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Robert Rapier

Robert Rapier

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Unpacking the Top Energy Stories of 2023

  • The U.S. achieved the highest oil production ever, surpassing any other country in history, while also potentially leading in LNG exports.
  • The COP28 climate conference made progress with a climate disaster fund for vulnerable countries but faced criticisms for weak fossil fuel transition agreements.
  • ESG investing struggled due to rising interest rates, impacting renewable energy companies and changing market dynamics in clean technologies.

Following last year’s chaos in the energy sector, there were fewer big energy stories in 2023. I think there was one really big story that is yet well-known, and then a big drop after that.

There were major geopolitical events, but they didn’t impact the energy markets the way they did a year ago. I believe the top story is clear, but after that there were at least a dozen stories that I considered for my Top 5. Here’s the list.

  1. The U.S. produces more oil than any country in history

I have tracked U.S. oil production closely this year. In fact, I predicted that it would set a new record high this year. It did that in mid-December, but data provider S&P Global Commodity Insights noted in a recent press release that the U.S. is also now producing more oil than any other country in history.

This is an incredible feat when you consider where the U.S. was 15 years ago. As Jim Burkhard, Vice President and Head of Research for Oil Markets, Energy and Mobility, S&P Global Commodity Insights wrote: “Not only is the United States producing more oil than any country in history, but the amount of oil (crude oil, refined products and natural gas liquids) that it is exporting is near the total production of Saudi Arabia or Russia. When you look back on 2008—when U.S. production was at a 62-year low, and exports were zero—it is a remarkable turnaround.”

In a closely related story, the U.S. should also set a natural gas production record this year, and exports of liquefied natural gas (LNG) will reach a new high. The U.S. is on a growth trajectory that could see it become the world’s top LNG exporter this year.

  1. COP28 climate conference

The 2023 Conference of the Parties (COP28) was held in Expo City, Dubai. I am always skeptical of these conferences, but the two-week UN climate summit is a big event, especially in the context of the hottest year in recorded history.

This year’s conference established a fund to help vulnerable countries cope with climate disasters. This marked a significant win for developing nations.

While the summit reaffirmed the goal of limiting global warming to 1.5°C, a stark assessment revealed that current emission reduction pledges put the world on course for warming of 2.9°C.

Critics argued that the agreement on transitioning away from fossil fuels was weak and riddled with loopholes, lacking concrete steps and allowing continued reliance on fossil fuels.

COP president Sultan Al-Jaber, head of the UAE’s state oil company, faced accusations of using his position to promote fossil fuels. This highlighted the potential conflict of interest in having an oil executive lead the climate talks.

  1. ESG investing hits a speed bump

Environmental, social and governance (ESG) is an investing strategy that has led to a significant boost in investments in clean technologies like renewable energy and electric vehicles. Those sectors have done well in recent years, but this year rising interest rates began to negatively impact the growth forecasts for many renewable energy companies. Many saw their share prices plunge 50-80% in the second half of 2023.

In late September NextEra Energy Partners LP, a publicly traded renewable energy subsidiary of NextEra Energy, announced that it was revising its distribution growth rate expectations from 12% to 15% per annum to 5% to 8%. NEP has a capital-intensive business model that is becoming increasingly challenged in the current interest rate environment. NEP units plunged by over 50% in the wake of the news.

The car rental company Hertz reported that its adjusted EBITDA margin of 13% for Q3 2023 missed expectations due to elevated costs from its growing electric vehicle (EV) fleet. The reasons given for the impact on earnings were higher collision and damage repairs, and depreciation on EVs. Hertz stated in the Q3 earnings calls that damage costs on EVs have run about twice as high as comparable gasoline vehicles. Shares have fallen about 40% since the earnings report.

This somewhat overshadows that it will be another record year for global EV sales and renewable energy installations. But it is a reminder that the energy transition will be bumpy.

  1. U.S. nuclear output increases

Georgia Power, a subsidiary of Atlanta-based Southern Co. started Vogtle Unit 3. Along with Vogtle Unit 4, these are the first newly constructed nuclear units built in the United States in more than three decades. Growth in U.S. nuclear power has fallen far behind China, but the addition of these units will help the U.S. maintain its lead as world’s top nuclear power producer for a bit longer before China ultimately takes the lead.

  1. Israel goes to war

I had a tough time with this one. War in the Middle East is always a concern for the energy markets, and there was some volatility following the outbreak of the conflict. But the markets settled down pretty quickly. Israel has minimal oil production but stands as a significant natural gas producer. After the attack by Hamas, Israel halted operations at its Tamar gas field, which is located offshore and provides gas to the local market, as well as Jordan and Egypt.

The real fear is that the conflict spreads to Iran, and then there could be significant impacts to the world’s oil markets.

Honorable Mention

There were a number of important stories that could have easily been included in a Top 5. The drop in gasoline prices, replication of last year’s fusion energy test, the prediction by the International Energy Agency (IEA) that we are close to peak fossil fuel demand, and continued record growth by renewables were all important stories in 2023.

Final Thoughts of 2023

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I will close with a funny story. I considered making the growing impact of artificial intelligence (AI) on the energy sector one of my top stories. AI has impacted the sector in many ways, and I have personally found it an increasingly useful tool when writing.

For example, for this article, I used AI chatbots to help me brainstorm the top energy stories of 2023 to see if I had missed anything major. I hadn’t, but one of the chatbots suggested the following as one of the year’s top stories:

“The potential of baby kangaroo poo to reduce methane emissions from cows, illustrating creative solutions to climate challenges.”

Given the relatively low and localized supply of baby kangaroos — as well as Australia’s tiny contribution to global carbon emissions — I don’t think this one makes the cut. Writers, I think our jobs are still relatively safe for now.

Those are the top energy stories as I saw them in 2023. I thank you for reading, and I wish you a Merry Christmas and Happy Holiday season.

By Robert Rapier 

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Leave a comment
  • Mamdouh Salameh on December 29 2023 said:
    These stories are a mixture of hype, delusion and misguidedmess.

    The EIA’’s US crude oil production figures are extremely hyped. Production is inflated by more than 2.0 million barrels a day (mbd) being the difference between the EIA’s estimates of weekly and monthly production.

    COP28 calling for orderly reduction of fossil fuels is meaningless since it is overwhelmingly accepted that fossil fuels will continue to drive rhe global economy well into the future.

    ESG has been losing credibility because investors are flocking to the oil industry as they seek higher return on their investments and in so doing accepting that global demand for fossil fuels is icontinuing to rise.

    The projection by the IEA and its Executive
    Director Faith Birol that peak oil demand will be reached by 2030 is false, politically-motivated and wishful thinking. OPEC Plus sees demand continuing to rise well into the future hitting 108.0 million barrels a day (mbd) by 2028 and reaching 116.0 mbd by 2045.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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