Week Recap: Ford’s EV Pivot, Wind Power Woes, UK Clean Energy Setbacks, and More

WASHINGTON, July 24 (Reuters) – Democratic U.S. lawmakers on Wednesday introduced a bill to hold energy companies accountable if they are found by federal regulators to have colluded with the Organization of the Petroleum Exporting […]

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:15] What’s going on, everybody? Welcome into a Saturday weekly edition of the Daily Energy News Beat. Stand up here on this gorgeous July 27th, 2024. Appreciate everybody who stuck with us. This is our weekly recap episode, so we just review all the great stories. Awesome. Awesome week. Lot of crazy stuff. Stuart a solo show on Wednesday. I did a solo show on Thursday so we’ll get a mix of everything there. Crazy week as always guys, we appreciate you checking us out. We’re going to go and kick this off to the team. But as always guys check us out. www.Energynewsbeat.com. Hit the description below. Sign up for our Substack. We will. I’ll be back in the chair on Monday to deliver the news guys. Have a great weekend! [00:00:57][42.5]

Stuart Turley: [00:00:58] Ford scraps plans for 1.8 billion an Oakville EV assembly plant. It will retool and make gasoline pickups. Ford motor announced it’s pivoting away from its initial production plans to build out electric vehicles at Oak Real in Ontario. Michael, this is critical because Ontario invested in subsidies to Ford for electric car jobs, to the tune of, I believe was 377,000 per job that they invested in. And now they’re doing a bait and switch on this. This is huge. [00:01:38][40.4]

Michael Tanner: [00:01:39] Well, it is, and I think, you know, something that that you’re you know, we’ve touched on this numerous times, but the EVs are falling out of favor with, you know, not just here in the United States, but around the world. I mean, again, this is in Canada if, if and now obviously Ford, it’s an American company. So there’s, there’s, there’s, there’s kind of the competing interest there. But on the side of whether or not EVs are going to be coming, I think we’ve been saying this now for years. If you either going to, you know, why will Tesla win? Probably not because of the electric nature of their car, but probably because of their full self-driving in the fact that they actually make a superior car. That’s the difference. Tesla is is a new way to design a car from the software and the way it looks and the ways it feels. The EV. [00:02:21][42.3]

Stuart Turley: [00:02:22] Part. [00:02:22][0.0]

Michael Tanner: [00:02:22] Of Tesla isn’t that novel, and probably, in my opinion, is not the reason Tesla is going to win this quote unquote new market, or why it’s valued so much higher than all these others. We know that a lot of what EV is being valued around is this robotaxi idea with it’s been pushed out a little bit till the end of August. So I think a lot of this I think all of these companies Ford, you know, Stellantis, all these companies, obviously they wanted in on the EV tax credit, but I think they miscalculated why Tesla was so successful and why they were getting a huge bump and why Tesla, in my opinion, will be successful is for things other than the fact that their vehicles happened to be electric. I wouldn’t be shocked if they came out with a hydrogen car at some point. [00:03:05][43.1]

Stuart Turley: [00:03:06] Oh, I wouldn’t either. I wouldn’t buy it. The Hindenburg is nothing to be driving around. [00:03:10][4.3]

Michael Tanner: [00:03:11] I don’t want to drive around a nuclear bomb. [00:03:12][1.7]

Stuart Turley: [00:03:13] No. Why is windpower useless? According to the Sierra Club, when that power electricity is economically viable without government assistance. Wow. I think that they’re going to have a job. Whoever this is. Is I our guy? The wig? Or we need to put them in to the Biden administration or the next one’s press secretary. What do you think? Yeah, the government subsidizes wind power. Some of the up front. Others are hidden tax rules created by the law to change that bargaining balance between providers of electrical electric utilities. The biggest hidden subsidy is taxed equity financing a masterpiece of accounting. Obscure ism. Yeah, this falls on the heels, Michael of a big the big one up in the vineyard. A wind farm just totally blew up. And it sent all of the blades up on the beach. And the microplastics and the plastics were just horrific. And the death industry, where are the ecological warriors out there when this kind of stuff happens? [00:04:22][69.4]

