Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav

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Irina Slav

Irina is a writer for with over a decade of experience writing on the oil and gas industry.

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Are You Prepared For The Mass Repricing Of Goods And Services?

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by Tyler Durden
Sunday, Oct 17, 2021 - 09:20 AM

Authored by MN Gordon via,

Rising consumer price inflation is not going away.  This, of course, is counter to the “transitory” argument made by Federal Reserve Chairman Jerome Powell earlier this year.

Powell’s cohort, Atlanta Fed President Raphael Bostic, recently admitted inflation is not transitory.  This admission comes with assurances the Fed will properly manage it.  We have some reservations.

The effects of rising consumer prices range far and wide.  For one, the pinch rising prices put on consumers is extraordinarily disruptive.  It acts like a hefty tax…eroding family budgets that are already stretched.  In this ongoing stagflation, personal income gains lag far behind rising consumer prices.

Industrial materials and consumer goods companies also feel the pinch.  They can pass on some rising prices to consumers.  They can also absorb through lower profit margins some short term price increases.  But there are natural limits to what price increases can be absorbed and passed along.

When input costs, including raw material and labor, push the costs of the final manufactured goods above what they can readily be sold for the business motive breaks down.  Halting operations makes the most business sense.

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Plant-Based Food Companies Face Critics: Environmental Advocates

Consumers and investors alike have gobbled up Beyond Meat’s burgers, sausage and chicken in recent years, thanks at least in part to the company’s message that its plant-based products are good for the environment.

But some are not so sure.

One investor-tracking firm gives Beyond Meat a zero when it comes to sustainability measures. Another rates it a “severe risk,” putting it on a par with beef and chicken processing giants JBS and Tyson.

“We don’t feel we have sufficient information to say Beyond Meat is fundamentally different from JBS,” said Roxana Dobre, a manager of consumer goods research at Sustainalytics, a firm that rates the sustainability of companies based on their environmental, social and corporate governance impact.

At first glance, it seems logical that plant-based food companies like the publicly traded Beyond Meat and its privately held competitor, Impossible Foods, would be better for the environment than meat processors like JBS. Those processors slaughter and package millions of heads of cattle each year, a significant contributor to methane released into the atmosphere.

The problem, critics say, is that neither Beyond Meat nor Impossible Foods discloses the amount of greenhouse gas emissions from its operations, supply chains or consumer waste. They also do not disclose the effects of their operations on forests or how much water they use.

But on its website, Beyond Meat claims that consumers who switch from animal to plant-based protein can “positively affect the planet, the environment, the climate and even ourselves.” Impossible Foods says that switching to plant-based meats “can be better than getting solar panels, driving an electric car or avoiding plastic straws” when it comes to reducing your environmental footprint.

“The dominant narrative from the plant-based industry and the venture capitalists supporting it is that these companies are better for the environment, they’re better for health, they’re better for this and better for that,” said Ricardo San Martin, research director of the alternative meats program at the University of California, Berkeley. “But it is really a black box. So much of what is in these products is undisclosed. Everybody has a supply chain, and there is a carbon footprint behind that chain.”

By some estimates, the agriculture industry produces one-third of the world’s greenhouse gases linked to human activity, is a primary driver of deforestation and uses as much as 70% of the world’s fresh water supply.

Yet it is lax in terms of tracking and disclosing not only its greenhouse gas emissions but also the effect it has on forests and water use. An examination of 50 North American food companies this year by Ceres, a nonprofit investor network, found that the majority did not disclose emissions from crops and livestock used in their products or disclose emissions from converting forests into agricultural use.

In response to growing investor concerns about the risks of climate change on corporations, the Securities and Exchange Commission is weighing a rule that would force companies to report their emissions, although it remains unclear whether the agency would also have companies account for emissions that came from supply chains and consumer waste.

Even as consumers and investors move to hold Big Food more accountable for its emissions, the fact that two of the leading plant-based food companies do not offer these disclosures is a source of frustration for watchdogs.

Beyond Meat, which went public in spring 2019 and whose shares have fallen 16% this year, said it had completed a comprehensive greenhouse gas analysis that would be released in 2022 and planned to update its environmental, social and governance goals by the end of the year.

But Patrick Brown, founder and CEO of Impossible Foods, echoed some of the arguments made by big food companies around the current accounting and reporting standards for emissions and other climate data, saying it does not reflect the total impact of a company like his.

The environmental, social and governance reporting that currently exists “simply doesn’t contemplate something of the magnitude that we’re doing,” he said. “We are as transparent as it is reasonably possible to be about our environmental impact, but the existing framework doesn’t recognize, doesn’t appreciate, the overall majority of our impact, which is massive.”

A spokesperson for Impossible Foods added that the company had a working group that had completed a full greenhouse gas inventory, was planning to set targets to reduce emissions and was preparing for environmental, social and governance reporting.

Both Beyond Meat and Impossible Foods have commissioned studies by academics or third parties that compare how their plant-based burgers or sausages stack up to beef or pork products. A 2018 study by researchers at the University of Michigan concluded that a quarter-pound Beyond Burger generated 90% less greenhouse gas emissions than its beef burger equivalent.

Likewise, an analysis by a third-party firm done for Impossible Foods concluded that its plant-based burger used significantly less water and land and created fewer emissions than the meat equivalents. For other food products, Impossible Foods has commissioned similar analysis that also include details on its supply chains and land and water use for the individual products.

But those reports, say analysts, may not tell the whole story about how the production of plant-based burgers, sausage and chicken may be affecting the climate. An Impossible Burger has 21 ingredients, according to the company’s website, including soy.

