Daily Energy Standup Episode #303 – Coal’s Resurgence, EV Challenges, and BP’s Strategy

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Daily Standup Top Stories

Biden Makes Coal Great Again As Exports Soar To India

Highlights of the Podcast

00:00 – Intro
01:33 – Biden Makes Coal Great Again As Exports Soar To India
03:34 – Why Americans don’t want electric vehicles
08:04 – Facing demand increase, Duke Energy seeks to delay its 2030 climate target in North Carolina
10:40 – More questions than answers after Massachusetts order to transition from natural gas
13:14 – Markets Update
14:58 – EIA “Short-Term Energy Outlook”
17:12 – BP beats forecast with $3 billion quarterly profit, boosts buybacks
26:45 – Outro

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

Michael Tanner: [00:00:14] What’s going on, everybody? Welcome in to another edition of the Daily Energy News Beat Standup here on this gorgeous Wednesday, February 7th, 2024. Here are today’s top headlines. First up, Biden makes coal great again as experts soar to India. Next up, why Americans don’t want electric vehicles. We’ve got a few reasons, but we’ll see what this one says. Next up facing demand increase, Duke Energy seeks to delay its 2030 climate target in North Carolina. Last, in our news segment, more questions than answers after Massachusetts orders to transition from natural gas stool. Then toss it over to me, I will quickly cover what’s going on in the oil and gas finance market. Today. We saw BP drop earnings after the market, actually beating their quarterly profit estimates and rolling out a dividend. So we saw that stock increase. We’ll also touch on crude oil prices and the API crude oil inventory numbers give us a forecast of what you guys might see today. And we also got the latest short term energy outlook specifically focusing on natural gas. So we will cover all of that in a bag of chips guys. But in person for the first time. Give me give me a pound here. Yeah I’m Michael Tanner. We’ve got Stuart Turley here. Let’s kick us off. [00:01:27][73.2]

Stuart Turley: [00:01:27] Hey let’s get rolling here. My buddy Biden diaper Dan, as I affectionately call him. Let’s head over to Biden. Makes call again great. And my so when we sit back and kind of go, it’s actually pretty funny. U.S. thermal coal exporters recorded more than $5 billion in overseas sales in 2023. Shipping over. Michael, are you ready for this? 32 million metric tons of the high polluting power fuel, according to Reuters. [00:02:00][32.7]

Michael Tanner: [00:02:01] As the title says. Make coal great again. [00:02:03][1.9]

Stuart Turley: [00:02:04] Great again. You know, the funny thing is they’re shutting down the coal plants. China and India are bringing them up. China has more than 400 in production and another 600 approve. [00:02:17][13.4]

Michael Tanner: [00:02:18] Well, this is one of our favorite sources routers. There’s a quote in here. India is expected to remain a keen buyer of international coal, as the domestic reserves are being depleted in power from to rely on coal. Forget this 75% of the electricity. They’re not going anywhere. [00:02:33][15.1]

Stuart Turley: [00:02:34] No. In fact, India is beefing up their cars, the EV cars that they’re bringing in from China. So it’s really pretty funny that India is becoming the number one destination. Here’s the coking coal. Here’s why they’re doing that. We are moving manufacturing from China to India so they can import our coal to make the pollution in India more. This is making my head hurt. [00:03:04][30.3]

Michael Tanner: [00:03:04] Well don’t worry, Apple’s moving its operations from China to India. So so they’re going to be using that coal as well. That’s the funny part is that you’ve got everybody now switching from China to India. Just as India becomes more reliant on all these quote unquote killer fossil fuels that everything’s going on. [00:03:21][16.6]

Stuart Turley: [00:03:21] Oh it’s unbelievable. I again, they’re they’re the Indian leaders are doing the best they can to elevate their economy and their people and eliminate energy poverty. But hey, Michael, let’s go to the next one. Why? Americans don’t want electric vehicles. Why do you think that? Just give me your first opinion a while. [00:03:43][21.4]