Michael Tanner: [00:04:23] Well, it it it’s it puts them in a mind twist because on one hand, yes, they, you know, wind they were shoving wind down our throats is the next greatest thing until you realize the, the horrendous nature of what happens when things goes, goes wrong. So it’s like everything there are, there are upsides and downsides. People have been saying, well, what happened? Well what about the Macondo spill? Yeah. Okay. Yes. Well obviously we don’t want oil spills. The difference is the amount of power we can get out of one oil well is tremendously more than we can get out of one windmill. So the question is, what risk would you rather associate with? I think that’s the part that people don’t realize. There’s risk with everything you’re doing. There’s risk when you walk outside and jaywalk across the street. But guess what? You do it anyway because you’ve evaluated the risk relative to doing anything else. So this idea that we have zero risk in everything we do, I think is stupid. But the fact that the the minimal. Minuscule amount of. Increase of of of energy that we get from a wind farm relative to the risk of, you know, you know, as much as I hate the whales, the whales, all the, all the, the seafood and, you know, the I think of it in terms of seafood, not sea life, because I’m all about trying to eat the stuff. But, you know, all of the, the ecosystem that surrounds these areas. And the fact is they’re just horrible to look at. That outweighs, in my opinion, the minuscule increase of quote unquote energy within these mammals. [00:05:46][83.4]

Stuart Turley: [00:05:47] Michael. They break it out very well. A $1 billion wind farm would have a nameplate capacity of 400MW. The nameplate capacity is the maximum output when there’s sufficient wind. But since wind isn’t always blowing, the average power would be typically 38% of the 400MW or 152MW. This accounts for 1,000,337 megawatt hours per year. To meet the 12% interest rate goal, the electricity would have to sell for the high price of a $115 per megawatt hour to meet an 8% goal. The case of a guaranteed long term contract, the company would need about $75 per megawatt hour. Michael to compare against a natural gas their $20 per megawatt hour. That is the significant difference. And that’s even with subsidies. [00:06:48][61.5]

Michael Tanner: [00:06:49] Yeah, legit subsidies. Not tax incentives, not tax incentives. Legitimate subsidy. [00:06:54][5.6]

Stuart Turley: [00:06:55] Right. Exactly. So the this article breaks it out pretty good. And for 95 megawatt per hour, the U.S. is wasting about $41 billion every year on subsidies for wind power, which is around $300 per household annually. [00:07:11][16.2]

Michael Tanner: [00:07:12] Yeah, crazy. [00:07:13][0.3]

Stuart Turley: [00:07:13] UK likely to miss its 2030 clean power goals. Really? I can’t believe this. I am so I’m so shocked. As part of its ever efforts to boost clean energy, the UK government lifted the de ban on onshore wind, which has been in place in England since 2015. The government has committed to doubling its onshore wind energy by 2030, quadrupling offshore wind and tripling solar power by the end of the decade. Michael, they’re going to go broke. They are. Their whole new government is is brand new. And they are absolutely just going to break the UK. [00:07:56][42.9]

Michael Tanner: [00:07:57] Yeah I mean it’s it’s it’s pretty you got this Financial Times analysis. This just cracked me up. Well it’s you got this. This is the most English company you’ll ever heard of who did this analysis? Cornwall Insight. It’s about as English as it gets. [00:08:11][14.2]

Stuart Turley: [00:08:12] It’s like a really horrible meal. I mean, it’s really the bland. [00:08:16][4.1]

Michael Tanner: [00:08:17] Here’s the here’s the quote from Kate Mulvaney. She’s a principal consulted over there at Cornwall Insight Cheeses. That labor quote faces significant challenges in reaching their 2030 power decarbonization targets as financial constraints, supply chain challenges and intense global competition for limited resources. Power pose hurdles. I mean, there’s a three pronged approach that you’ve you you got to have the money to be able to do this. It’s huge investments. You’ve got to be able to get these these raw materials. A lot of them are coming from Africa. We know what’s going on over there in terms of child labor, in terms of unsafe working environments. And, you know, with the amount of subsidies which have gone into this over the years, the massive entrants have flooded the market, and it’s almost become a dime a dozen to have your own renewables company, because why not? You’re going to get a nice big government check for that. You know, the UK Climate Change Committee said did say last week that its latest assessment showed that the you or did say that the US, the latest assessment showed that the UK is off track for net zero only as a third, as only a third of the emissions reductions required to achieve the country’s 2030 target are currently covered by credible plan. So even the climate change committee over there says they’re not going to work. [00:09:25][68.8]