“The problem with plant-based products, generally speaking, is that while they may be fixing one problem, combating the fact that growing meat is very carbon-intensive and emits a lot of carbon dioxide, depending on the ingredients and where they are sourced from, you could still be involved in deforestation issues,” said Dobre of Sustainalytics. “You still need the space to grow the soy that is in many of these products.”

Brown of Impossible Foods acknowledged that soy was a key ingredient in the company’s products but argued that much of the soy grown in the world is used to feed animals and that Impossible Foods uses the soy more efficiently than the animals do.

Further arguing his point, Brown said it would be “ridiculous” for the company, which uses coconut oil in its products, to try to ascertain how many of the coconut shells it used were recycled versus thrown away.

“It’s such a tiny fraction of the positive impact that we’re having, to be perfectly honest,” he said. “We’ll report it if it’s necessary, but really, you’re totally missing the point if you’re obsessing about that kind of stuff.”

Trying to account for every sustainability measure “is a ridiculous use of our resources,” he said. “It will make us less impactful because we’re wasting resources to satisfy an Excel jockey rather than to try to save the planet.”

© 2021 The New York Times Company

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Interior Secretary Haaland Says Wind Turbines May Soon Line US Coasts

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by Tyler Durden
Saturday, Oct 16, 2021 - 07:30 PM

Authored by Nathan Worcester via The Epoch Times (emphasis ours),

Speaking at a wind industry conference held by the American Clean Power Association, Secretary of the Interior Deb Haaland announced plans by the Bureau of Ocean Energy Management (BOEM) to arrange seven offshore lease sales along the U.S.’ coastlines by 2025, in line with the Biden administration’s executive order, “Tackling the Climate Crisis at Home and Abroad,” which directed the Secretary of the Interior to “[double] offshore wind by 2030.”

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US Coal "Roars Back" Under Biden Unlike Trump 

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by Tyler Durden
Saturday, Oct 16, 2021 - 08:00 PM

One of the biggest ironies to start this decade is the transition from fossil fuel generation to green energy has created a global energy crisis that is forcing the U.S., among many other countries, to restart coal-fired power plants monumentally ahead of the winter season in the Northern Hemisphere to prevent electricity shortages.

The virtue-signaling assault by the green lobby spearheaded by hapless puppet Greta Thunberg must beside herself as U.S. power plants are on course to burn 23% more coal this year, the first increase since 2013, despite President Biden's ambitious plan for a national grid to run on 100% clean energy by 2035. 

A global energy crunch is rippling through the world amid a huge rebound for power. Natural gas has soared to record highs as supplies remain tight, and countries are finding out that renewable energy sources aren't as reliable as previously thought. This has created a massive worldwide scramble by power companies for fossil fuels, especially coal.

U.S. utilities are transitioning to coal because soaring natural gas prices make it uneconomic to produce electricity. At the moment, 25% of all U.S. electricity produced is derived from coal-fired plants, up ten percentage points since the beginning of COVID. ...

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After Rapid-Fire "Blame Putin" Headlines, European Commission Quietly Affirms Russia Is Not Manipulating Gas Market

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by Tyler Durden
Saturday, Oct 16, 2021 - 11:00 AM

Putin earlier this week batted down as "utter nonsense" widespread accusations among Western media pundits that Europe's energy crisis is due to the Kremlin using gas as a 'geopolitical weapon'.  It now appears the European Commission is quietly agreeing with him. This as Nord Stream 2, which Washington has long battled to stop, is awaiting final approval from German regulators begore going online.

As the Economist summarized of the ongoing accusations: "Russia is responding to a view gaining currency in European capitals that Gazprom, the state-controlled energy goliath that is the continent’s biggest supplier, has been stoking the continent’s energy crisis by withholding exports of natural gas. European parliamentarians are demanding that Gazprom be investigated for not shipping more gas, allegedly as a ploy to secure final regulatory approval for the controversial Nord Stream 2 pipeline designed to ship Russian gas to Germany."


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UN Climate Change Conference Reportedly Using Diesel Generators To Charge Teslas Being Used As Shuttles

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by Tyler Durden
Saturday, Oct 16, 2021 - 01:00 PM

We're not sure we can think of a better analogue for the lunacy behind the climate change hysteria that what is reportedly going on in Glasgow. 

As many people know, the Conference of the Parties (COP) Climate Change Conference, hosted by the UK in partnership with Italy, is taking place in Glasgow from October 31 to November 12. 

One blogger from Brighton wrote this week that attendees from the conference will be staying at Gleneagles Hotel.

He wrote that there's 20 Teslas at the hotel to shuttle people back and forth to and from the convention, which is about 75km. 

Then, the kicker. Since the hotel only has one Tesla charging station, diesel generators were contracted to help recharge the Teslas overnight. ....

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Europe EU Natural Gas - Live chart -

European gas prices eased back to a 1-week low of 92.3 euros a megawatt-hour on Tuesday, as forecast of warmer than normal temperatures in November provided some relief after Russia’s state gas giant Gazprom dashed hopes of more gas flows to the continent next month. At the same time, wind output is expected to peak in both Germany and the UK on Thursday. Yet, the natural gas market remains about 380% higher so far this year, amid a strong rebound in demand and reduced inventories ahead of the winter season. The natural gas market took a breath from a record high of 162.125 hit on October 5th after President Vladimir Putin signaled Russia would help Europe to grapple sky-high energy prices by delivering more via Ukraine but an auction on Monday showed no increase in supplies from Russia either through the Ukrainian pipeline or lines passing through Poland to northwest Europe in November.

