White House Seeks Repeal of California Smog Policy
The White House is seeking the repeal numerous policies aimed at reducing vehicle emissions, ranging from EPA policy to state policy. One policy under attack is federal fuel standards, which will be capped at 2020’s 30 mpg rather than rising to 50 mpg by 2025. Trump’s administration is also challenging California’s Clean Air Act waiver allowing them to implement stricter standards and require minimum electric vehicles sales. Regulatory uncertainty is a nightmare for automakers, who must now decide whether to build cars based on old regulations or on potential new regulations. Click Here to read more from World Oil.
The Regulation That Could Push Oil to $200
Economist Paul Verleger is predicting oil prices may rocket to $200/bbl following the implementation of IMO 2020, a marine industry regulation that requires international vessels to cut sulfur emissions 7x lower. Verleger argues that global refining capacity will not be able to keep up, causing bunker fuel prices (the dirty, high-sulfur oil currently burned by ships) to plummet and diesel prices to soar. He notes that half the refineries in the world will not be able to produce fuel meeting the new spec. On the other hand, a report from Columbia University shows there is more flexibility in the global oil supply chain. We have 18 months to find out who’s right. Click Here to read more from OilPrice.com.
Will Trump Lower Oil Prices?
It’s unlikely. The only way Trump can cut oil prices is a release from the Strategic Petroleum Reserve – a massive crude storage network holding about 650 million barrels of crude. Markets have begun speculating that Trump could release some oil from the SPR to relieve high gas prices going into the midterm elections. However, a release would only have a short-term impact. Additionally, refineries are already producing fuel near full capacity, meaning they couldn’t easily refine more oil to create more additional fuel. The relative lack of impact makes any SPR release unlikely. Click Here to read more from CNN Money.
Russia’s Oil Tax Laws Are Changing
Russia is revamping its crude oil tax, eliminating duties (taxes imposed on exports) and instead putting the taxes on the producers. It’s functionally a re-shuffling that is neutral for Russia’s oil industry, but it could impact some of their trade partners. Certain European countries have exemptions from Russia’s current oil duties; these countries will now have to pay producers more for the same crude to compensate for the production taxes. Russia’s tax book will benefit, but consumers in those select countries will be left paying more. As Russia attempts to revitalize the economy, the new funds will help support economic growth in Russia, meaning the change could be net bullish for oil prices. Click Here to read more from Bloomberg.