Michael Tanner: [00:03:43] Because I saw a tweet the other day from. I won’t call the guy out, but his name, he’s he’s a prominent he’s a prominent, energy like, renewable energy guy on Twitter. Right. And he tweeted out something of the effect of my app won’t work, so I can’t get into my Tesla. [00:03:58][15.2]

Stuart Turley: [00:03:59] No way. Yeah. [00:04:00][0.8]

Michael Tanner: [00:04:01] He was it seeking with you. So why don’t I like EVs too electronic I like I got my four wheel drive on a block. I don’t need the government driving me right to the right to the the police station when I make a wrong turn. [00:04:14][12.7]

Stuart Turley: [00:04:14] The government doesn’t like me anyway, but we’ll leave that alone. [00:04:17][2.5]

Michael Tanner: [00:04:17] And that’s maybe not EVs as much as it is the electronic car part. I think the problem with EVs is especially like the cold. Maybe in a hot weather environment. It works, right. Think about that cold streak we just had. [00:04:28][10.5]

Stuart Turley: [00:04:28] Oh, and they don’t. Here’s where the number one thing was. Fewer drivers are interested in driving electric vehicles. Hertz. According to a new survey, this is further confirmed by Hertz’s recent announcement to sell 20,000 electric cars in its fleet. We’ll be able. [00:04:47][19.4]

Michael Tanner: [00:04:47] To get them cheaper. [00:04:48][0.3]

Stuart Turley: [00:04:48] Oh, no, I would, but you gotta buy a new battery for $20,000. Now, here’s the thing. The zero the number one issue is the charging stations. The charging stations are a failure. And then the zero emissions label is misleading. This is coming up into a whole energy thread that we have. Is that the numbers for the green energy? Yesterday on our podcast we talked about the UK and how they are misleading. The electricity. Electricity. The green. I’ve interviewed several, big people on, green energy and how climate crisis is being mis reported. That’s coming out here as well too. So, when you sit back and take a look, who can afford Michael the tax incentives, the rich, do you think the poor people will ever care about a tax incentive. [00:05:47][59.1]

Michael Tanner: [00:05:48] Because they don’t have enough free capital to spend? Unfortunately, there are some. I know this comes as a shock to some people, but there are some people in the world. They just have to buy what’s around them because it’s cheap and they don’t have that much money. We don’t just have all this excess money to have a political stance around. [00:06:05][16.9]

Stuart Turley: [00:06:06] No, and I just felt so sorry for all the folks in Chicago that had to wait eight hours to charge their car. Now, on a side note, I’m about ready to go to the next story, Michael. But Toyota, is leading the charge on their, hybrids. You and I have been talking about hydrogen hybrids for over two years, and I’m all in on having a hybrid car and getting another 4 to 5. No, not a four. [00:06:35][29.7]

Michael Tanner: [00:06:36] Oh, yeah. I want to do. Neighborhoods are definitely the both the best of both worlds. I’m all for battery backup on houses, especially when you have when the grid is in such crazy condition like we’re in. You know, this is this is a, not an opinion piece, but more of a research paper. Jason Isaac, he’s the founder and CEO of the American Energy Institute. Okay. He recently was in front of Congress, the Senate or the Senate Energy and Natural Resources Committee. They heard they had a hearing on the federal electric vehicle incentive that says, is that basically what their what their research showed is that every EV sold places in nearly $50,000 additional cost to taxpayers. [00:07:16][40.6]

Stuart Turley: [00:07:18] And yes. And then you have, the tires. Tires are lasting less than 5000 miles. [00:07:25][7.6]

Michael Tanner: [00:07:26] Why are the tires on EVs? Why is that? My tire mean my tires are bald right now, but they’ve lasted a while. [00:07:31][5.2]

Stuart Turley: [00:07:32] 30,000, 40,000 miles. It’s because the way. The way. And then the car parking lots are failing. You start putting in because, EV, the weight on an EV is 14, 15 times more than a normal car. [00:07:50][17.6]

Michael Tanner: [00:07:50] You’re right. They’re much heavier. It’s, you know, it’s. I mean, I’m not driving an EV, trust me. [00:07:55][5.1]

