruption, and opaqueness that is common to leadership in so many oil producing countries.
Regulatory turf wars, disputes over the eligible crudes for physical delivery, and a sharp downturn in trading in a number of markets in the region have delayed the opening of China's crude benchmark.
As vehicles communicate with each other through sensors, they can remain a safe distance from each other but they do not have to completely stop before slithering through an intersection.
The first crude stock declines will have a significant psychological impact on the market, but it will be tricky to determine if the draw is a standard seasonal pull, or if the market is beginning to finally rebalance.
OPEC policy, fresh data from agencies such as the IEA and the EIA, price speculators, and geopolitical disruptions are all known as market movers. But there’s another important player in oil price movements, and that’s the Federal Reserve.
Autonomous vehicles promise to shatter current limitations on personal mobility while revolutionizing fuel efficiency and enabling a widespread transition to electric vehicles. Skepticism about driverless cars, as with any new technology, is high. As criticism mounts, so have popular misconceptions.
Andrew Grove, an early advocate of electric vehicles and former legendary CEO of chipmaker Intel, died this past week. Over the past decade, the tech mogul emerged as a prominent voice in dispelling the myth of energy independence and repeatedly urging reforms in transportation, particularly the adoption of EVs.
Uber is rumored to have purchased 100,000 autonomous vehicles from Daimler’s Mercedes Benz. While Daimler and Uber have yet to comment based on press reports, the deal would make a lot of sense for both companies, and it would be an important step for the penetration self-driving cars.
States that are major oil and gas producers are seeing significant holes in their budgets in part due to low prices. One major player on this list is Louisiana, which has a long energy-rich history and is going through a severe fiscal crisis at the moment.
Self-driving cars have the potential to bring extraordinary benefits to consumers and society as a whole, but technology is moving faster than policymakers can keep pace with. In order for self-driving vehicles to reach their potential, there needs to be a federal regulatory environment that allows for flexibility and accelerated development.
Despite the decline of volumes on the tracks and controversies surrounding safety, crude shipped via rail is here to stay, given there isn’t currently pipeline capacity to move supplies from the prolific Bakken plays to the coasts.
OPEC member Nigeria has taken a major step in improving its country’s energy sector by restructuring its state-run oil company. The move is significant since the NNPC has a longstanding history of corruption and the country is dealing with a large budget gap.
Compared to other storylines in House of Cards, the energy subplot is not completely out of the realm of possibility. It wasn’t all that long ago the U.S. and global oil markets were in a crisis, with producer countries having outsized power.
Whether the current rally has staying power is up in the air, but overall fundamentals suggest otherwise, despite recent ambiguous headlines that have been interpreted as supportive. The rebound has been largely technical in nature, with hedge fund positions exaggerating the price move upward.
The refining sector is the one part of the oil & gas industry that is actually making money in the current low price environment. The good times are slowing down, with demand growth weakening and refined product inventories ballooning, but U.S. refiners are still set to have a strong year in 2016
U.S. crude oil exports declined noticeably during the second part of last year—an ironic development given the intense lobbying at the same time for the liberalizing of the country’s export laws and the ultimate repeal of the ban in December.
Issues of mistrust among OPEC members date back to the group’s inception, although they have compounded over the years. Throughout the cartel’s history, members have overproduced, in order to sell more volumes and boost revenues, sometimes by excessive amounts, causing widespread suspicion and distrust.
The Saudi oil minister's comment that the Kingdom isn't planning to cut production was the biggest news to come out of CERAWeek this year. What are the implications for OPEC and global oil markets? Jamie Webster of IHS explains.
Secretary of Energy Ernest Moniz stated that energy security is a “collective responsibility,” noting, for example, that insecurity elsewhere negatively affects the U.S.
With Cheniere's vessel heading to Brazil, LNG is now being exported from the Lower 48 States. What are the implications for the US and global gas markets? University of Houston Law Professor and LNG expert Susan Sakmar explains to The Fuse.