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U.S. NatGas - Live Chart -

Natural gas futures fell below $5 per million British thermal units, the lowest since September 22nd as demand is seen falling amid mild weather in the US for the rest of October. Meanwhile, major Chinese energy companies are in talks with US exporters to secure long-term liquefied natural gas supplies, as soaring gas prices and domestic power shortages heighten concerns about the country's fuel security, Reuters reported mentioning several sources. Still, gas prices remain elevated and not far from a seven-year high of $6.5 early hit earlier in the month, amid strong demand during the winter heating season and depleted inventory levels, especially in Europe and Asia. The EIA forecasts that natural gas prices at the US benchmark Henry Hub will average $5.67 per million British thermal units between October and March, the highest winter price since 2007–2008.

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Natural Gas Price Prediction – Prices Drop on Warm Weather Forecast

Published: Oct 18, 2021, 19:35 CDT1min read

Natural gas prices moved lower on Monday, dropping 7%, as warmer than normal weather is expected to reduce heating demand as the Calendar turns to November. LNG exports continue to rise, which has helped demand. There are no disturbances in the Atlantic that are expected to become tropical cyclones over the next 48-hours. The EIA expects inventories to drop 5% to the 5-year average for the 9-months ending September.

Technical Analysis

On Monday, natural gas prices tumbled, dropping 7% and poised to test target support near the 50-day moving average at 4.86. Resistance is seen near the 10-day moving average at 5.57. Prices are oversold as the fast stochastic prints a reading of 2, below the oversold trigger level of 20, foreshadowing a correction. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram prints in negative territory with a downward sloping trajectory which points to lower prices.




Inventories Are Expected to Remain Below Average

The EIA forecasts that U.S. natural gas inventories ended September 2021 at about 3.3 trillion cubic feet 5% less than the five-year average for this time of year. Injections into storage this summer have been below the previous five-year average, largely as a result of more electricity consumption in June due to hot weather, and increased exports even as domestic natural gas production has remained flat.


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Natural Gas Price Forecast – Natural Gas Markets Gapped Lower

Published: Oct 18, 2021, 16:13 CDT2min read
Natural gas markets have gapped lower to show signs of weakness to kick off the week. That being said, this is a market that is still extraordinarily bullish.

Natural gas markets have gapped lower to kick off the trading session on Monday, reaching down towards the $5.15 area before turning around to show signs of life. With that being the case, the market is likely to continue to see a lot of support in this general vicinity, if for no other reason than we have the 50 day EMA sitting underneath that is rising. Furthermore, were in an uptrend anyway so at the end of the day that is probably all that matters.

NATGAS Video 19.10.21

Looking at this chart, we could go looking towards the $5.50 level to fill the gap, and perhaps even the $6.00 level given enough time. I think at this point in time it is very likely going to continue to be very difficult to deal with, so what we need to keep in mind is that your position size will be crucial. If you can keep your position size somewhat small and only build once we get some type of confirmation, then you will do much better.

Clearly, you cannot be a seller of this market, as it is in such a huge uptrend. Furthermore, we have cold weather coming and that will increase the demand for natural gas going forward. I have no interest in shorting this market, at least not until we break significantly below the $4.00 level. We are more likely than not to see some type of a bounce in the short term, so I continue to look at it through that prism. Ultimately, I think this is a market that continues to be very noisy, but still has plenty of reasons to go higher in the short term.

For a look at all of today’s economic events, check out our economic calendar.

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Despite the fact that the current administration in Washington and the most powerful figures within the EU are attempting to switch away from fossil fuels, oil, natural gas, and coal use are soaring.  The European Commission claims that it will not turn away from its energy transition priorities and will continue to invest heavily in cleaner energy sources.  The success of fossil fuels in 2021 is not due to an elaborate conspiracy, instead, it is due to poor planning and the unassailable fact that alternative energy source are not yet efficient enough or cheap enough to take over...


Conspiracy Or Incompetence? Why Fossil Fuels Are Flying

By Irina Slav - Oct 18, 2021, 7:00 PM CDT

  • Despite the fact that the current administration in Washington and the most powerful figures within the EU are attempting to switch away from fossil fuels, oil, natural gas, and coal use are soaring.
  • The European Commission claims that it will not turn away from its energy transition priorities and will continue to invest heavily in cleaner energy sources.
  • The success of fossil fuels in 2021 is not due to an elaborate conspiracy, instead, it is due to poor planning and the unassailable fact that alternative energy source are not yet efficient enough or cheap enough to take over.

U.S. coal use is on track to jump 23 percent this year, for the first time since 2013. European utilities are switching from gas to coal because of the former’s soaring prices. And Brent crude just passed $84 per barrel. 

At the helm in Washington is Joe Biden, a president who came into office with a pledge to reduce American energy dependence on fossil fuels. At the helm in the EU are people equally dedicated to phasing out oil, gas, and coal, and replace them with low-carbon alternatives. Yet, it seems fossil fuels have been the only winners from their energy transition efforts.

In a world where conspiracy theories are becoming increasingly popular, someone somewhere must have already started suspecting Big Oil’s influence. After all, a couple of years ago, a U.S. House committee accused Russia of inciting the protests against the Dakota Access pipeline “to suppress the research and development of fossil fuels and stymie efforts to expand the use of natural gas,” per a Fortune report.