Stuart Turley: [00:09:26] That’s bad when the climate change police are, you know, confronting the mattress police mattress tag police, right. [00:09:33][7.6]

Michael Tanner: [00:09:34] Yeah, absolutely. The only thing I saw is we officially got some notes out from SM energy. They announced a private upsized debt offering of about 1.5 billion, half of that due in 2029, the other half due in 2032. And this was to fund the HCL resources acquisition, which is a joint venture there from and Cap and Rice Energy Partners. You went to basin which is actually really interesting. There’s there’s two notes here. You know, you’ve got 6.7% senior notes, half of that due in 2029, the other half in 2032 at 7%. So, you know, I mean, that gives you an idea on how much debt that’s costing nowadays. And. And there’s definitely a little bit of a. [00:10:16][42.1]

Stuart Turley: [00:10:16] 7 trillion a year or something like that. [00:10:18][2.1]

Michael Tanner: [00:10:19] 7 trillion a year. It’s not that expensive, but you’re definitely you read it. Yeah. Gates in Stanley nickels. That’s what that’s what it is in Stanley Nickels. But this is, again, assuming the XL resources closed. This has what they call a special mandatory redemption, which means that they don’t actually closed this acquisition. The bank can go ahead and redeem all this back. You know, I’m generally not a big fan of using debt to go out and make acquisitions, especially when those acquisitions, especially when you got to go spend a lot of capital to actually develop these assets. But I want to throw up this chart here. This is from Ted Cross. He’s over there at Novi Labs. We love them over there. Yeah. Basically what this chart is showing Xcel Energy. This is back when they bought their you went to those exclu into assets. What this showing is that the you went to Wells. The average you went to well is outperforming both the Delaware, the Williston and Midland basin. The basically the do you it is slowly becoming and sneakily becoming one of the top plays in the United States. And that’s crazy to think about, especially because there’s only 283 wells drilled there. So the downside is the sample size is probably maybe smaller than you want. You know Delaware as you see down there’s got 11,000 wells drilled. Midland basins got 10,000 wells. You got kings only add you know, 3600 wells. But you see the average you are is substantially higher than the Midland basin, a lot better than the wells and slightly better than the Delaware. And right now all the rage is focused on the Delaware Basin. Big wells are being drilled down there. Right. Pretty interesting. So, you know, knowing this, I don’t feel as bad taking debt out to go acquire a company. Obviously, as SMBs going to, you know, you got to fund your acquisition some way. We don’t have cash on hand. But, you know, as as I’m not as worried per se about SME energy doing this because I think they’re actually going to see the returns relative to, you know, this acreage. The key. The good thing about Excel is they have some of the best acreage out there and you went to. So there is a lot of running room in this deal I am it’s pretty fascinating. Stu I again I, you know, call me crazy. I don’t actually mind taking out all this debt to fund this, because I do think you’ll be able to make the money back. [00:12:36][137.6]

Stuart Turley: [00:12:37] Oh, yeah, from way you described it. [00:12:38][1.9]

Michael Tanner: [00:12:39] But again, the only way to know is drill wells. And we love that. So we’ll we’ll definitely be seeing some development there. [00:12:44][5.4]

Stuart Turley: [00:12:44] UK mandates green jet fuel by 2025 David Blackman, Irene Islam and Tammy Nemeth and I have been talking about the UK in the left leaning left wing government that has now been put in is. The UK government has announced the introduction of sustainable aviation fuel ISAF mandate, set to begin on January 21st, 2025. Pending parliamentary approval. The percentage will increase to 10% by 2030 and 2022, in 22% by 2040, meaning this level until further supply certainty is achieved. Here’s where this is a huge mistake. Jet engines are not like car engines. And by the way, ethanol is one of the biggest mistakes that the U.S. government has ever done. It takes more energy to create sustainable or green jet fuel than it does to actually burn aviation fuel. So this is absolutely nuts. They say in the article. It’s expected to deliver emission reductions of up to 2.7 Mtco two E by 2030 and up to 6.3 Mtco two D by 2040. I this agree, because that’s not taking into consideration the actual methane and other emissions that it takes in order to make it. So this is a 100% play to their base in their electoral base. This is a brand new thing they’re trying to do. And all it does is waste energy costs people. It will be harder on the engines and that does not work. [00:14:37][112.9]

