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I thought we were done with horrible weeks for a while, but 2021 is already showing us that it, too, can surprise.
For Democrats and clean-energy advocates, there was, however, some good news: Democrats won both runoff elections in Georgia to regain control of the Senate. That’s a big deal for pretty much every issue, from healthcare to voting rights to energy.
Though there’s a hefty caveat: The Democratic majority is so slim that any major (and controversial) bills – including those related to climate change – are unlikely to find traction.
Let’s start there.
Who wants one stressful election when you can have two?
The news: Democrats won both runoff elections in Georgia, giving them 50 of the Senate’s 100 seats. The tiebreaking vote will fall to incoming Vice President Kamala Harris – in other words, Dems regained control.
The significance: President-elect Joe Biden won’t, as previously expected, operate within a divided government. That gives him a lot more latitude to achieve his ambitious climate agenda.
- Congress could likely pass legislation that allocates more funding and extends tax credits for clean energy. That may be especially good news for EV companies.
- His picks for key climate and energy roles will likely be confirmed.
- Biden’s administration could even restrict oil producers as part of a broader tax reform, one analyst said.
Big buts: It may be obvious, but a 50-50 split in the Senate gives Democrats a very narrow majority. That will be a problem for any sweeping climate bills, especially if they appear to constrict fossil fuels.
- Not all Democrats may vote in favor of big climate bills.
- Plus, don’t forget about the filibuster. It’s unlikely to go away anytime soon, and it essentially means that climate-specific legislation could require 60 votes.
- Fun fact! Filibuster comes from the Dutch word for pirate. “It came to mean a legislator who was ‘pirating’ parliamentary proceedings,” NPR reports.
All eyes on Joe: Not that Joe. I mean Democratic Senator Joe Manchin of West Virginia. He’s “the most powerful person in US energy policy right now,” said Ed Crooks, Vice-Chairman of Americas at Wood Mackenzie.
- Of all Democratic Senators, he appears most likely to oppose legislation that constricts the fossil-fuel industry, experts told me.
- Though it’s dated, an ad published by Manchin famously shows him shooting a bullet through a climate bill.
Arctic drilling anyone? Anyone?
The high-profile fight to open up the Arctic National Wildlife Refuge to oil drilling appears set for a rather anticlimactic ending.
The news: After a three-year push by the Trump administration to allow oil companies to drill in ANWR – considered to be the largest remaining swath of wilderness, and likely home to a huge amount of oil – leases for acreage in the refuge finally went up for sale. But there were just three bidders … one of which was the state of Alaska.
- Oh, and half of the available leases had no takers at all.
- You may remember that a big reason for opening up the refuge was the revenue these leases could raise. Now it appears they could net as little as $15 million.
No surprises: The unsuccessful lease sale wasn’t exactly surprising. We reported on the lack of interest back in August.
- Wall Street analysts told us that while the prospect of drilling in ANWR might have been appealing several years ago, the calculus looks a lot different today.
- Companies are looking to cut costs, and drilling in ANWR would be expensive and risky. Plus, it’s not a good look as pressure rises among investors to produce more sustainable energy.
- Here’s the full story, where we lay out analysts’ reasoning and statements from companies.
Clean-energy stocks surged last year, and they’re soaring in 2021. Wall Street analysts offer up their top bets.
Amid a global pandemic and a historic oil market collapse, clean-energy stocks casually soared. The ECO index, a benchmark for clean energy, grew last year by a stunning 203%, according to Raymond James.
- For comparison, the S&P 500 grew by 16%, while the E&P Index (including companies that find and extract oil and gas) fell by 38%, per Raymond James.
This year: It’s already looking up, thanks to a Democratic takeover of the Senate and a late-2020 relief bill that included all kinds of goodies for clean energy. This year it’s already up about 20%. (The S&P is up 3%).
For investors: Analysts are predicting another good year for the sector and sharing their top picks.
- Joe Osha, an analyst at JMP Securities, shared 3 solar stocks to buy now that are set to surge under Biden
- Raymond James also shared a list – in this case, seven lesser-known energy firms to buy up.
Price check: Crude hits an 11-month high due to a ‘perfect storm’ of events
Brent today: The benchmark is at about $55 per barrel, as of Friday midday.
- The last time we saw prices that high was February – before the coronavirus scourge was declared a pandemic.
Why the rally? Analysts at Rystad Energy said it’s due to a “perfect storm” of events:
- Saudi Arabia, the de facto leader of OPEC, agreed to voluntarily cut crude production starting in February by 1 million barrels.
- Storage tanks are finally starting to empty around the world, a signal that demand is ticking up.
- Democrats regained control of the Senate, giving way to a potentially massive economic stimulus in the months ahead.
- And, of course, the dispersal of COVID-19 vaccines.
But: A full recovery of oil demand is still a long way off. A bunch of industry experts shared what to expect in the year ahead for the oil market.
That’s it! Have a great weekend.
Ps. I went cross-country skiing on New Year’s Day and discovered it’s not as boring as skiing on a flat surface sounds. I also discovered that it’s a great workout because I woke up cocooned by sore muscles.