OPEC’s Secretary-General Abdallah El-Badri argues the output freeze is “the first step to see what we can achieve,” adding that producers will review the action in the coming months to see how successful it’s been and what the next steps will be.
While OPEC producers and Russia have been significantly undermined by U.S. shale growth, they appear determined to reassert their market power and will be better positioned to impact prices when fundamentals eventually tighten.
Although Iran has diligently reformed its petroleum contract to attract IOCs, the OPEC country is still dealing with a volatile political and economic environment that could delay and possibly undermine new and longer-term investment.
Against the backdrop of high debt, capex cuts, and more E&P bankruptcies, 2016 will be a slog for oilfield services, just like everyone else in the oil and gas industry.
A good bit of the linkage between oil prices and the Dow is the result of general market sentiment, psychology, and knee-jerk reactions. At the same time, however, the fallout from the pain in the energy sector is touching large segments of the economy, including many major U.S. corporations with exposure to oil and gas.
The decline in oil prices that began in mid-2014 has wreaked havoc across all different types of companies in the industry, and there seems to be no respite in the short run. Companies are continuing to lay off staff, cut back on projects, and report eye-opening losses.
One consequence of shale producers taking hits from lower prices: More reliance on OPEC. After years of decline, crude oil imports from OPEC members rebounded in Q4 as a result of U.S. production stagnating, higher refinery input, and a tighter spread between U.S. prices and the international market.
While there are some structural similarities between the shale and housing bubbles, the puncturing of commodity prices and the shale industry does not pose a systemic risk to the banking sector and the wider economy.
Although the oilfield service giants will undoubtedly survive, there’s a lot of uncertainty going forward, prompting them to focus on cost per barrel optimization and improving efficiency
Few, if any, shale oil producers are profitable in the current price environment. But unlike previous oil price collapses, oil companies have access to new lines of credit which are helping to keep production high.
It’s now a good time to be in the auto business. Technological advancements are moving at a rapid pace and are set to continue at a fast clip, vehicle sales are at an all-time high, and low fuel costs for consumers are set to persist for the foreseeable future. But there are a number of hurdles on the horizon.
Can low oil prices tip the economy into a recession? Not on their own, but the fact that a key sector that was instrumental in the post-2008 economic recovery is suffering is worrisome.
Oil prices all along the curve have taken major hits. The futures curve may be underestimating risks from both geopolitics and deferred investment, or the rapid descent of the curve could in fact indicate the market is in for longer-term structural weakness.
Saudi Arabia is mulling selling shares in Aramco, but the announcement of a possible IPO has prompted a number of questions, particularly the overall value of the company.
The oil markets have had a crazy beginning to 2016. Prices have plummeted to the lowest levels in 11 years, and it’s hard to identify anything likely to turn the market around in the near future.
The head of the API discusses the importance of fossil fuels at the organization's 2016 State of American Energy.
The deteriorating relations between Saudi Arabia and Iran amid the Saudi execution of several Shia prisoners, including a prominent cleric, add a key uncertainty to oil markets in the upcoming year, and for the longer-term stability of the Middle East,
2015 has been a roller coaster for energy and oil markets. We break down the most critical developments of the year.
Electric utilities are one major entity that can gain financially from deployment of charging stations for electric vehicles and will be key in improving charging infrastructure.
The oil markets will be keeping a close eye on interest rates, as any rate hike could push prices even lower.
Between terrorism attacks on soft targets around the world, the struggle against ISIS, Syria’s civil war, and broader instability throughout the Middle East, the situation today is, in many ways, worse than post-9/11.
OPEC has faced many existential threats in the past, but it has always regrouped and reasserted its influence over the market. There's no reason to believe the cartel won't be able to do the same in the future.
Barclays notes, "For OPEC, managing the impossible trinity of achieving higher market share, higher prices and higher demand through a nominal target which members continue to breach continues to be difficult.”
Very low oil prices are making OPEC ministers quite concerned. But so far, with the composition of the membership in flux, there's been no change to current production policy.
