18 March 2021

1) Griddy Energy, the Texas power retailer, filed for bankruptcy, becoming the latest casualty of the cold weather blast and sweeping blackouts that pushed electricity prices to historic highs. The company, after its customers received exorbitant power bills, blamed its downfall on Texas’s grid operator Ercot who is blamed for destroying Griddy’s business. Griddy is at least the third to file for bankruptcy. Ercot owes more than $29 million dollars, making the grid operator Texas’ largest unsecured creditor. Texas is unusual in the U.S. in that homeowners and businesses can choose from a number of power providers. Griddy charges wholesale prices instead of fixed ones, and knowing that rate structure would mean massive bills for its customers as power prices climbed, the company made the unusual move of pleading with customers to switch to another provider in mid-February, but some customers who didn’t switch in time were stuck with bills for thousands of dollars.

2) The world’s three biggest consumers of coal, the most dirty of the fossil fuels, are getting ready to boost usage so much that it’ll almost be as if the pandemic-induced drop in emissions never happened. The U.S. power plants will consume 16% more coal this year, and then an additional 3% in 2022. China and India, which together account for almost two-thirds of coal demand, have no plans to cut back in the near term. This means higher emissions, and in the U.S., the gains may undermine President Biden’s push to reestablish America as an environmental leader and raise pressure for him to quickly implement his climate agenda. Coal consumption at U.S. power plants is almost returning to 2019 levels. While in recent years, China has reduced the share of coal in their energy mix, total power consumption has risen, so its usage has also climbed. China has the world’s largest number of coal-fired power plants, so it’ll be tough to shift to alternatives. India is also a very long way from a clean grid, with coal continuing to account for around 70% of its electrical generation. Consumption at their power plants will rise 10% this year, and is set to increase every year through at least 2027.

3) Although little known to most people, sand is another natural resource becoming scarce. So China has launched a crackdown on illegal sand mining operations on the Yangtze river, which have made large parts of central China more vulnerable to drought. Sand mining in the river and its connecting lakes and tributaries has also affected shipping routes and made it harder for authorities to control summer floods.

4) Stock market closings for – 17 MAR 21:

Dow 33,015.37 up by 189.42
Nasdaq 13,525.20 up by 53.64
S&P 500 3,974.12 up by 11.41

10 Year Yield: up at 1.64%

Oil: down at $64.63

10 March 2021

1) There is an insatiable global appetite for sand, one of the world’s most important but least appreciated commodities. The problem, however, is this resource is slipping away. It is the world’s most consumed raw material after water and an essential ingredient to our everyday lives. Sand is the primary substance used in construction when using concrete. Sand, is used to make the glass found in every window, computer screen and smart phone. Even the production of silicon chips uses sand. The world consumes roughly 40 to 50 billion tons of sand on an annual basis, which has tripled over the last two decades, far exceeding the natural rate at which sand is being replenished. Desert sand grains are too smooth and rounded to bind together for construction purposes, instead sand from rivers and ocean shores is needed.

2) The oil giant Exxon is looking to enter the carbon-capture technology business, and Exxon says it’s ready to go all-in. This is a business of capturing carbon dioxide and storing it underground, which is far easier for a company like Exxon than building out renewable energy capabilities, as its European competitors are doing. The main use of captured CO2 is to extract more oil out of the ground, anyway. Exxon’s strategy is to cut emissions but pared back capital spending and a low breakeven price for oil. Experts have raised questions about the economics of carbon capture technology. Exxon has had to slash its operations budget last year to stay afloat, which resulted in job cuts that several employees described as haphazard. Morale inside the company has suffered as a result.

3) Fears are growing that the national average cost of gasoline could hit $3 a gallon by Memorial Day. With OPEC’s decision not to meaningfully boost oil production despite rising demand, the price at the pumps will soon breach $3 a gallon. Early in the coronavirus pandemic, OPEC slashed its oil production as demand for gasoline fell sharply. Presently, the national average price of gasoline is $2.76, up 30 cents from $2.46 a month ago. Last week gasoline demand reached the highest level in nearly a year, rising 15% from the prior week and now close to pre-pandemic demand. President Biden’s recent decisions to cancel the Keystone XL oil pipeline while also halting new drilling on federal land are playing no role in rising gas prices. There is no shortage of pipeline capacity and U.S. producers have little incentive to install new rigs on federal land since some existing wells remain shut down. With the economy improving, demand for gasoline has been rising, so with oil production not increasing, gasoline prices must rise.

4) Stock market closings for – 9 MAR 21:

Dow 31,832.74 up by 30.30
Nasdaq 13,073.82 up by 464.66
S&P 500 3,875.44 up by 54.09

10 Year Yield: down at 1.55%

Oil: down at $63.97