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Main Takeaways for the week of April 6, 2022

Horrific images from Ukraine prompt another round of sanctions, including potential European sanctions on Russian coal and oil. China’s Covid-19 lockdowns are providing some relief for oil markets, while also snarling up more supply chains, including those for EVs, providing relief for transition metals. Nevertheless, experts are moving toward consensus that there will not be enough nickel and copper over the next ten years. India’s largest coal miner restricts deliveries to industrial customers in current thermal coal squeeze. Italy in discussions with Azerbaijan on expanding Trans-Adriatic Pipeline for natural gas. France endures €3,000 per MWh prices for electricity. Canada announces $2 billion to enhance domestic battery minerals supply chain.  


Featured Article

European refineries have struggled to match this revival in demand. One key reason is pricey natural gas. Refineries use gas to produce hydrogen, which they then use to remove sulphur from diesel. The spike in gas prices in late 2021 made that process prohibitively expensive, cutting diesel output. Low-sulphur crude is also in short supply: OPEC+ countries that pump that kind of oil, such as Nigeria and Angola, are unable to increase output. Any additional production has to come from Saudi Arabia and the United Arab Emirates, but both largely produce crude with high sulphur content.

From The Oil Price Rally Is Bad. The Diesel Crisis Is Far Worse, by Javier Blas for Bloomberg Opinion


Weekly Energy Chart

From Drought effects on hydroelectricity generation in western U.S. differed by region in 2021, by the EIA

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Headlines

Global Petroleum Liquids 

Global LNG 

Global Coal 

North American Energy Infrastructure 

China

Russia

Europe

India

U.S. - Canada Energy Relations 

  • No significant developments

Middle East Energy Geopolitics 

Central Asia Energy Geopolitics 

Canadian Oil and Gas 

Electricity 

  • No significant developments

Nuclear 

Renewables

Energy Transition Metals

Hydrogen 

  • No significant developments

Biofuels

  • No significant developments

Quotes

That hasn’t stopped the Biden Administration from blocking a proposed copper mine in Minnesota and taking steps to slow another in Arizona. Regulators in February suspended a right-of-way for a road in Alaska, granted by the Trump Administration, that provided access to one of the world’s largest mineral deposits including zinc and copper.

From Critical Mineral Contradictions, by the Wall Street Journal Editorial Board

 

The issue is a stark illustration of why the global trading system should not be counted out just yet, despite all the strain it has been under in recent years. President Biden is determined to build up the US manufacturing base in low-carbon energy. It is one of his signature issues. […] The problem is that domestically produced equipment may often be higher-cost than the imports it is intended to replace, and may jeopardize renewable energy project economics. Onshoring can reduce risks in the supply chain. But it is an insurance policy that comes with a price tag.

From Rethinking Energy Security, by Ed Crooks for Wood Mackenzie

 

Even in the most optimistic scenarios where every single raw material project in the pipeline comes on stream and existing operations expand aggressively, there will not be enough raw material for the battery supply chain as we go into 2030

From Key Takeaways from the Battery Gigafactories USA Event, by Benchmark Mineral Intelligence

 

European refineries have struggled to match this revival in demand. One key reason is pricey natural gas. Refineries use gas to produce hydrogen, which they then use to remove sulphur from diesel. The spike in gas prices in late 2021 made that process prohibitively expensive, cutting diesel output. Low-sulphur crude is also in short supply: OPEC+ countries that pump that kind of oil, such as Nigeria and Angola, are unable to increase output. Any additional production has to come from Saudi Arabia and the United Arab Emirates, but both largely produce crude with high sulphur content.

From The Oil Price Rally Is Bad. The Diesel Crisis Is Far Worse, by Javier Blas for Bloomberg Opinion

 

Public enemy number one has to be the National Environmental Policy Act, or NEPA. Passed in 1970 as part of a wave of environmental regulatory reform, NEPA created regulatory standards and hurdles for infrastructure projects, industrial facilities, and more. NEPA’s practical effect has been the proliferation of environmental impact statements (EISs) for projects that could “significantly affect” the environment, including everything from denser housing supply in cities and high-speed electric rail to large-scale renewable-energy projects and, infamously, bike lanes. The constraints on breaking ground, let alone completing, projects like these are notorious. As Niskanen’s Hammond and Brink Lindsey have noted, the average EIS today runs over 600 pages in length and takes 4.5 years to complete.

From Cost-Disease Environmentalism, by Alex Trembath for City Journal

 

Because Russia exports so much oil, it would be impossible to reduce sales to zero in one fell swoop. Thankfully, there’s a ready playbook for sharply reducing a country’s oil sales: the one that the United States used against Iran since 2011.

From Time for Even Tougher Sanctions on Russia, by Edward Fishman and Chris Miller for Foreign Affairs


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