Last week, Bloomberg’s Will Wade reported that during Trump’s term in office, coal consumption by utilities in the U.S. had fallen by 36 percent despite all of Trump’s efforts to boost the sector. Now, under the fossil fuel opposing Biden, the decline has reversed to a 23-percent jump in consumption. And that’s in the United States which, until recently, was the biggest producer of gas in the world.

It’s true that U.S. natural gas exports have been growing at breakneck speed this year. Yet the country’s export capacity is still limited, so most of the gas produced locally remains to be used locally. The EIA said this week that gas exports have been rising faster than gas production, so prices were likely to remain high this winter, but, again, there is only so much LNG you can export with existing capacity.

Meanwhile, in Europe, the situation with gas prices has gotten so bad that utilities are finding it more affordable to switch to coal and pay for the higher emissions than stay with gas, which emits less. In other words, the frontrunner in the energy transition race, the EU, is on track to emit more this year amid its emission-reduction efforts because it is finding itself still addicted to fossil fuels.

This is not to say that the energy transition camp will veer off course, and this, in a world where conspiracy theories were true, would have been suspicious. The European Commission this week released what it calls a toolbox to tackle the “exceptional situation” with energy prices.

Among the measures envisaged in the toolbox, the EC has included aid to energy-poor households, tax cuts, and help for industrial users. The focus, however, is on sticking to the transition priorities or, as the EC puts it, “Our long-term transition and investments in cleaner energy sources should not be disrupted.”

“The clean energy transition is the best insurance against price shocks in the future, and needs to be accelerated,” the document goes on to say. “The EU will continue to develop an efficient energy system with high share of renewable energy.”

All this comes after lower wind speeds for much of the year dramatically reduced the actual share of wind power in parts of Europe, contributing to the energy shortage amid growing demand. Solar doesn’t do particularly well in the autumn and winter by definition, too, which increases reliance on fossil fuels. And yet, the EC proposes acceleration rather than a reconsideration of the energy transition in its current form and increased reliance on both wind and solar.

If this was a movie, it would end with the clever protagonist uncovering an elaborate plot devised by Big Oil to boost its profits by first building our reliance on unreliable energy sources and then cunningly reducing the availability of the reliable ones - fossil fuels - to push prices higher.

However, this is not a movie, and Big Oil has been forced to rethink its own priorities with a view to staying relevant in a low-carbon world. The supermajors are spending billions on renewable energy projects, although to many, it is still too little, too late. Yet the industry will still reap the benefits of the energy crisis that has gone from regional to global in less than a month.

One could argue that this is an energy version of a dead cat bounce and the long-term outlook for fossil fuels remains bearish. However, with the EC and Washington still unable to influence wind speeds and the Earth’s spin around the Sun, chances are even the long-term outlook for fossil fuels is brighter than many might expect. Unless, of course, we manage to slash global energy demand by a sizeable chunk in short order. But that’s another conspiracy theory entirely.

By Irina Slav for

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5 Energy Stocks To Watch As Earnings Season Comes Up

By Alex Kimani - Oct 18, 2021, 5:00 PM CDT

  • Earnings season is upon us once again, although no energy companies have reported their Q3 earnings yet.
  • Two oilfield service giants are set to report earnings this week, with one of them predicted to overperform and the other one set for disappointment
  • Both Next Era Energy and Next Era Energy Partners are set to report earnings this week, with the subsidiary expected to perform the better of the two

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Oil And Gas Companies Will Never Truly Be Carbon Neutral

By Tsvetana Paraskova - Oct 18, 2021, 3:00 PM CDT

  • Oil and gas companies are pushing a net-zero narrative, but their pledges may not live up to true carbon neutrality.
  • Carbon neutral oil and gas is largely reliant on the murky world of carbon credits and carbon offsets.
  • The lack of standardization and transparency within the carbon credit market has drawn a lot of criticism.

The energy transition, net-zero pledges, and increased investor pressure on oil and gas companies to slash emissions have given rise to the latest trend in energy markets—the arrival of the ‘carbon neutral’ oil barrel and the ‘carbon neutral’ liquefied natural gas (LNG) cargo. 

Oil and gas firms have started to offer those so-called carbon neutral oil and gas shipments. And buyers are lapping them up as they themselves are also pressured by investors and their own carbon reduction pledges to procure lower-emission energy supply. 

Energy firms offering carbon-neutral LNG or oil cargoes say that until carbon capture and storage (CCS) or direct air capture technologies reach maturity and develop at scale, nature-based carbon offsets could be the best shot at immediate emissions reduction.  

Currently, ‘carbon neutral’ oil and gas are being ‘emission-neutralized’ by carbon offsets, in which buyers and sellers pay for participation in emissions-reduction projects elsewhere (actually anywhere) in the world. In this case, ‘carbon neutral’ implies that the seller or buyer, or both, have paid to reduce emissions by investing in projects to save forests or to support a renewable energy project somewhere. As-is, ‘carbon neutral’ does not mean that the emissions generated from the production, liquefaction, and transportation of the gas have been offset during those processes with technologies such as carbon capture, for example.

The carbon offsets approach has drawn a lot of criticism from environmentalists, who say that this is just more greenwashing from an industry in terminal decline, which continues to avoid taking action to save the planet. 

Moreover, the growing carbon-offset market lacks standardization of quality carbon credits, companies aren’t required to disclose information, and there isn’t any unified standard to measure how much carbon footprint is being offset. These issues put ‘carbon neutral’ oil and gas in a grey area, which doesn’t help the image of the companies saying they use carbon offsets.