Kurdistan's oil sector remains open for business despite low prices, the dispute with Baghdad, and the ongoing fight against ISIS. Live reporting from Kurdistan-Iraq Oil & Gas Conference in London.
Although the EPA is simply conforming to the reality of the marketplace with its new biofuel blending targets, it is getting blasted by a number of industry groups.
The IMF's inclusion of China’s yuan in the global currency basket gives the country a big symbolic victory ahead of the launch of its yuan-denominated crude futures exchange.
Hedge funds have taken hits from lackluster equities and a big shake-up in commodities. The string of fund closures could be a harbinger of deeper structural issues in the economy.
With so many mixed opinions and divergent forecasts in the oil market, here are factors that could push prices either way.
For global oil markets, violent attacks by Islamic extremists prompt questions about vulnerability of economic growth, fluctuating geopolitical dynamics, and the future of supply in unstable regions.
It’s premature to say that oil demand will peak anytime soon, or to pinpoint an exact timeframe when it will plateau and eventually decline. Global oil demand is made up of a number complex factors that are always in flux.
While output in the Bakken has held up relatively well, it is set for a dramatic decline, making East Coast refineries further dependent on imports.
Americans are driving more than ever, but gasoline demand remains below peak levels, indicating that fuel efficiency gains have kept consumption in check—at least to some degree.
While now is a time of unique challenge for OPEC and the future of the organization is up in the air, this is not the first time the cartel has faced external threats.
Current low prices for natural gas and the ongoing production boom in shale gas should provide the perfect impetus to boost NGVs in the country’s automobile fleet.
The diesel market is dealing with two major issues, one of which is a short-term glut and the other which surrounds questions about its long-term outlook in the wake of Volkswagen cheating on emissions testing.
As the shale boom stalls and demand rises, Congress's willingness to sell oil from the Strategic Petroleum Reserve reflects the fact that lawmakers have grown complacent on energy security.
The Renewable Fuel Standard's main purpose was to reduce U.S. dependence on oil by mandating production of renewable fuel, and in that regard, it has been successful, but only marginally.
Saudi Arabia may run out of financial assets in five years if the government continues with current policies, according to the IMF.
Russian sanctions have isolated the country from the West, but they have not changed President Putin’s overall strategic vision.
China’s forthcoming launch of a crude futures exchange to be traded with the yuan is another major step to cement itself as a global economic powerhouse and challenge the U.S. currency’s dominance in oil markets.
A rail technology startup seeks to make oil train derailments a thing of the past.
Adversaries Iran and Saudi Arabia, while having to overcome sectarian strife that has persisted for hundreds of years, will eventually take a realistic approach to their relationship and forge paths of cooperation, with energy at the forefront.
There’s been a lot of discussion lately about a possible diminished role for the U.S.’ strategic crude stockpile now that the country’s imports have declined dramatically since their peak ten years ago and domestic production has boomed.
Kleinman: There’s no market rationale for U.S. crude exports, now that the Atlantic basin is glutted with supply and the differential between U.S. and global oil prices has narrowed.
While the cartel may in fact hold steady throughout 2016 and ride out the low-price environment, there are still reasons we could see an OPEC cut next year.
There’s been a twist in the narrative of falling US oil production. US crude output continues to defy expectations, with the latest government data showing that output actually rebounded in July.
There will be “no dramatic price impact” from a ramp-up of Iranian exports next year as volumes from the OPEC producer will be accommodated by other market developments, such as lower U.S. shale output, other non-OPEC losses, and a cutback by Saudi Arabia.
After a number of years of relative price stability, the oil market is again dealing with wilder fluctuations on a more regular basis, as technical traders such as the quants play a key role.
Underinvestment in the oil sector is increasingly looking like a major risk. With the lack of investment in today’s low-priced environment, the industry will likely see a very tight oil market down the road.
China is poised to establish the world’s third crude futures benchmark, a logical step given the country’s growing importance in the oil markets and its determination to flex its economic muscle on a global scale.
