Last week global energy markets saw action as OPEC extended production cuts and Mexico joined free market dynamics with a fully liberalized domestic fuel market. Buzz around electric semi development continues in the wake of Tesla’s unveiling, but whether it will live up to the hype remains to be seen.
OPEC Agrees to Extend Production Cuts Through 2018
OPEC and non-OPEC oil producers met in Vienna, Austria on Thursday, November 30, and extended their current production cuts by nine months through the end of 2018. In addition to extending current cuts, OPEC member Nigeria will cap its production at 1.8mmbd. Progress toward clearing the global oil supply overhang will be revisited by all countries included in the agreement at their next meeting in June.
All participants in the production-cutting accord hope to create a plan to gradually end the cuts as the global supply clears. Russia was in agreement for continuing production cuts but appears to also be the most ardent supporter of creating a plan to exit the accord. The outcomes of the OPEC meeting were widely anticipated by energy markets. WTI closed just $0.10 higher following the meeting news on Thursday.
Mexico’s Fuel Price Liberalization was Completed
Mexico’s diesel and gasoline markets were fully liberalized from a government-set maximum pricing program on Thursday, November 30th. The government pricing program had been lifted from northern Mexico in stages throughout 2017. All of central and southern Mexico experienced liberalization to end November.
Mexico’s fuel markets will not be entirely free from government intervention, as the Mexican government will continue to apply what it calls a “fiscal stimulus” to the transactional IEPS tax (an excise tax) that will smooth volatility through the Mexican fuel market. Year-to-date, the government has essentially reduced the IEPS tax during periods of increasing diesel prices and expanded the tax during periods of decreasing diesel prices, which partially insulates the market from price volatility. The government plans to continue adjustments to the IEPS tax through 2018, which will limit market volatility.
In Other News
Nikola Motor Co. has chosen Nel ASA as the sole equipment supplier to help create a network of hydrogen fueling stations. According to Nikola, the network will cover more than 2,000 miles and include 16 stations to fuel the company’s hydrogen-electric Class 8 trucks that are scheduled to be road-tested in 2018 and manufactured in 2021.
Exxon Mobil Corp Chief Executive Darren Woods is reorganizing the company’s refining operations, part of a push to boost profits amid volatile oil and natural gas prices, the company said on Monday.
Elon Musk knows how to make promises. Even by his own standards, the promises made last week while introducing two new Tesla vehicles—the heavy-duty Semi Truck and the speedy Roadster—are monuments of envelope pushing. To deliver, according to close observers of battery technology, Tesla would have to far exceed what is currently thought possible.
Unilever is acquiring Sundial to expand its offering of hair and skin-care products for black women. Consumer giants, such as Unilever and L’Oreal, are targeting the spending power of Africans, African-American and other black women, in hope of garnering the attention of this expanding market. According to Bloomberg, as part of the agreement announced Monday, Unilever and Sundial are creating the New Voices Fund with an initial investment of $50 million to “empower women of color entrepreneurs.”
Oil prices dipped on Tuesday, weighed down by uncertainty over the outcome of an OPEC meeting next week at which an extension to its price-supporting oil output cuts will be discussed.
Nikola’s high-performance dune buggy is more than a plaything in a life-size sandbox. Milton says many of the elements his team used on the Zero – like its stability control, torque vectoring, over-the-air updates, autonomous software and hardware, steer by motor, and battery characterization – will make its way to the Nikola One tractor when production gets underway.
Researchers at MIT claim to have uncovered a flaw in the Energy Department’s official forecast, which may vastly overstate domestic oil and gas production in years to come. The MIT team believes the Energy Information Administration’s premise that better technology has contributed to recent output gains and will continue to boost production is flawed. Instead, the MIT team suggested drillers have focused upon the easiest to extract oil and productivity of individual wells may not continue to rise.