Current Affairs
March 18, 2024
American Energy Overview
America’s fossil fuel industry is booming.
Indeed, while clean energy policies (or, perhaps, a lack thereof) are debated ahead of November’s election, one quiet fact has gone relatively under the radar: no country in the history of our planet has pulled crude oil out of the ground at the pace of the United States over the last 6 years.
Data released by the US Energy Information Administration (EIA) on Monday finds that the US produced the equivalent of 12.9 million barrels of crude oil and condensate per day last year, 28% more than the world’s previous top producer, Russia, and 33% more than even the oil-rich Kingdom of Saudi Arabia.
Reversing the flow
The modern petroleum industry can trace its roots — or wells — back to the 1850s when Edwin Drake dug a ~70 foot oil hole in Pennsylvania and started pumping up to 20 barrels a day of what would come to be known as black gold. But, despite getting a head start on much of the rest of the world, the US was a tiny player in global oil for much of the latter half of the 20th century.
Indeed, were you to transport someone from the oil-importing heyday of the year 2000 to the present day, they’d scarcely believe that the US had become a net exporter of oil (chart here), let alone become the dominant force in a market that — despite the best efforts of renewable scientists — remains the most important global energy source.
Frack to the future
The shale revolution is often credited with much of the progress in America’s newfound oil boom, as hydraulic fracturing (or fracking) unlocked a wave of previously inaccessible, or at least uneconomical, oil and gas reserves. Fracking involves forcing liquid — usually water mixed with sand and chemicals — into fissures in shale rock, cracking and expanding the gaps, allowing the once-trapped oil and gas to find its way to the surface.
As fracking got more efficient, it wasn’t just the crude oil industry that benefited: America’s natural gas production has also exploded over the last 15 years.
Gassed up
Oil and natural gas now join the ranks of heavy machinery, semiconductor chips, and cultural exports like TV & movies, as one of America’s most important trading markets. In December 2023, the US exported ~400bn cubic feet more natural gas than it imported, a dramatic shift from a decade earlier. Driving much of the boom is America’s liquefied natural gas (LNG) export industry, which — as recently as 2015 — basically didn’t exist.
By liquefying the gas, at a frosty -260° Fahrenheit, shipping and storage becomes a lot easier, with the volume of natural gas in its liquid state roughly 1/600th of the volume in its gaseous state — enabling America’s newfound fracking success to be shipped all over the world.
Upheaval in energy markets, particularly after Russia’s invasion of Ukraine, further boosted demand for American LNG. Indeed, over the past 2 years more than 60% of US LNG exports have found their way to Europe, where buyers have been looking to replace lost supply from Russia. The overall result? From what was pretty much a standing start at the beginning of 2016, America’s LNG industry is now shattering records, with the US becoming the largest exporter of LNG in 2023, unseating Australia and Qatar.
Rigged
One of the most striking things about America’s ongoing fossil fuel boom is that the industry has learned to do more with less.
To get a sense of whether US oil production was likely to rise or fall, you used to be able to look at the number of drilling rigs — the towering steel structures that dig wells and adorn oil-rich regions like the Permian basin in Texas. However, despite the production upswing, the number of crude oil rigs has actually fallen, to about one-third of what it was a decade ago. Advancements in fracking, as well as new “horizontal drilling” techniques — that can spread more than 3 miles underground in one direction — has enabled drillers to increase production without the need for additional rigs.
Independence decade
The “shale revolution” has not only dramatically transformed global oil markets — and made a lot of people a lot of money — it has also shifted the sands that underlie global power structures. Although it would be a gross oversimplification to suggest “America doesn’t need anyone else’s oil or gas”, the fact remains that a thriving energy sector gives American leaders a stronger hand when negotiating on the world stage, as well as the ability to step in for allies when supply from volatile regimes is lost or blocked.
March 11, 2024
Another Relocation of Services to Costa Rica
German chemical company increase operations in Costa Rica
Published on Monday, March 11, 2024 By the A.M. Costa Rica staff
The German-headquartered Brenntag, a chemical and ingredients distribution firm opened its Finance Shared Services Center in Costa Rica to provide financial and accounting support for its Americas operations.