Much of the energy discussion surrounding the lifting of Iranian sanctions has focused on the effects on oil prices, but Iran’s gas potential could shake up global gas markets and provide robust economic benefits for the country.
Following steady increases in output since last November’s OPEC meeting, Saudi Arabia’s production has fallen to its lowest level in six months. But that doesn’t mean the kingdom is giving up on its policy of sacrificing higher revenues for market share.
Even as the Blue Dog Democrats get on board, the odds that Congress will reverse the ban on crude oil exports remain slim in the hyper-partisan campaign season.
The Energy Information Administration (EIA) has downwardly revised its U.S. production forecast for next year once again, the latest indicator of how low oil prices have affected high-cost shale output.
Presidential candidates for 2016 have talked immigration, taxes, jobs, social issues, and foreign policy, but critical energy issues have not been on anyone’s radar.
The Fuse takes on the top five oil market uncertainties—rampant volatility, U.S. production, Saudi Arabia's strategy, Chinese demand growth, and the U.S. crude oil export debate.
The two OPEC Latin American countries, Venezuela and Ecuador, have always held unique positions in the global oil market because of their geographical advantage of being close to the U.S. But both have seen their importance fade dramatically against the backdrop of rising North American production and the drastic fall in oil prices.
WTI's discount to Brent has held steady as of late around $4-$5 per barrel, and remains around that level far out on both futures curves. But shifting dynamics in the U.S. market, mostly declining output and strong demand growth, are likely to lift WTI back to a premium over European marker Brent.
With U.S. demand surging and exports on the rise, this summer has been a good time to be a refiner.
The oil market is now functioning the way a free market should: Numerous buyers and sellers are competing with one another in the marketplace, weeding out wasteful resource allocation and causing prices and costs to fall.
The Obama administration is continuing to carve out a middle ground when it comes to energy policy—satisfying neither environmentalists nor the energy industry in the process.
The U.S. government has approved a crude oil swap agreement between the United States and Mexico, in the latest dent in the longstanding ban on exports of American crude oil.
WTI crude oil prices dropped to new lows this week, showing that oil's price collapse is still far from over.
Despite remarkably high output, less and less of OPEC’s oil is heading to the U.S. For the first half of 2015, U.S. buyers pulled in just 2.6 mbd from OPEC—roughly a third of total U.S. crude oil imports, versus about 55 percent seen at times last decade.
Norway, which produces just under 2 million barrels per day (mbd), is not experiencing the social and political turmoil seen in Iraq, Venezuela or Russia, but it is still taking major hits from the precipitous drop in prices as a result of oil’s integral role in the country’s economy.
Although there has been significant progress in the past 10 years, the fundamental issue that Bush strove to correct—oil’s monopoly in the transportation sector—remains unresolved.
The massive drop in crude oil and gasoline prices has been a huge boon for the American consumer, but it has come at a cost—U.S. motorists have been driving more, furthering a rebound in demand and boosting the country’s reliance on imports of both crude and refined products while also mitigating recent gains in fuel efficiency.
Lisa Murkowski is a Senator from Alaska and the chairman of the Senate Committee on Energy and Natural Resources. She speaks with The Fuse about oil production in her home state, as well as energy policy at the state and national level.
The oil market is shrouded in bearish sentiment at the moment as prices continue to trend downward, with Nymex West Texas Intermediate (WTI) falling from around $61 per barrel in the middle of June to $48. Continued pressure to the downside appears likely—but not inevitable.
Crescent Petroleum’s CEO Majid Jafar, in an exclusive interview with The Fuse, said that demand issues had a bigger impact than supply in causing oil prices to fall in the past year, and decisions made now regarding transportation policy can bring about major changes 10-20 years down the road.
Mexico's historic initial auction, although it was a bust, is a positive reflection of how major producing countries in Latin America are moving away from resource nationalism—for now, at least—as they struggle in the current low oil price environment that shows no sign of turning around.
Forecasting oil markets has always been complicated and fraught with risk. Now is no different, with so much price volatility and global uncertainties.