The Carbon Neutral Oil & Gas Trend  

Many major oil and gas firms have recently announced carbon-neutral oil and LNG deliveries. 

In January, U.S. Occidental delivered said it had delivered the world’s first shipment of carbon-neutral oil, or oil where emissions associated with the entire crude lifecycle—wellhead through the combustion of end products—have been offset. Sweden-based Lundin Energy said in April it had sold the world’s first certified crude oil produced with net-zero emissions from an oilfield offshore Norway. In June, the company said that all future barrels that it would sell from Western Europe’s biggest field, Johan Sverdrup offshore Norway, would be certified as carbon neutrally produced. Lundin Energy further worked to offset net residual emissions using natural carbon capture projects certified by the Verified Carbon Standard (VCS). 

TotalEnergies and Shell are also selling carbon-neutral LNG cargoes, mainly to customers in Asia. 

Part Of The Solution Or Greenwashing? 

“To decarbonise LNG, all levers will need to be pulled. Avoiding emissions where possible, reducing emissions where they cannot be avoided, and offsetting emissions when they cannot be avoided or reduced. As more ways to avoid and reduce emissions develop at scale, the industry needs to work together to use high-quality carbon credits to compensate for greenhouse gas (GHG) emissions along the LNG value chain that are otherwise hard-to-abate,” says Shell, which has been offering carbon-neutral LNG for several years.  

“It’s not the panacea and we won’t call it green,” Mehdi Chennoufi, general manager LNG origination at Shell, told The Wall Street Journal, noting that the use of carbon offsets should be a last resort if emissions can’t be avoided or reduced.   

But environmental and non-profit action groups are having none of it. They say carbon offsets are the latest sophisticated greenwashing tactic of oil polluters to avoid the consequences of their contribution to climate change.  

“Offsetting has become the most popular and sophisticated form of greenwash around. It could work in theory, but in practice, it’s riddled with flaws,” Greenpeace said in June.

Jennifer Morgan, Executive Director at Greenpeace International, slammed last month companies such as Shell and ExxonMobil for their “dangerous climate lie” of carbon offsetting. 

“What these polluting profiteers see as their ‘get out of jail for free card’ in the climate game is offsetting, or to speak plainly, the sewer of the voluntary Net Zero commitments that are being rolled out almost daily,” Morgan wrote

The Standardization Problem

The lack of standard practices in the carbon offset market only adds to the objections from the critics of the ‘carbon neutral’ hydrocarbons. 

This market currently “operates in the shadows,” Mark Carney, former governor of the Bank of England and now the UN Special Envoy on Climate Action and Finance, told the Financial Times earlier this year. Currently, the system has some good practices, “but lots of bad,” he added.  

Carney launched last year the Taskforce on Scaling Voluntary Carbon Markets, which aims to create “a scaled, high-integrity voluntary market for the trading of carbon credits.” The ultimate goal of the taskforce is “to ensure that the voluntary carbon market serves its primary purpose of reducing greenhouse gas emissions and accelerating the transition to net zero,” it says. 

Oil and gas producers will continue to sell what they pitch as ‘carbon-neutral’ oil and gas to a growing number of willing buyers, but doubts over the ‘neutral’ nature of these forms of energy supply will continue to persist, and even grow, amid a lack of standardization and transparency. 

By Tsvetana Paraskova for


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Two Reasons European Natural Gas Prices Climbed So High

By Leonard Hyman & William Tilles - Oct 18, 2021, 2:00 PM CDT

  • Natural gas prices in Europe have risen by nearly 400% since the start of the year after five years of relative stability 
  • Energy market regulators are partly responsible for this rise because they misunderstood the nature of both governments and consumers
  • While it may be more expensive, energy markets need to be reimagined in order to ensure both resilience and reliability 


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Refining Billionaire: $100 Oil Is Likely

By Tsvetana Paraskova - Oct 18, 2021, 1:00 PM CDT

  • John Catsimatidis: “With oil nearly at $84 this morning, we are going to see $100 oil, it looks like, there’s no sign of it stopping,”
  • Catsimatidis: Food prices are going up very fast because nobody wants to be behind the curve, and everyone is raising prices

With oil prices rallying in recent weeks, it looks like we are going to see $100 a barrel oil, John Catsimatidis, who is active in both the oil and food business, told FOX Business on Monday.  

“With oil nearly at $84 this morning, we are going to see $100 oil, it looks like, there’s no sign of it stopping,” said Catsimatidis, who is chief executive of United Refining Company, and president and CEO of Gristedes, D’Agostino Foods, and the Red Apple Group.

“Food prices are going up tremendously,” Catsimatidis told FOX Business.

Food prices are going up very fast because nobody wants to be behind the curve, and everyone is raising prices, the executive said.

Catsimatidis expects prices to rise by 10 percent in the next 60 days, inflation not to go away any time soon, and supply-chain issues to likely persist through the middle of 2022.

The billionaire U.S. businessman with interests in the oil and food business, among others, is not alone in his forecast that oil prices could hit $100 per barrel.

Oil could hit $100 in case of a colder winter, some analysts and investment banks have said in recent weeks. Record-high natural gas prices are forcing some utilities to switch to oil derivatives instead, boosting demand for crude.

Surging natural gas prices, a cold winter, and the reopening of international airline travel could push oil prices to $100 per barrel and trigger the next economic crisis, Bank of America said in early October.

Recovering global oil demand could send oil prices to $100 a barrel at some point at the end of 2022, despite COVID challenges to demand this coming winter, according to one of the world’s largest independent oil traders, Trafigura.