The company, known as Quimicos Holanda S.A, has been operating in Costa Rica since 1978 with the Shared Services Center (SSC) located in the Global Park Industrial Zone in Heredia Province.
“We are very proud to be inaugurating our Americas Shared Services Center in Latin America. We’ve chosen Costa Rica for its strategic geographical location and quality professional employees,” said Mónica González HR Manager. “Our arrival to this country is the result of a multi-year plan launched to start a business center to support our regional operations in the Americas.”
The multinational is now hiring for its new Finance Shared Services Center for processes such as procurement, sales recording and collection, and corporate financial information documentation and reporting. New hires must have language fluency equivalent to an English level of B1 to C1, a French level of B2 and a Spanish level of B2.
Brenntag offers benefits, including incentive programs and continuous education. Those interested can apply at the firm career’s website.
Brenntag has a global team of more than 17,500 employees who deliver a unique portfolio of industrial and specialty chemicals and ingredients combined with customized application, marketing and supply chain solutions worldwide. The company operates a network of more than 600 sites in 72 countries.
In 2022, Brenntag generated sales of around 19.4 billion EUR. The company shares have been listed on the Frankfurt Stock Exchange since 2010, and in the DAX since September 2021. In addition, the Brenntag SE shares are listed in the DAX 50 ESG and DAX ESG Target.
Brenntag is one of many international firms hiring in Costa Rica. Last week, the California-headquartered digital technology firm, Movate, announced the expansion of its operations in the country.
Costa Rica’s unemployment remains at 7.9%, according to the National Employment Survey. Data recorded from Nov. 2023 to Jan. 2024 shows more than 183,000 people without registered jobs. Of these, 104,000 are men, making up 56% of the unemployed people in the country.
https://amcostarica.com/German%20chemical%20increase%20operations%20in%20Costa%20Rica%20031124.html
March 5, 2024
Too Funny
As China Builds Yugos, EVs May Be The New Edsels
by Tyler Durden
Friday, Mar 01, 2024 – 07:00 PM
Authored by Duggan Flanakin via RealClear Wire,
The year 1957 is memorable for at least two historic launches. The launch by the Soviet Socialist Union of the Sputnik, the world’s first artificial satellite, prompted the U.S. to create the National Aeronautics and Space Administration (NASA) the very next year.
Eleven years later, Neil Armstrong stepped out of Apollo 11 and famously proclaimed, “That’s one small step for man, one giant leap for mankind.”
Barely three years later, Apollo 17 astronaut Eugene Cernan announced the end of the manned space flight experiment: “We shall return, with peace and hope for all mankind.”
Many believe that the Challenger launch failure in 1986, with teacher Christa McAuliffe one of the seven dead, and the disintegration of Space Shuttle Columbia in 2003, in which another seven astronauts died, ended the U.S. dream of manned space flight.
Former NASA Jet Propulsion Laboratory systems engineer Mark Adler spilled the beans in 2015. “The bottom-line answer is that it was … way too expensive. The shuttle never met its promise for low-cost access to space.” [Well, it was a government program!]
Cost-cutting and bureaucratic overkill were behind the Challenger (whose politically correct O-rings failed) and Columbia disasters. As chief NASA historian Bill Barry told Newsweek, “People realized that [Columbia] was a lot more risky than generally thought [mostly] because of [design] compromises … due to cutbacks in the budget [emphasis added].“
The other historic 1957 launch was Ford Motor Company’s much-heralded Edsel. Ten years in the making, at a development cost of $250 million ($2.78 billion in 2024 dollars), Ford dealers saw thousands lining up to buy the new dream car that September, but by yearend monthly sales had fallen by a third.
Two years later, Ford ceased production of the Edsel and revamped its production lines to build compact cars. According to Time reporter Lily Rothman, “As it turned out, the Edsel was a classic case of the wrong car for the wrong market at the wrong time.”
