News at WGC2018: Tariffs, Demand Growth and More
Posted June 26, 2018
API’s Jessica Lutz contributed to this post.
ExxonMobil Chairman and CEO Darren Woods and Chevron Chairman and CEO Michael Wirth used the big stage at the World Gas Conference to underscore what we’ve been saying for some time about the administration’s tariffs on imported steel: They work against the U.S. natural gas and oil renaissance.
Woods said the concept of free trade “underpins the competitiveness” of the natural gas and oil industry. Other administration initiatives – Woods mentioned tax reform and regulatory changes – have enhanced the competitiveness of U.S. industry versus global rivals. Tariffs on imported steel could hinder progress by the domestic industry:
“Right now we’re still in this turbulent time in terms of where exactly this lands and how it settles out. Our perspective is we try and keep a level-headed voice in the conversation around the importance of our industry … They are global businesses – can we compete globally? … When tariffs come on and threaten a trade war, you run the risk of making those projects less competitive, less attractive. … We’re continuing to advocate that the world is very well served with low tariffs and free trade.”
(Photo below – L-R: Dan Yergin, Michael Wirth and Darren Woods)
Wirth said the administration’s desire to support the domestic steel industry and its actions to support domestic energy must be in balance:
“The world economy is growing, really for the first time in a decade or so … We see it in demand for the commodities in our business and in all the economic data. The risk of trade skirmishes or trade wars starts to weigh on people’s perceptions of economic growth in the future and so from a demand standpoint I think that’s a risk. … These things (tariffs) run the risk of becoming a bit of a drag on growth. … We try to buy steel in the U.S. for U.S. projects to the extent we can. Not everything we need here is made here.”
Woods also put in a plug for the North American Free Trade Agreement and the way NAFTA has helped enhance the benefits of the U.S. energy renaissance – imports to the U.S. of crude oil from Canada and Mexico, followed by exports of fuels and other refined products back to those two countries – two of the leading destinations for U.S. energy exports.
Global Oil Demand Rising
International Energy Agency Executive Director Fatih Birol said IEA sees solid oil demand growth for the foreseeable future. Birol said although sales of electric vehicles reach 1 million last year, the total was less than 1 percent of all car sales and that cars represent only 20 percent of global oil use. “We don’t see oil demand decreasing any time soon, unless we have another financial crisis,” Birol said.
Increasing share of power from wind and solar creates the challenge of managing intermittency. Natural gas is in the fast lane thanks to its flexibility and the role it plays in helping the environment, he said.
Birol said there will be a major shift in the global natural gas market over the next five years – with China becoming the world’s largest natural gas importer, the U.S. having a new, significant wave of shale gas production and increased LNG exports.
Canada: There's Agreement on Natural Gas
Jim Carr, Canada's minister of natural resources, said that at a recent G20 energy summit -- where agreement on many issues was difficult to reach -- there was consensus on the importance of natural gas.
Carr said ministers were able to agree that natural gas is playing a key role and that role will expand in the future because there's broad recognition of the environmental benefits of using cleaner burning natural gas. The world needs natural gas, Carr said, calling it a clean energy for a cleaner future.
Cheniere President and CEO Jack Fusco said that through LNG exports, the U.S. has given the world an affordable, secure, dependable energy source.
The Age of Gas
BP Group Chief Executive Bob Dudley said the world is in the beginning of the “age of gas.” Dudley said energy is essential to human progress and demand for it will continue to grow. Because natural gas is abundant and affordable, it will be increasingly important to the world energy mix. Natural gas helps meet the twin goal of securing affordable and cleaner energy.
“We need to recognize gas not just as a transition fuel but a destination fuel,” Dudley said, adding that more investment is needed in infrastructure and technology and in partnering natural gas with renewable energy sources.
Ryan Lance, ConocoPhillips chairman and CEO, said the great conundrum is how to deliver affordable energy to all corners of the world while also reducing emissions. This already is happening in the U.S. Lance:
“Natural gas has to be more than a bridging fuel. … It’s going to be around for some time. … It’s a very long-term solution to reach climate change goals.”
More on WGC2018 from the Energy Tomorrow Twitter feed:
@SecretaryPerry: Americans decades ago could not have imagined the growth of US #energy, and especially in American #naturalgas. #Innovation was the key -- horizontal drilling and #hydraulicfracturing. #WGC2018 pic.twitter.com/6A4fZ3f6FQ— EnergyTomorrow (@EnergyTomorrow) June 26, 2018
@exxonmobil's Woods: #Technology evolves our understanding of issues, and I believe we'll continue to see that. I'm convinced we’ll find additional technologies to help achieve #emissions reductions. #WGC2018 pic.twitter.com/5dhPY9L73W— EnergyTomorrow (@EnergyTomorrow) June 26, 2018
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and five grandchildren.
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