Stuart Turley: [00:07:56] No, but a hybrid gets you 60 miles per gallon. [00:07:59][3.0]

Michael Tanner: [00:07:59] Oh, yeah. I’m all about the hybrid. [00:08:00][0.8]

Stuart Turley: [00:08:01] I’m all in on the hybrid. All right, let’s go to the next one here. Facing demand increase, Duke Energy seeks to delay its 2030 climate target in North Carolina. Michael, you know what my opinion is of Duke? I always think good management, good numbers in any company. And they’ve always, really, done quite well. Duke is is trying to do all forms of energy, and they are now projecting to increase their, energy demand is really going, they are trying to increase 12% increase in demand by 2038, driven by two dozen economic, development in the Carolinas. And some of those are server, issues. So, AI is going to be just huge. However, they’re trying to load in more natural gas plants. I gotta hand it to them. It’s tripling down on the coal. The gas transition. Saddling customers with risky investments in new polluting power plants and failing to deliver clean energy. Future call for a state law was Will Scott, southwest climate and clean energy director for the Environmental Defense Fund, in a prepared statement. He’s not reading all of the tea leaves, but he. [00:09:25][84.7]

Michael Tanner: [00:09:26] But they’re retiring. They they they stated, if you read this article, they’re they’re moving up the retirement of coal and moving to natural gas, which should be celebrated by everybody, because that’s one of the bets. The biggest way, the biggest reason emissions fell. It is because the transition from coal to natural gas. [00:09:44][18.3]

Stuart Turley: [00:09:44] EIA several years in a row, right. That was their biggest reason. [00:09:49][4.4]

Michael Tanner: [00:09:49] But you’ve got the regulatory counsel for the North Carolina Sustainable Energy Association, Justin, whatever his last name is, some Lafarge doesn’t know anything. Who knows what how to pronounce his last name. Point is, he says the bad news is they’re doing they’re doing that transmission asset to interconnect new gas. Xfinity. And I’m sorry. [00:10:09][20.0]

Stuart Turley: [00:10:10] That you can’t. When you sit back and take a look. People who just are religion are causing problem. Let’s talk about physics and finances and then let’s get everybody on the road. I’m all in on Duke Energy. Yep. I’m I’m with the managers on this. They are doing what’s right. And you just gotta love family meetings with people that don’t like, facts. Let’s go to the next one here. More questions and answers after Massachusetts. Duke. That’s Oklahoma. Way to talk. Order. To order. Transition from natural gas. I’m not sure how to even get into this one. They’re beginning to chart their next steps following an order issued two months ago that said, signaled the beginning of the end of natural gas in the state. This is a quote, said Senator Michael Barrett. The order poses the questions, but doesn’t answer them for the most part. Well, imagine that it’s opening statement in the huge, conversation Massachusetts needs to have about truly reducing the footprint in in the gas system in the state. It’s just unbelievable. They’re already on the track. Here’s, Caitlyn PL Sloan, vice president for, mass. Two sits at the Conservative Law Foundation. They are already on the track. Everything is going to be electrified, so it should be relatively aligned. Most of the changes are on the gas utilities where they have to reformat their business model to deal with this. These are regulatory, issues that they’re putting in on methane and controls. On that. [00:12:00][109.6]

Michael Tanner: [00:12:00] Since they even killed renewable natural gas, like, they they don’t even want they want to push us to such an end. They’re going to end up, as you know, once this all shakes out, buying their intermittent gas. From who? Your friend. Putin. [00:12:15][14.5]

Stuart Turley: [00:12:15] Putin. Right. A he all this is helping Putin. So, I’d, I’d say I had a fun segment off to you now, dude. [00:12:25][9.3]