Ford had relied on market research showing that within a decade half of U.S. families could buy then-popular medium-priced vehicles. Further studies led Ford to design “the smart car for the younger executive or professional family on its way up.”
To Ford’s sad surprise, by 1957 the lust for medium-priced cars was usurped by a new boom in the compact field, an area the Edsel research had overlooked completely, said Rothman.
Much as with the space program, the federal government has spent huge sums subsidizing the construction and purchase of electric vehicles, including 18-wheelers, airplanes, and tanks. All of this has been driven, ostensibly, by the perceived threat posed by the plant food carbon dioxide.
Much as with the Edsel, the electric vehicles that European, American, and other Western governments have been subsidizing are “the wrong car for the wrong market at the wrong time.”
Around the planet, individuals, automakers, and even policy advisors are waking up to this gross miscalculation.
Meanwhile, the Chinese, who long ago cornered the market on the primary raw materials and technologies needed for producing EVs in quantity, stand to be the primary sellers of vehicles Western governments have mandated that the hoi polloi purchase.
The largest Chinese automaker, Biyadi (BYD), uses the slogan “Build Your Dream” to lure buyers into even greater reliance on Chinese technology that will erase tens of thousands of American jobs.
BYD sells battery-electric vehicles in China for US$26,000. BYD makes its own batteries, semiconductors, and seal upholstery, and its nearly 30,000 patents owned or filed puts BYD light years ahead of any Western automaker.
The only brakes on China destroying the world auto market are tariffs and other import restrictions – or ending the EV mandates. But the tariffs would likely be passed onto customers, forcing Americans to pay double if Washington forces Chinese EVs down their throats.
And, as noted, without the tariffs, Ford, General Motors, and every other non-Chinese automaker could quickly be forced into bankruptcy. The United Auto Workers know this and hedged their bets for 2024 by throwing money in both directions. Western automakers, joining Toyota, have already pulled back from their EV production commitments.
Ford, which has been losing $60,000 – more than the selling price – on every EV it sells, saw sales of its Lightning F-150 fall 46% in third quarter 2023. Mercedes downsized its EV sales projections by 2030 by 50% and announced it will update its petrol-fueled fleet engines into the next decade. Now Ford has halted all shipments of the Lightning F-150.
Rivian, too, has fallen on hard times, laying off 10% of its workforce, signaling a significant decline in demand. With prices starting at $70,000 for its pickup and $75,000 for its SUV, the sales downturn led to a corporate loss of $1.52 billion in the first quarter of fiscal 2023.
Slackening demand for EVs has even led to entire mines shutting down as the supply of rare-earth minerals now exceeds demand. Albemarle announced it was deferring spending on a planned $1.3 billion plant in North Carolina. The price of lithium has shrunk by 90%, and the price of nickel has been cut in half. As a result, a nickel mine in New Caledonia recently suspended operations.
In the UK, auto dealers are offering discounts of up to 25% on EVs sitting idle on their lots. The Lords Committee says British drivers are “giving the cold shoulder” to the electric transition despite dramatic drops in finance rates for EVs in an effort to boost flagging sales. Non-fleet EV purchases in the UK fell by 25% from the prior year, with yet another reason being much higher auto insurance rates.
The obvious ability of China to dominate the EV market, coupled with increasing public resistance to EV mandates, has put pressure on the European Union and its member states. A year ago, the EU took a baby step backward, agreeing to allow sales and registration of internal combustion engine vehicles after the 2035 deadline if they operate only on carbon-neutral fuels.
In the U.S., President Biden had until very recently doubled down on his EV demands, ignoring the concerns of automakers, auto unions, and the auto buying public. Just a week ago, the EPA indicated it was “considering” delaying EV mandates beyond 2030, an election-year concession that could quickly be reversed.
A 2023 Gallup poll showed that only 16% of Americans with incomes between $50,000 and $100,000 either own or are “seriously” considering purchasing an electric vehicle. The most likely EV buyer is a Democrat who lives in a Pacific Coast state, but only 28% of U.S. Democrats and 25% on the West Coast either own or are “seriously” considering an EV.