It is “quite possible” that the WTI Crude oil prices reach $100 per barrel in light of growing global demand for energy commodities, Russian President Vladimir Putin said last week.

By Tsvetana Paraskova for

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Japan Asks OPEC For More Oil

By Irina Slav - Oct 19, 2021, 9:30 AM CDT

Japan has approached OPEC producers and their partners in OPEC+ with a request for more output, Kyodo News reported this week, citing industry minister Koichi Hagiuda.

The minister said the calls will continue until the next OPEC+ meeting, scheduled for November 4. Meanwhile, Japan’s foreign minister had talked with his Kuwaiti counterpart specifically for a potential increase in supplies.

"We are closely watching movements in the crude oil market as well as the impact on domestic industry and households," Japan’s Prime Minister told media earlier, after he asked his Cabinet to watch out for fallout from energy price hikes on the Japanese economy.


Prime Minister Fumio Kishida has also called on the International Energy Agency to make OPEC boost oil production.

Japan is almost entirely dependent on imported oil for its needs, and the latest price rally has delivered a blow to its still-fragile economic recovery, earlier this month pushing the national currency to a three-year low, according to a Reuters report.

Japan gets most of its oil from OPEC, with Saudi Arabia its biggest supplier, followed by the United Arab Emirates and Kuwait. Qatar and Russia are smaller exporters to Japan.

Calls on OPEC to boost oil production have been multiplying since prices started climbing. Besides the United States, which has appealed twice to OPEC+ to produce more oil, the International Energy Agency has also called on the cartel to provide more oil.

So far, however, OPEC+ has remained reluctant to heed the requests, keeping supply tight on fears the current strong demand may not last. However, it seems that lately, OPEC+ has not just stuck to its production targets but has been undershooting them.

In September, according to a recent Bloomberg report, OPEC+ cut output by 15 percent more than it had planned, after producing 16 percent less than agreed in August and 9 percent less than agreed in July.

By Irina Slav for

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Permian Oil Output Close To Pre-Pandemic Level

By Irina Slav - Oct 19, 2021, 9:00 AM CDT

Crude oil production in the Permian has climbed closer to pre-pandemic levels, according to the latest drilling productivity report of the Energy Information Administration.

According to the report, oil production in the Permian stood at 4.826 million bpd this month and will rise to 4.888 million bpd in November. The October average is already higher than the average for February 2020, which stood at 4.816 million bpd.

With the price of U.S. crude at over $80 per barrel for the first time in years, shale oil production is finally picking up. Although large public companies are still reluctant to boost output in any significant way lest they anger their cash-return-eager shareholders, smaller, private producers are ramping up to take advantage of the higher prices.

“It’s a win for the privates without being a loss for the oil markets,” Raoul LeBlanc, an analyst at IHS Markit, told Bloomberg earlier this month. “The big takeaway is that private growth won’t ruin the party.”

The recovery in the Permian will push total U.S. oil production higher as well. OPEC expects the U.S. to add some 800,000 bpd to global production, although “uncertainty regarding the financial and operational aspects of US production remains high,” the cartel said in its monthly report last week. 

The EIA currently sees U.S. oil production averaging 11.0 million bpd this year, and rising to 11.7 million bpd in 2022. That’s 700,000 bpd growth on average for next year. 

Overall, America’s production growth next year is expected to be modest, especially compared to the surges in output in 2018 and 2019, which led to a record U.S. oil production of 13 million bpd in February 2020, just before the pandemic crippled demand and crashed oil prices

Currently, West Texas Intermediate is trading above $82 per barrel and Brent crude earlier this month topped $85 per barrel.

By Irina Slav for

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Biden Administration Begs OPEC For More Oil

By Charles Kennedy - Oct 19, 2021, 10:00 AM CDT

  • The Biden administration is not giving up on its attempts to convince OPEC that it needs to pump more oil
  • White House Press Secretary Psaki: ''We'll continue to use every lever at our disposal''

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Oil Falls From Multi-Year Highs

By Tsvetana Paraskova - Oct 19, 2021, 11:00 AM CDT

Oil prices reversed course on Tuesday, paring gains from earlier in the day in what some analysts described as a short-term pullback from multi-year highs as the global energy crunch continues.

As of 10:50 a.m. EDT on Tuesday, WTI Crude was trading down 0.04% at $82.46 and Brent Crude was down 0.09% at $84.34.

Oil prices held close to the multi-year highs reached early on Monday, when WTI Crude hit the highest level since October 2014 at $83.73 and the international benchmark briefly jumped above $86 per barrel at $86.04, which was the highest price since October 2018. 

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One Bank Reveals The Dismal Truth About The $150 Trillion Crusade Against Climate Change

Tyler Durden's Photo
by Tyler Durden
Tuesday, Oct 19, 2021 - 04:55 AM

Last week, Bank of America sparked a firestorm of reaction amid both the pro and contra climate change camps, when it published one of its massive "Thematic Research" tomes, this time covering the "Transwarming" World (available to all ZH pro subs), and which serves as a key primer to today's Net Zero reality, if for no other reason than for being one of the first banks to quantify the cost of the biggest economic, ecologic and social overhaul in modern history.

The bottom line: no less than a stunning $150 trillion in new capital investment would be required to reach a "net zero" world over 30 years - equating to some $5 trillion in annual investments - and amounting to twice current global GDP.