Michael Tanner: [00:12:25] Yeah. But before we go ahead and dive into the finance section, guys, we’ll go ahead and pay our bills here. As always, this podcast is brought to you by the world’s greatest website, Energy News Beat.com the best place for all of your energy news. Doing the team. Do a tremendous job keeping that website up to speed. Everything you need to know to be the tip of the spear when it comes to the energy business. Check us out again. Online energy news be.com. Hit the description below this podcast. You can go ahead and see all the timestamps, all the links to the articles. You want to go back in here. You’re anything you could do that skip ahead to see how BP’s earnings shook out. Feel free to do that. You can also hit us up dashboard.energyNewsbeat.com. it’s our MVP that we’re looking at for for for our little data news combo products. So check that out. You can email the show questions@Energy News beat.com. [00:13:13][47.5]

Michael Tanner: [00:13:14] When we look at the markets today I mean they were there was some positive news. Remember we got a lot of earnings rolling out specifically. And then on oil and gas we saw the S&P 500 fairly flat today only up about quarter of a percentage point. Nasdaq that falls about a quarter of a percentage point. dollar index stays fairly flat only only down about a, 10th of a percentage point. We did see Bitcoin rise to above $43,000. Currently trading 4321. Markets are closed right now for oil or markets have reopened. Excuse me for the night trading session here as we record this about 7:00 Central Standard Time, we’re going to go ahead, and work that night. Session 7365 is the current trading price. That’s up about a dollar, from where it was trading at earlier, mainly due to the reason that there what seems to be, a growing ceasefire consensus going on in the Gaza Strip. The problem, the problem is, is we see prices rise in light of new ceasefire talks. Something between me and you doesn’t necessarily compute. And again, that’s again why when you’re reading something like Reuters, be mindful of the fact that they’re just they’re just taking the news of the day and trying to fit it in with what happened to oil prices, when that may or may not be the case. I think the big thing that was influencing prices today was the fact that we saw the API come out. We were forecasted to see AA2 point one, 2.1 million barrel build in the strategic petroleum reserves, which will drop as you guys listen to this, on Wednesday, they’re forecasting only about a 500,000 barrel increase, which again, that’s going to be, you know, aggressive on prices. So we absolutely love that. I think the only other thing that we saw, today’s 2 or 2 things. First EIA dropped short term energy outlook outlook. They go ahead and basically do this every single month. But if we don’t mind Andy going ahead and throwing up this this chart here. This first, this first. Chart that they have, which is basically comparing, West Texas Intermediate crude oil prices. Confidence intervals. Okay. So you’ve got basically the current price. You know, they’ve got the QE2 curve which gets in above $120. That’s their top one. They got the Tanner curve, which is the lower one which says prices could end up somewhere in the the the 60 to $40 range. I don’t know if I believe that, but really where they’re showing prices is is a downward spike. And I think that’s changing a little bit from the sentiment. If you go ahead and look at that, that first image, I mean they’ve got price is holding fairly constant at that $75 mark, which I think is absolutely super fascinating. Considering I think we’re a lot of other people believe prices to go. So if you, if you’re a, a believer in that forecast, which I am, and all of the deals that we’re currently working with, we’re underwriting at $75 oil, $70 oil. So we’re we’re not being too aggressive. But I think it’s interesting there. I think the other thing, to notice is that natural gas consumption, peaked at 118 BCF per day, consumed in January, which is a new monthly record, again, that was mainly driven by the renewable sector. We’re converting a lot of battery power, but absolutely have to love it. Natural gas storage in yeah, yeah, I basically had a withdrawal of about 920 BCF, which is the third most ever, which is interesting because we see prices come down. We’re currently sitting about $2, basically even for the spot price. Mainly what that means is the beginning of