As Mark Knopfler’s Romeo said to Juliet, “the timing was all wrong,” perhaps the only real flaw with the current EV mandates is that the supply chain – especially in the West – is just not ready for prime time.
But in another few years, things could change. After all, the privately funded Odysseus Moon lander just became the first new U.S. presence on the lunar surface in 55 years.
On the other hand, unless the West cedes EV manufacturing to China, the EV may soon become so unpopular it will go the way of the Edsel.
Duggan Flanakin is a senior policy analyst at the Committee For A Constructive Tomorrow who writes on a wide variety of p
https://www.zerohedge.com/political/china-builds-yugos-evs-may-be-new-edsels
March 4, 2024
Evonik Says Economic Recovery Unlikely in 2024, Plans 2,000 Job Cuts
March 4 (Reuters) – German chemicals group Evonik Industries said on Monday it did not expect an economic recovery in 2024 and announced up to 2,000 job cuts worldwide by 2026. The job cuts are expected to reduce costs by 400 million euros ($434.04 million) annually, the company said, adding that the majority – some 1,500 – would be in Germany. Chemical companies have been under pressure for more than a year, forced to reduce inventories on lower demand from industrial clients as energy prices soared.
“We will have to be prepared for the economic storm to continue in the global economy,” said CEO Christian Kullmann on a conference call, adding that the company hopes customers will be in a position to benefit from the more recent fall in energy prices. Evonik, whose products are used in items from animal feed and diapers to Pfizer/BioNTech’s COVID-19 vaccine, expects 2024 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of 1.7 billion to 2.0 billion euros ($1.84 billion-$2.17 billion).
This compares with a 2023 result of 1.66 billion euros which fell short of the 1.7 billion expected by analysts. The 2024 guidance is close to consensus and should reassure investors, JP Morgan said in a note. Evonik, a market leader in the production of amino acids used in poultry feeds, said on Monday it would sell its superabsorbents business to the International Chemical Investors Group (ICIG) for a price in the low triple-digit million-euro range.
The Essen-based company also said it would buy back shares worth up to 113.8 million euros including transaction costs. The group will propose an annual dividend of 1.17 euros per share, unchanged from the last year. Its 2023 sales fell 17% to 15.3 billion euros. Sales at its performance materials division, which accounted for around 13% of the total, fell by 22% to 2.55 billion euros after the company sold a production site in Luelsdorf in June.
https://www.reuters.com/business/evonik-says-recovery-unlikely-2024-plans-2000-job-cuts-2024-03-04/
February 28, 2024
Chemical M&A to Accelerate
Chemical Sector to See Increased M&A Momentum, Brenntag’s CEO Says
Published: Feb. 27, 2024 at 10:02 a.m. ET
By Stefanie Haxel
The global chemical sector might see increased momentum in mergers and acquisitions, according to Brenntag’s chief executive officer.
The head of the German chemicals company, Christian Kohlpaintner, said in an interview with Dow Jones Newswires that dealmaking in the chemical industry seems to be accelerating, as reflected in the size of acquisitions being implemented.
“If you look at the top 50 distributors, in a short period of time, I would say in the last seven or eight years, they have increased their market share from 30% to almost 40%,” Kohlpaintner said, which he accredits to aggressive acquisitions.
Brenntag had doubled its acquisition budget in the fall of 2022 to between 400 million and 500 million euros ($434.1 million-$542.7 million) a year.
Although many players in the industry have grown significantly through acquisitions in recent years, the economies of scale aren’t enough to have a positive impact on manufacturers.
“This is the reason why, in our opinion, the consolidation of the market will occur at a higher speed and in larger steps,” Kohlpaintner said.
According to data from the Boston Consulting Group, the market for industrial chemicals is growing between 2% and 4% annually, and that for specialties is growing by 3% to 5%.
–Nina Kienle contributed to this story.
Write to Stefanie Haxel at stefanie.haxel@wsj.com
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