Needless to say, the private sector has nowhere near the capital required to complete this investment which is why Bank of America generously estimate that all or parts of the bill would have to be footed by central banks in the form of tens of trillions in QE. And since QE is essentially debt monetization, and since $150 trillion in new debt would have devastating consequences on the economy, BofA was kind enough to share its calculation of just how inflationary this billionaire pet project would be: the "full monetization" scenario, where central banks inject $5 trillion in liquidity every year via QE for 30 years, would result in incremental 3% of inflation for a good decade. This is inflation over and above whatever is already coming down the pipeline.


Which is where we get to the punchline, because as BofA admits, the crusade against climate change, the ESG doctrine, the "Net Zero" world, whatever one wants to call it, it's all about greenlighting the biggest QE episode in history, one wrapped in the "noble" veneer of fighting for the most important cause in the history of civilization, but in reality it's just the biggest wealth transfer scheme in history:

We just see a peak of <1% additional inflation a year over a three decade horizon. Under more aggressive scenarios where central banks opt to absorb either half or the full decarbonization bills through quantitative easing, the risks of an inflation shock grow. Still, we think our third case is the most likely scenario, as it would be politically difficult to justify a much more expansive monetary impulse. True, while central bankers have expressed a desire to help green the economy, their corporate bond purchases have historically been restricted to crisis time policies through quantitative easing and remain well below purchases of sovereign debt. As such, any purchases of corporate green bonds would likely be limited both by the size of future purchase programs and their proportion relative to the overall corporate bond market, with slightly higher allocations under more progressive purchase policies that highlight environmental concerns

At this point alarm bells should be going off even among the most brain-dead progressives because for all its touted benefits, the costs are starting to emerge and - at least when it comes to the next two or three generations - they will be absolutely crushing for the middle class, while allowing the top 1% to plunder and pillage virtually all the world's assets. Think of it as the biggest mandated theft in world history, and suddenly one can understand why every private-jet setting billionaire is oh so very vocally in support of a "net zero" world.

It gets worse.

Now that the genie is out of the bottle, and the hard questions like "who gets to pay for all this" are being asked, Bank of America had a follow up report in which it made it abundantly clear that "contrary to some arguments, we think climate mitigation efforts are likely to hurt growth in the next decade or so."

In his note titled "A hot take on climate change" (once again available to professional subscribers in the usual place), Bank of America chief economist Ethan Harris first goes through all the familiar steps of just why it is so imperative - and noble - to do something to fight greenhouse gases (similar to what we have read for much of the early part of the 20th century, when article after article starting in 1912 lamented the catastrophe that is global warming, at least until the 1970s when the lack of actual global warming prompted "scientists" to suggest that global cooling and "a new ice age" is inevitable instead). At least the scientists could agree that it's "global something" (turns out it would really mean "global money printing"), and as Harris laid it out, this is what "scientific consensus" appears to agree on now:

  1. Human behavior is having a significant impact on climate change and climate events.
  2. Even under optimistic assumptions—such as achieving net zero emissions by 2050—the impacts will likely grow over this century.
  3. Early action is much more effective than waiting until later.
  4. Uncertainty about the exact impact is not an excuse for inaction: a wide range of outcomes means more, not less urgency in acting.

None of the above is new as the mainstream media has been bombarding its audience for the past decade with emotional platitudes and qualitative appeals as to why something has to be done.

However, as we first touched upon last week, any discussion of the economics of climate change should start and end with the fact
that it is the ultimate example of “externalities”—private activities (usually for corporations who scions and shareholders are by now in the top 0.01% of global wealth) that create public costs. Indeed, as Harris writes, climate change is the ultimate externality because activity in one place impacts the whole world. The fact that climate change is global in nature and that so much of the benefit of actions accrues to everyone else has some powerful implications.

First, unlike other technology “races”, climate mitigation is more of a cooperative “game” than a competition. When countries like the US and China “compete” to develop new technologies, two points of conflict often tend to arise—a fight for market share and a fight for geopolitical superiority. By contrast, countries that develop efficient climate mitigation technologies have a strong incentive to share the benefits. If they hoard the technology, the impact on their own climate will be much smaller.

This is great... if only it weren't a pipe dream. Why? Because as the recent refusal by China's Xi Jinping - incidentally the world's largest polluter - to join his fellow "climate change crusading" world leaders at the COP26 Net Zero summit in Italy later this month, it's all one giant spectacle meant for the masses. Because if the world's largest polluter is making it clear he has no interest in actually reducing his own CO emissions, then anyone preaching some bullshit about a "cooperative game" can shove it.

Still, where Harris is somewhat correct, is in pointing out the "depressing consensus out of the climate change literature" that even if everyone cooperates, the earth will continue to warm as there are lags in the link between GHG and global warming. Indeed, under the best of outcomes—with every country hitting aggressive mid-century goals—the policy shift will mitigate, not stop the problem. Hence in BofA's view, "climate events will be a rising downside risk—of varying intensity—under almost any plausible scenario."

In other words, the net zero theater of the absurd is one where the actors' motives clearly diverge - when only a convergence from the start could make it work - yet where even a best case scenario of complete cooperation has no chance of actually stopping the problem, just mitigating it. Oh, and meanwhile, the world is set to incur some $150 trillion in costs.

Which then brings us to BofA's core assessment: will all this be good or bad for growth? Here, we find some unexpected truth...

