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One thing to start: U.S. oil producers are front There is a lot of money in their hedge.

Welcome back to Energy Source-we sent the newsletter a little later than usual today, so we can squeeze news from the annual statistical review just released by BP, which just lifted the embargo. This is our first note.

In our second article, Houston reporter Justin Jacobs examines how the Joe Biden government approached OPEC, which is committed to protecting some of the world’s largest fossil fuel producers Interests. OPEC is committed to the energy transition and rapid decarbonization plan.

Finally, I participated in a fascinating Panel discussion Yesterday I talked to the International Energy Agency about my Traveling through the fossil fuel communities in the U.S. Ask them what they think about the energy transition. Fatih Birol, the executive director of IEA, said during the discussion: “Labor must be at the core of the energy transition.” For institutions that are generally regarded only as modelers and scenario builders, this is An interesting new focus.

Now enter the newsletter.

The impact of the pandemic on the energy industry, quantified

We know that the coronavirus crisis has caused severe damage to the energy world. But how bad is it? The latest issue of “BP Statistical Review” exposes the complete destruction caused by the pandemic.

“2020 is a unique year,” said Spencer Dyer, chief economist of BP, in a prepared speech scheduled for Thursday afternoon. “The global pandemic is the mother of all stress tests.”

The following are the key points:

1. non-renewable energy Consumption fell by 4.5% in 2020, which is the largest annual decline since 1945. This was mainly driven by oil, which accounted for three-quarters of the decline due to government blockades and travel bans. The United States, India, and Russia experienced the largest declines in energy consumption.

2. carbon emission In 2020, energy use fell by more than 6%, reaching the lowest level since 2011. This is the biggest drop since the Second World War.Although this is good news for the environment, in the next 30 years, the world will need to reduce carbon emissions in a similar way every year to achieve the Paris climate goals-this is still Not enough to achieve the net zero emission target that many companies and governments have signed.

© BP

3. As prices fall to multi-year lows, The proportion of natural gas in primary energy Continue to rise, reaching a record high of 24.7%.

4. Decline in coal consumption An increase of 4.2%, mainly due to declines in the United States and India. OECD coal demand fell to its lowest level since at least BP began collecting data in 1965. However, its use in power generation is still relatively strong, only dropping to 2015 levels.

“There is still a long way to go to squeeze coal out of the power industry,” Dell said.

5. Wind, solar and hydropower Despite the decline in overall energy demand, all figures have increased. The installed capacity of wind and solar power will increase by 238GW in 2020, an increase of 50% over any time in history.

© BP

6. energy used It is estimated that the main component of energy demand has the smallest decline, falling only by 0.9% last year, because the demand of industrial consumers and offices is offset by those who work at home and spend more time.

Dell said that for more than 70 years, “Statistical Review” has witnessed some of the most notable events in the history of the global energy system: the Suez Canal crisis in 1956; the oil embargo in 1973, followed by the Iranian Revolution in 1979; most recently. , The Fukushima disaster in 2011. All moments of the global energy turmoil. But compared with last year’s events, everything looks pale and weak.”

(Amway Laval)

Biden balances oil diplomacy and decarbonization

President Joe Biden may put his legacy on freeing the world from fossil fuels, but the disharmony of OPEC+ and concerns about soaring fuel prices have pulled him back into the world of oil diplomacy.

After the OPEC meeting anchorThe White House Press Secretary Jen Psaki said this week that the government is “in direct communication with all OPEC parties to reach an agreement” to increase market supply.

Psaki said: “Ensuring that Americans do not bear the burden of gas stations remains the government’s top priority.”

In view of the potential impact on the economy and consumers, as well as their own political fate, the President of the United States has been paying close attention to OPEC.

For Biden, the soaring prices of crude oil and gasoline (see the data drill chart below) as Americans hit the road and fly again, and OPEC’s efforts to prevent oil from entering the market are fueling inflation concerns and imposing politics on Republicans. Sticks.

But don’t expect Biden’s oil diplomacy to look a lot like his predecessor, Donald Trump, who tried to micromanage the oil market and OPEC’s decisions through Twitter.

On July 4, 2018, when the price of gasoline rose to about $3 per gallon, Trump said on Twitter that the “OPEC monopoly” was pushing up prices, sending a threatening reminder to Saudi Arabia that the United States ” Very few dollars defend many of its members.” (Trump’s tweets are no longer available on Twitter after being banned by the platform, but the history of his OPEC jaws can Found here.)

Although Biden may send a message expressing similar views to Riyadh, it will certainly not appear in the form of an exaggerated tweet that stirs the market.

Even more extraordinary is that Trump intervened in the depths of the pandemic last year and personally helped OPEC reach an agreement. cut In order to boost prices from historical lows and save the US oil industry in a state of free fall.

Pasaki said that Biden did not personally intervene in the OPEC negotiations, but hoped that he would hand over the task to other government officials.

To a certain extent, this is a return to US-OPEC diplomacy, but for Biden, it also reflects the embarrassing politics of the energy transition of a president who sees climate change as an existential threat.

Just a few months ago, Biden convened a virtual summit of world leaders to inject new impetus into efforts to cut world carbon emissions and get rid of oil and natural gas.

But before the COP26 climate summit in November, Biden needs to ask the world’s top oil producers to produce more carbon-emitting crude oil to keep the economic recovery on track. (Justin Jacobs)

Data drill

Americans who drive on holiday weekends pay more for this privilege. The average gasoline price yesterday was close to $3.14 per gallon, a 40% increase since January. AAA expect another increase 10-20 cents before the end of August: bad news for summer road trips.

Gasoline prices have never been higher in seven years, and this new increase will exacerbate many Americans’ concerns about post-pandemic inflation.

The price line chart has risen by 40% since January, showing that U.S. natural gas prices are climbing

Power point

  • How about a company transition Staying away from fossil fuels is another opportunity to redouble our efforts.

  • Why OPEC+ failed to obtain transaction In the case of rising oil prices.

  • Cement is one of the most difficult industries to decarbonize.These ones Startup company Want to change this.

  • EU Carbon Border Tax produce Nearly 10 billion euros.

  • Possible to achieve its net zero goal cost The UK is less than the pandemic.

  • “As long as Syria gets sick, Lebanon will be tired.” Facing its own energy crisis, Lebanon is Tighten It controls the smuggling of fuel into Syria.

  • Biden’s infrastructure Bill Energy means

Energy Source is the twice-weekly energy newsletter of the Financial Times.It is written and edited by Derek Brower, Miles McCormick, Justin Jacobs with Emily Goldberg.

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