Daily Energy Standup Episode #109 Supreme Court rejects climate bids from oil and gas companies

(Reuters) U.S. fuelmakers are expected to post higher first-quarter earnings in coming days on strong fuel exports and margins even as domestic diesel demand slumped during the period. Refiners have been riding a wave of favorable […]

Highlights of the Podcast

00:00 – Intro02:36 – Supreme Court rejects Climate Bids from Oil and gas companies05:52 – U.S. oil refiners posts to post strong Q1 earnings, but demand outlook dims. 08:44 – Market Updates11:44 – Outro

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:14] What is going on, Everybody, Welcome to another edition of the Daily Energy News Beat Stand Up here on this gorgeous April 25th, 2023. As always, I’m your humble correspondent, Michael Taylor, coming to you from an undisclosed location here in Dallas, Texas. Stu is out on assignment today, so I am rocking a solo show I appreciate you guys tuning in. I will have to say the last two solo shows that Stu and I have both done so for Total, he’s beaten me a download. So I need your guys’s help here. [00:00:45][31.5]

Michael Tanner: [00:00:46] If I was a 15 year old YouTuber, I would tell you to smash that like button, But you’re probably listening to this on your podcast if you’re driving to work send this to one of your friends bring it up unannounced at the office. Make your coworkers feel uncomfortable with the amount of times you’re telling them to listen to this podcast be very much appreciated we need to beat Stu. [00:01:05][18.5]

Michael Tanner: [00:01:05] We nonetheless have a great menu tonight for today’s stories provided by Stu will keep it fairly short. I’ve got two stories and then Finance first big story out of the US Supreme Court I don’t know why I have to be the one that covers the political stuff, but the Supreme Court rejects climate bids from oil and gas companies this has long-ranging effects. I will dive into what that decision was today and what that means for all stakeholders involved. [00:01:28][23.3]

Michael Tanner: [00:01:29] And then we’re going to go ahead and look at U.S. oil refiners to post strong Q1 earnings, but demand outlooks dims know this isn’t a crazy week for earnings specifically in the U.S. refining business. So I will cover what that looks like. [00:01:42][13.3]

Michael Tanner: [00:01:43] We’ll quickly look at the overall markets, How the S&P and NASDAQ did yesterday oil up a little bit, 70, 60 natural gas holding strong at $2.25. I will cover all that and a bag of chips, guys but first, check us out again online world’s greatest website www.EnergyNewsBeat.com for all the stories I’m about to cover are from you can hear the description below. [00:02:04][21.3]

Michael Tanner: [00:02:04] Our team does a great job of making sure that description is updated with all the links. So as you’re listening, boom, hit it. You can follow along with the story all that Dashboard.EnergyNewsBeat,com the best place for all of your data and energy news combo. Get it while you still can you never know when it might go behind some subscription wall. I’m just throwing that out there’s a possibility. We appreciate everybody. If you want to interact with the show Questions@EnergyNewsBeat.com but if not that the pleasantries, let’s get into our first menu item. [00:02:32][28.0]

Michael Tanner: [00:02:33] It’s the Supreme Court story title of the headline Supreme Court rejects Climate Bids from Oil and gas companies. The US Supreme Court today decided against allowing climate lawsuits filed against some of the biggest oil companies in the world to be moved out of the state and local courts and into the federal level here so it’s very specific what happened. [00:02:52][19.2]

Michael Tanner: [00:02:55] Mainly a conglomerate of big oil and gas companies, Exxon, Suncor, and Chevron what they are attempting to do is move climate lawsuits away from the state and local level, which are jury style, you know, jury style, where the jury, your own peers, all that jazz to the federal level, which there’s no jury. It’s a panel of, you know, ex-lawyers who are now judges, a.k.a. you’ve got the Supreme Court, the verb who’s got all that stuff. That’s what they were trying to do. [00:03:22][26.9]

Michael Tanner: [00:03:22] They were trying to move all of that stuff out of the state and local level. Unfortunately, the Supreme Court said, no, you know, we got Richard Wiles here he’s the president of the Center for Climate Integrity so, you know, probably a lot we agree on. [00:03:37][14.3]