In BofA's view, both press reports and many of the studies of climate change focus on the wrong side of the economy—the impact on aggregate demand rather than on productive capacity. For example, the latest report from the International Energy Agency (IEA) argues that pushing toward net zero emissions would lower employment in the traditional energy sector by 5 million by 2030, but would add 14 million jobs in the clean energy sector. They also argue that “the increase in jobs and investment stimulates economic output, resulting in a net increase in global GDP to 2030.” Global GDP growth averages 0.4 higher over the 2020 to 2030 period. The downside would be that some countries would be winners and others would be losers, and that inflation - once one factors in the trillions and trillions of central bank QE needed to fund this whole crusade - could be 1-to-3% higher.

Here Bank of America disagrees, writing that by the time serious climate mitigation efforts are underway the global economy will likely be close to full employment. This will likely be the case in the US. Hence staffing up the industry means drawing workers out of the rest of the economy. At the same time, building up green energy infrastructure will require more than a doubling of investment in the sector, from roughly 2% of GDP now to a 4.5% average over the 2020-30 period. Where is that 2.5% of GDP going to come from? (spoiler alert: money printing, and everyone knows this).

Or maybe note: Harris admits that in the short run, central banks could in effect accommodate the surge in demand, allowing their economies to overheat. Hence the IEA estimate of 1-to-3% higher inflation. However, the BofA economist disagrees with that estimate as well. If the Fed allows a permanent overshoot of economic potential, inflation will not just increase, it would trend higher. As in the 1970s there will be a feedback loop between price inflation, wage inflation and price expectations.

Translation: the "net zero" crusade against climate change really is.... the necessary and sufficient condition to trigger the hyperinflation that the world's massively indebted nations need to inflate away their debt.

But wait, there's more, because as Harris concedes next, in reality, while inflation is set to soar, climate mitigation is "also likely to slow the supply side of the economy,  particularly in the ramping up phase." He explains further:

Big structural changes in the economy tend to create big transitional challenges. Workers need to move from one sector to another, some industries will boom while others shrink, and as regulations and taxes increase, capital that had been invested in producing and using dirty energy will rapidly become obsolete.

All of this means lower trend growth during the transition from a dirty to a green economy. And, as noted above, there isn't even any assurance that a transition to a green economy will ever be completed once it has begun; at best, we may be stuck in the "mitigation" phase for ever.

The highly asymmetric payoff - BofA concedes - comes in the very long-run, with the benefits accreting here and now to those who stand to reap the generosity of central bank printing, which naturally will be those who own the inflation-resistant assets such as stocks, commodities and, of course, cryptos; while the pain borne by everyone else which - sadly - means the shrinking middle and lower classes, who however are "in it for the long run", and for the benefits that a cleaner climate will (perhaps) provide their grandchildren and great grandchildren. Their generation, however, will be sacrificed at the altar of the 0.1% good. Because like every true religion, "climate change" also requires a sacrifice so a handful of chosen ones can live better.

Just the tip of the iceberg

So much for theory, what is happening on the ground? As Harris explains, the progress on policy is painfully slow as some policies continue to worsen rather than help the problem. Consider two examples. First, according to IEA, countries spend more than $400BN per year subsidizing mainly oil, but also gas and electricity consumption. In many instances there is a conflict between helping the poor and helping the environment. Second, despite what BofA calls "rising sea levels and increased hurricane activity," some countries incentivize locating houses in harm’s way through subsidized insurance and disaster relief. Almost as if the countries themselves, and certainly the Malibu beachfront billionaires, don't actually believe in - gasp - rising sea levels. Again there is a conflict between two goals—helping vulnerable people and reducing the cost of climate events.

Meanwhile, climate change and mitigation efforts already appear to be impacting the global economy. While scientists are very careful to avoid assigning a causal relationship between climate change and individual climate events - perhaps for the same reason that "science" emerged as a politically-motivated farce when reaching rash, ideologically-driven conclusions during the covid spectacle  - but they point to some disturbing trends. Consider two examples highlighted by BofA: "First, data published by the Environmental Protection Agency show that the number of wildfires in the US has shown no trend from 1983 to 2020. However, when they focus only on large fires, the amount of acres burned seems to have shifted up significantly starting in about 2000. Second, the Geophysical Fluid Dynamics Laboratory collates studies of hurricanes and tropical cyclones. Its report is sprinkled with the usual qualifiers (medium to high confidence) but the evidence points to an increase in the intensity of storms in recent years." Dear Bank of America - this is called tortured goal seeking: squeeze the data hard enough and any pattern you want will eventually emerge.

More importantly, BofA admits that there is now evidence that climate change and mitigation play "some role" in the recent rise in energy prices (to this we would counter that not only does climate change mitigation play "some role" but that the chief reason for the global energy crisis is the idiotic push for a ESG utopia, something which we warned would happen back in June in "Will ESG Trigger Energy Hyperinflation").

But where it gets worse is that given the regulatory outlook, and the now prevailing stigma associated with any fossil fuels, investment in dirty energy capacity will be low and depend on high prices. Meanwhile green energy is not ramping up fast enough to fill the gap. Hilariously, changes in wind and rain patterns seem to have affected the supply of wind and hydro power. The same wind and hydro power that was supposed to lead the world out of its fossil fuel addiction. Because so blind were the scientists in pushing their political agenda, they failed to see what was right in front of their noses, the same way Reuters figured out last week that European and U.S. cities planning to phase out combustion engines over the next 15 years first need to plug a charging gap for millions of residents who park their cars on the street. Oops - perhaps in retrospect, the policymakers and scientists should have though of the blindingly obvious first, instead of rushing to goalseek the agenda to makes them the most monetary benefits...



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