the month, we started with about 13% more natural gas storage than we did over the five year average. And that’s generally how things are covered in the natural gas markets. If you’re above the five year average, anything that brings you back down below that is going to see as positive. Anything that brings you up is going to see that. So, you know, prices on the natural gas side were were depressed. But we did see Brant again last, last month, January, averaging about $80 per barrel. I think the only other thing that I find interesting, Stu, is that BP did drop their earnings last night. They saw about a 5% bump in their their stock price, posting a basically beating their earnings by about $3 billion for the fourth quarter and went ahead and decided to do another round of share buybacks. This was the first time earnings call for newly appointed CEO. What’s his name? Murray. And to close, you know, basically this is and you know, he was named the permanent CEO a few weeks ago after being named the interim CEO. You know, just a little side note, Bernard Looney, the former CEO, got fired for having, inappropriate relations with colleagues. Well, guess what? Don’t worry. The new CEO, he’s dating somebody at BP, but he’s properly disclosed it, so. No, don’t don’t look over here. Look over here. Yeah, well, we’ll give it two years before that. The fallout on that. But, but but mainly what happened is and, and while we did see, you know, the stock price rise by 5%, something I found interesting is that, you know, in the earnings call, Andrew Close did come out and say BP remains strong, remain strongly committed to its strategy and attempt to reduce oil production by 25% from 2019 levels, basically to 2 million barrels per day, while still attempting to grow their renewables and low carbon business. But in the other breath, he said that they could grow its oil output beyond its 3% target for 2022 to 2027. So he’s talking out of both sides of his mouth. Yeah, hey, we’d like to reduce, but we probably won’t. It’s going to increase probably by 3%. As we drive towards this is the quote, as we drive towards 2025, we are focused on simplifying the business. We will pragmatically, pragmatically adapt to what’s happening in demand with society. We will go for the highest returns and the highest value projects. And we know that’s probably not going to be solar. They didn’t come out and say they are looking for partners, specifically in their Lightsource bp division and canceling their, wind offshore or their wind project with Equinor. They’ve got 12 to 16 oil and gas projects that could potentially get, a FDI, which is a final investment decision. Over the next two years, you know, to give you guys an idea, profit was about three. Excuse me. Profits. Excuse me, were about 2.99 billion, beating the forecast of 2.77 billion. That’s still about half from where they were last year, mainly due to the fact that really strong refinery profits. Remember, Exxon and BP have really strong refining businesses, which as prices rise, you almost get a premium for those refined products. So we absolutely love that. You know, both Exxon and Chevron last year did beat their profit expectations, mainly due to the back of higher oil and gas production. BP went ahead and said they’re going to maintain their dividend of $0.07 per share and increase the rate of stock buybacks to $1.5 billion over the next three months, which is up, excuse me, 1.75 billion, which is up from 1.5 billion on the previous three. So market reacted fairly positive for that. They generated about 32 billion of cash last year compared to 41 billion A. 2022. They did release their net debt by about $1 billion. But you know overall good, good earnings for BP. What I’m interested in Stu, is so they’ve got a new CEO now. But it doesn’t seem like they’re too terribly interested in changing strategy. This is going to continue to bite them in the bank as they move forward. This was an opportunity, I think, for them to shift strategies and get back into the oil and get back to what’s really making the money, which is their refining business and their oil and gas business. They’ve said some tea leaves about, oh, we’re going to bring in a partner for light sauce. Hey, we’re canceling this project with Equinor, but they still want to reduce their oil output by over 25%. Now as they said, they’re not going to do that. But I’m interested in where you think BP’s going the toilet. [00:20:51][456.9]