Michael Tanner: [00:03:37] He said the high court’s decision is a major victory for communities across the country they’re fighting to hold big oil accountable and make them play for the climate damages they knowingly cause now it’s time for these polluters to face the evidence of their deception in court. I don’t agree at all with that statement it in so facto to say that, you know, these are the type of people who who were opposing this. [00:03:58][20.4]

Michael Tanner: [00:03:58] Now we’ll say this this is where I’ll I’ll zig when peoples act I don’t agree with anything Richard Wiles said in that statement. Now, unfortunately, I kind of agree with the decision here with the Supreme Court. I am in favor of anything that hands over more power to the states and the local level and the federal government. [00:04:16][18.5]

Michael Tanner: [00:04:17] The reason why I’m saying this now is because Stu’s not on the other side, because all his blood would be boiling right now his blood would be boiling, as I’m saying this, But this is an instance where, unfortunately, my belief of states and localities should control their destiny has to apply evenly everywhere, including oil and gas. [00:04:36][19.2]

Michael Tanner: [00:04:37] I get that it would be great to have federal lawsuits for climate change, if only because smart, you know, the lawyers can do lawyer things and can walk and, you know, meld arguments and all you do is pitch them to other trained lawyers and judges versus getting someone like me on the on the jury where I’m just I’m punching a clock wondering when lunch is. And hopefully they didn’t cut my TV access back at the hotel or I have to play a crossword for the 80th night in a row. [00:05:03][25.8]

Michael Tanner: [00:05:03] I’m listening to you know, climate scientists try to talk to me about greenhouse gas exposure. I mean, I I’m only half kidding when I say this there’s a reason Exxon, Anchorage, Chevron wanted to go to the federal level. It’s an instance where, unfortunately, my belief on who should control their own destiny must be applied evenly. [00:05:23][19.8]

Michael Tanner: [00:05:23] I have to applaud the decision by the Supreme Court, if only unfortunately, this probably does mean we’re going to see an uptick in climate lawsuits now that they know they have to be settled at the local level or the state level, which again, you now get into a jury trial. So, you know, again, I’d be very interested in what Stu’s take is on this we will try to ask his thoughts. I know his blood would be boiling with that take the nice part is we’re going to get his thoughts tomorrow let them cool off a little bit. But a big decision out of the Supreme Court, guys. [00:05:50][26.6]

Michael Tanner: [00:05:51] Next up, we’ve got U.S. oil refiners posts to post strong Q1 earnings, but demand outlook dims. As I mentioned, the open IDs I heard on Squawk Box this morning, 158 companies are announcing earnings this week, which is absolutely insane. I think it’s one of the busiest weeks in the S&P 500 we’ve had in years. Specifically, we have refining market. US filmmakers are expected as the first headline of the Reuters article, but you can view it on EnergyNewsBeat.com. [00:06:21][30.1]

Michael Tanner: [00:06:21] US Fuel makers are expected to post higher first quarter earnings in coming days on strong fuel exports and margins, even as domestic diesel demand slumped during this period, refiners have been riding a wave of favorable pricing and demand as pandemic era closings boosted margins alternative periods of higher demand for products have also helped with jet fuel recently spreading higher as diesel falls off TV Guys, an idea Valero Energy, the second largest U.S. final by capacity, will kick off its earnings on Wednesday. [00:06:47][26.3]

Michael Tanner: [00:06:48] Their share for profit is expected to triple I said that right triple to $7.23 that’s based off a mean estimate of 17 analysts. To give you an idea, a year ago, it was $2.31 per share. The top U.S. refiner by volume, Marathon Petroleum, their forecasted share per profit is $5 and 70 $0.71 compared to $1.49. PHILLIPS 66 could be up to about $3.60 a share, compared to about one dollars and $0.32. All of that is, according to Reteam, a very reputable refining company those latter will report earnings in later May. [00:07:24][36.5]

Michael Tanner: [00:07:25] And the final kind of round out of the numbers ExxonMobil signaled that is refining profits could reach 3.55 billion for the period compared to 332 million a year ago which again was sort of hurt by high maintenance costs. But absolutely insane to think about what’s going to happen with these U.S. refiners. You know, if there was ever an opportunity to maybe go out and play the markets a little bit again, we don’t give investment advice we are not investors. We do not suggest you take our advice seriously this is for entertainment purposes only. But maybe Valero is not a number to look at I wouldn’t be so sure if I wouldn’t go buy some Valero stock right now. [00:08:04][38.7]