Michael Tanner: [00:14:38] Let’s move over US Democrats to launch bill holding oil and gas firms accountable for any work with OPEC. This is super interesting here. I’m going to be straight from the article. Democratic U.S. lawmakers on Wednesday introduced a bill to hold energy companies accountable if they are found by federal regulators to have colluded with with OPEC to raise oil prices. The bill, which was introduced by Senator Ed Malarkey and Representative Nannette the Bargain again, sorry if I butchered the name, says if any energy companies found by the FTC to have colluded with OPEC, it would no longer be eligible for new oil and gas leases on. Federal lands and water. There’s a quote in here, the malarkey. He said in a statement that this bill is the first step towards ensuring Big Oil gets big consequences when they profiteer off the back of hard working Americans. Of course, there’s some other co-sponsors, including our favorite, Alexandria Ocasio-Cortez and Rao and and Rao Grover. This comes off the heels of the US Senate Budget Committee launching a probe last month into basically all domestic oil producers to see if they’ve been colluding with OPEC. The American Petroleum Institute came out and said this was a, quote, election year stunt, which is probably true. It’s also important to note that this is not really going to pass. We’ve got US House. The US House of Representatives is controlled by the Republicans. So it’s very unlikely that this would pass the House. If it did ever make it to the president’s desk, he would most likely sign it. So obviously that’s it. This, again, all comes off the heels of the FTC accusing Scott Sheffield, who at the time was the CEO of Pioneer Natural Resources, of colluding with OPEC in order to artificially inflate oil prices. They went ahead and let that merger go through, but barred him from being on Exxon’s board, which is app, which is pretty unbelievable. You know, Exxon ended up submitting about 1.1 million documents and other information as part of that probe to the FTC. And they said that they raised no concern with his business practices. So, I mean, again, it’s all just a political stunt. What I find interesting here is, again, this is all just hand-waving. This is to say, hey, we’re standing up to Big Oil. You know, if you look at the cover image, of course, you got Elizabeth Warren standing behind. Again, there’s there’s very little substance to this in terms of the maybe the FTC doesn’t necessarily have the same rulebook. There’s no defining what collusion is, is a little bit subjective. And that’s part of what the FTC is. The FTC doesn’t have a rulebook to say what’s collusion and what’s not. It’s a little bit like, well, there’s a you know, it looks like collusion. They’re texting. What is texting mean? I you know, we we all text a lot of people. If I was liable for everything I ever said in the text, Holy smokes, we’d all be done. So the fact that, you know, they got Scott Sheffield for app for texting somebody or communicating with people in OPEC, it’s like, well, duh, he’s in the oil and gas business. And you know, the funny part is I think what they don’t understand is that OPEC doesn’t care about US shale and they don’t actually like it. Remember back in 2014 when they turned on the taps and tanked U.S. shale? I mean, it’s the same OPEC. They haven’t changed. There’s no incentive for them to work with the United States. It’s two different. It’s two different. It’s two different markets really I mean you’ve got Brant and WTI. Yes there’s some there’s definitely a correlation there. But I think the part that these these these you know, this these US Congress people are missing is the fact that they think OPEC will do what U.S. shale one. No no they won’t. Trust me. They may say it upfront in order to, you know for whatever reason. But they’re going to do what’s in their best interest and they’re already holding back production. So what are you. Well, what’s more to do? Hey, we need you to, you know, hold back more oil. I mean, no, that’s that’s definitely not. I mean, again, I think what’s also all getting lost in the tap here is that if President Trump, former President Trump wins, which is looking highly likely that he will, that’s going to do more, in my opinion, damage quote unquote to the to oil price than any quote unquote collusion that’s going to happen. So what’s funny is if Ed Malarkey wants oil prices to go down, probably should elect Trump. But you can’t tell him that because that’s, you know, threat to democracy, all that. We’re just going to get mad if someone gets caught emailing anybody associated with OPEC. Pretty unbelievable. [00:14:38][0.0][850.5]

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