Granholm's Olive Branch // HSBC Halts Oil and Gas Funding // Peru to Declare 30-Day Emergency

Granholm's Olive Branch

Energy Secretary Jennifer Granholm offered the oil and gas industry an olive branch in a meeting at the White House this week.

According to Yahoo! News, Granholm told executives "that she recognizes fossil fuels will be around for a long time, even as the Biden administration works to transition away from them to cleaner alternatives."

“We are eager to work with you,” she said. “Moving too fast could have unintended consequences that hurt people, cause backlash.”

The Biden Administration has been at loggerheads with the industry from the jump. Joe Biden ran on ending fossil fuels, the administration has threatened the industry with windfall taxes, but has also pleaded with the industry to ramp up production. O&G hasn't been shy about its frustrations, either. The relationship has been fraught.

"Granholm nodded to that friction Wednesday, beginning her remarks by acknowledging the 'elephant in the room' and that the administration has 'butted heads' with industry," reports Yahoo! News. "Fossil fuel production will need to increase in the near future to meet growing demand, including a shortage of diesel in the Northeast US, she said."

What this means from a policy perspective remains to be seen. A non-antagonistic relationship between the government and the industry would be a welcome change. But politics and policy aren't the only reason why the American fossil fuel industry's expansion has ebbed--lower quality wells, undervalued stock, labor shortages, supply chain issues, and interest rates are also playing a large role.

Still, Granholm's pivot, should it hold firm, could help American energy at a time when the world and the country need it most.

HSBC Halts Oil and Gas Funding

HSBC will not finance new oil and gas fields or related infrastructure any longer.

"The London-based bank announced the move on Wednesday as part of an update to its energy policy, which it said had been informed by 'scientific and international bodies' and analysis of pathways that will limit the global temperature rise to 1.5C," reports Bloomberg. "The new policy covers both loans and debt underwriting, the bank said."

HSBC is instead pivoting to "renewable energy and clean infrastructure" with "$750 billion to $1 trillion in sustainable finance and investment by 2030," according to the statement. The energy crisis--brought on by a lack of fossil fuels--is cited as the impetus for their heightened ambitions.

"HSBC is among the biggest financiers of fossil fuels companies, providing $111 billion of debt since the Paris climate agreement was signed in late 2015, the second highest among European lenders," reports Bloomberg. "As a result the firm has been slammed by climate activists, with its Canary Wharf headquarters the target of frequent protests. It’s also faced a shareholder vote on its support of the fossil-fuel industry."

HSBC made it clear how serious they are: if a company isn't in-line with its climate goals, HSBC will not supply new finance and could even pull its current support.

Peru Declares 30-Day Emergency

The Peruvian government has issued a 30-day state of emergency, in which basic rights will be suspended, to restore order.

"President Dina Boluarte, appointed by congress last week after her predecessor was impeached, is trying to establish her authority and restore order," reports Yahoo! Finance. "At least 7 people have died in clashes between protesters demanding Boluarte’s resignation, early elections, and the release of former President Pedro Castillo, who was arrested after he tried to dissolve congress on Dec. 7 amid an ongoing political crisis."

The violent protests are already taking an economic toll and disrupting exports from copper mines and the distribution of perishables like food are getting disrupted. "Demonstrators have attempted to shut down a pumping station near the Camisea field that supplies natural gas to generate half the country’s electricity, and to seize airports, forcing four of them to shut down," reports Y!F. "The threat of looting has forced stores to close, according to local media in Arequipa, Cusco and Ica."

Inflation has recently surpassed 8% in Peru, inspiring steep rate hikes from its central bank.

Boluarte said on Wednesday that it was possible the country's general elections could be moved forward to December 2023, according to US News.

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Conversation Starters

1. Canada has cancelled the sanction exemptions it gave to the company that fixes turbines for Gazprom. "According to a joint statement by resource minister Jonathan Wilkinson and foreign minister Melanie Joly, the cancellation followed Gazprom’s failure to return the Nord Stream 1 pipeline to normal operating capacity after the Canadian government granted an exemption for the company that repaired its turbine," reports Oilprice.com. "The statement marks the latest chapter in what became a whole saga that began earlier this year when Germany’s Siemens, which was in charge of Gazprom’s turbine maintenance, sent the turbine to the Canadian company."

2. Australia's coal exporters have had a great year. The Guardian reports, "Coal exporters from Australia reaped as much as $45bn in windfall gain in the 2021-22 year, with a similar bonanza likely this year, offering governments a budgetary boon for those willing to grasp it, the Australia Institute has said. In a report released on Thursday, the institute’s economists said Russia’s invasion of Ukraine and subsequent disruption to energy markets alone had delivered between $13bn and $23bn of gains to coalminers. All up, those gains totalled between $39bn and $45bn."

3. Europe's cold front hasn't set the continent back, gas-wise. "Wood Mackenzie said that colder temperatures across Europe have increased month-on-month heating demand by 20% in December, but a behavioral change in households and services means the amount of gas used in these sectors is 16% lower than previous average consumption patterns for similar temperatures," reports Rigzone. "Despite the recent cold weather, Europe is still on track to end this winter with gas storage levels at 38% and looks set to meet the 2023 European Union target of having inventories up to 90% by November next year."

Crom's Blessing