Michael Tanner: [00:08:04] And again, I think there you know, I know the pushback they get well, you know, diesel prices are slumping Gas is, you know, $2 gas prices. Well, again, the key is these crack spreads. And you have to look at you know, they mentioned this at the bottom of the article, the U.S. Refining Cracks bed, which is a proxy for profit from processing a barrel of oil in a fuels is hovering around $30 a barrel, $10 lower than it was a year ago. [00:08:28][23.9]

Michael Tanner: [00:08:28] So while crack spreads are still high, they’re coming down a little bit so, you know, now may be the time to buy, see the pot sell off in the next month or two. It’ll be interesting to see where these companies go. But I expect much like this article says, big, big, big, big earnings coming out of these U.S. oil refiners. [00:08:43][15.3]

Michael Tanner: [00:08:44] On the finance side, guys, I mean, it’s pretty flat. S&P was down. It was only up about a 10th of a percentage point. NASDAQ tumbles about a quarter of a percentage point. Dollar index basically stays flat. One, two, 126. Crude oil drops a quarter of a percentage point. I’m 7859. That’s in these latter half of the trading session as I record this at 650 but overall, on the trading day Monday, it popped about two and a half percent or about about a percent to half, excuse me. [00:09:08][24.3]

Michael Tanner: [00:09:09] Mainly off the back of some good Chinese data to give you guys an idea, Brant did settle up about $1.07 or 1.3 percentage points, which is a little bit higher than what WTI said. Again, what we’re seeing on the story is Asian demand and really what it sees is bookings for China’s May Day there. You know, I don’t even know what May Day is, but apparently it’s an insane holiday for that day. Bookings for China have absolutely skyrocketed there’s an implied shortage of jet fuel. And as they’re trying to fill in planes to get people to the to this event. [00:09:41][32.7]

Michael Tanner: [00:09:42] So, again, as China goes as the dollar goes, that’s how we will see crude crude oil go. I just spilled all of my pens because I’m a nut. But I, I think when we look at natural gas I think the easiest thing to say is we’re trading at $2.25 thank goodness for the little bit of cooler weather that has swung in here, if only because we could have seen ourselves continue to tumble below $1.90. I think the the thing to watch for on natural gas is we have the upcoming storage report that drops excuse me, next week are on Thursday. [00:10:15][33.5]

Michael Tanner: [00:10:16] And this is what I took note of when I saw this this morning range of expectations, 29 to 82 backfill. So we’re into we’re in build MGI has their weekly storage estimates at 77 BCF. So they’re on that higher side of the range. expensive big range I mean, you’re talking to spread of almost 65 Bcf from an injection standpoint. [00:10:35][18.5]

Michael Tanner: [00:10:35] I would like to say if we’d be on the chiller side of the draw or of the build, But you know, I tend to take NGI as a pretty good barometer. So they say 77, they say it’s going to be on that upper end of the estimates, not much really happening. [00:10:50][14.6]

Michael Tanner: [00:10:51] We’re going to see a lot of earnings come out I know there’s a lot of M&A deals going on right now, a lot of stuff under the weather sniffing around. But we will hear some here’s some news coming out very quickly. [00:11:00][9.7]

Michael Tanner: [00:11:01] There’s there’s some rumors floating around I heard a very juicy a nice, juicy rumor this morning about a pretty large Lee County, New Mexico company in talks. But, you know, we’ll we’ll see what happens but I’ll check my sources on that. [00:11:15][14.2]

Michael Tanner: [00:11:15] I asked you if there’s anything else, but there’s nothing because I’m in control tonight. Guys, I appreciate you sticking with me a little short episode we’ll get you out of here. Appreciate you guys checking me out and checking out Energy News Beat again www.EnergyNewsBeat.com is the best place for all you oil and gas news for Stuart Turley I’m Michael Tanner guys we’ll see you tomorrow he’ll be off leave. [00:11:15][0.0]