Stuart Turley: [00:20:51] And when you take take a look at Chevron in Exxon and Oxy. They’re not, total, total energy, as we call it on the show, is actually moving, more along the lines of the U.S. and they’re drill, baby, drill. And they are also doing it again, Saudi Arabia has the mold broken. Yeah, they are using their profits to pay for their hydrogen for their renewable. They’re doing it right in the U.S.. I gotta hand it to oxy. I mean, oxy, he’s doing it right. The the next big thing is the carbon capture and the carbon taxes. Oxy is leading the charge on that. [00:21:41][50.0]

Michael Tanner: [00:21:42] No, what I’m wondering is, you know, I would say pre-COVID, you know, there was a big push to, like, will BP officially divest BP? Remember, their U.S. onshore unit is a subsidiary that they fully own. It’s not floated on the stock market or whatever. There was talks that it may or may not. They may sell that business completely. Right now, I don’t think they do. [00:22:05][22.9]

Stuart Turley: [00:22:05] Know, because, total energy, but, enough gas powered plants two months ago, three months ago, in Texas that are equivalent to two nuclear reactors. So there are oil companies buying energy projects in the U.S. from the majors around the world? [00:22:29][23.9]

Michael Tanner: [00:22:29] Yep. Absolutely, guys. [00:22:31][1.3]

Stuart Turley: [00:22:31] Well, let me, throw this at you here. We just had this article about Duke Energy saying that in Duke Energy, the demand is going to increase in the next year, year and a half, 12%. I’m looking at the article that we had earlier, minus the short. [00:22:49][17.7]

Michael Tanner: [00:22:49] Term energy outlook. [00:22:50][0.5]

Stuart Turley: [00:22:50] On the short term energy outlook. And when you take a look at the, natural gas is going to go up next year and the following year to 42% of our electrical generation is natural gas. And then it’s going to downsize to 41 in a few years. Coal is going to keep going down 20, 17, 15 and then 14. They’re just going to keep closing those coal plant nuclear. 1919 1919. They’re not increasing our nuclear capacity. Renewables. This is where I think they’re wrong on their numbers 21, 22, 24, 26% of our, electrical generation will be done by renewables. [00:23:41][51.4]

Michael Tanner: [00:23:42] And what’s crazy is that’s not a big forecast jump. That’s only five, 6% a year, which to do all of the crazy transition stuff that everyone say to go net zero by 2030, we’d have to do 20, 30, 40% cuts a year. [00:23:56][14.0]

Stuart Turley: [00:23:57] And it’s not. [00:23:58][0.7]

Michael Tanner: [00:23:58] I don’t even believe. [00:23:59][0.7]

Stuart Turley: [00:23:59] It. No, the numbers are not there. But listen, here’s where the second order of magnitude of this report kicks in is the CO2 emission. Let’s go through this real quick. Okay. So remember we had 12% increase. But yet you’re going to remain flat on natural gas and you’re remained flat on, nuclear. And you’re going to increase your renewables, which does not help your, elimination of CO2. So here’s where this goes. It’s, 400 and 4941 metric tons, million of metric tons this year. 4700, 4783 million metric tons. And it’s flat from here on out. Even though they’re reducing coal, even though you’re increasing renewables, you’re not going to get any better unless you do more natural gas and more nuclear. And it ain’t going to happen. Yeah, we are going to flat. Line on reducing our, CO2 emissions. I think that it is actually hypocrisy in numbers is is screaming out of their report. [00:25:20][80.8]

Michael Tanner: [00:25:20] The IEA has taken a playbook out of the IEA. Maybe they borrowed some borrowed some analyst. Absolutely unbelievable. So all right. Well that that does it for us here folks. What else should people be worried about. We’re here down in Houston for Nape. It’s going to be awesome. [00:25:35][14.5]

Stuart Turley: [00:25:36] Oh we’ve got some, great events lined up. We are, communicating with the folks for the governor and, the governor of Oklahoma, governor of Texas. We have, three other, podcast tomorrow. We’re also working to try to get the inductees that are going to be there. We have, executives from embarrass. We have Doug Sandridge, he is, the executive director for the, oil and gas executives for nuclear. We have, Sharon Manns. She’s with, CEO of Nccn, technology and AI and oil and gas. We have Jay Young will be over in the booth. It is a phenomenal lineup. [00:26:25][49.0]

Michael Tanner: [00:26:25] We’ve got well database Pecos country operating and. [00:26:29][3.1]

Stuart Turley: [00:26:29] And. [00:26:29][0.0]

Michael Tanner: [00:26:30] W energy. We’ve got CEOs out the wazoo going to be at our booth. [00:26:33][3.9]

Stuart Turley: [00:26:34] We got was issued the CEO. It almost sounds like something you’d order at, Chipotle or something. Yeah. Ooh. Okay. We’re having fun though. Thank you all very much. [00:26:45][10.8]

Michael Tanner: [00:26:45] Now it’s going to be awesome. Guys will appreciate everybody checking us out. We will be back here on Thursday, back here tomorrow for our final show. And then you’ll be able to hear our weekly recap over Stuart Turley. I’m Michael Tanner. We’ll see you tomorrow, folks. [00:26:45][0.0][1562.0]

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