Month: June 2016

IEA releases Oil Market Report for June

Unexpected supply cuts and outages in North America, Africa and South America dampen global production forecasts

14 June 2016

Outages in OPEC and non-OPEC countries cut global oil supply by nearly 0.8 mb/d in May. At 95.4 mb/d, output stood 590 kb/d below a year earlier – the first significant drop since early 2013. Non-OPEC supply growth is expected to return in 2017 at a modest 0.2 mb/d, after declining by 0.9 mb/d in 2016, the newly released IEA Oil Market Report  (OMR) for June informs subscribers.

OPEC crude output fell by 110 kb/d in May to 32.61 mb/d as big losses in Nigeria due to oil sector sabotage more than offset higher Middle East output. Iran has clearly emerged as OPEC’s fastest source of supply growth this year, with an anticipated gain of 700 kb/d.

Global oil demand growth in 1Q16 has been revised upwards to 1.6 mb/d and for 2016 growth will now be 1.3 mb/d. In 2017 we will see the same rate of growth and global demand will reach 97.4 mb/d. Non-OECD nations will provide most of the expected gains in both years. The growth rate is slightly above the previous trend, mostly due to relatively low crude oil prices.

Commercial inventories in the OECD increased from March levels by 14.4 mb to stand at 3 065 mb by end-April, an impressive 222 mb above one year earlier. As the US driving season kicks off, OECD gasoline stocks stand above average levels and last year in absolute and days of forward demand terms. There is a similar picture in China.

Refinery runs in 2Q16 are suffering from deepening outages. Throughput is nearly flat year-on-year, as refiners finally catch up with maintenance postponed from 2015. The seasonal ramp-up to 3Q16 is expected to be the largest on record, surging by about 2.3 mb/d quarter-on-quarter.

 The Oil Market Report (OMR) is a monthly International Energy Agency publication which provides a view of the state of the international oil market and projections for oil supply and demand 12-18 months ahead. To subscribe, click here.

Photo: © Shutterstock.com

Carbon tax: Not what Robin Hood had in mind

There is often some fairly muddled logic spouted by those who work in the corridors of power on Capitol Hill, but even by Washington’s standards this one takes the cake: Rep. Jared Polis (D-CO) referring to a carbon tax as a “tax cut.”

As E&E Daily reported recently, in response to the House taking up a resolution opposing a carbon tax, Rep. Polis said “this is the first sign of momentum for a carbon tax cut — and you’ll hear me referring to it as a carbon tax cut because that’s essentially what it is: using carbon tax revenues to cut taxes for the American people.” By his logic, the carbon tax is like Robin Hood: robbing from the rich, giving to the poor.

Except that’s not quite true. To begin, the notion that raising taxes and then giving it back is somehow a tax cut is the sort of fuzzy thinking that could only take place in Washington, DC.

Second, does anybody really believe that 100 percent of this tax will be given back to the people? And finally, even if it is given back, it is highly likely that it will go to the government’s preferred group of consumers – the kind of affluent consumer that can afford to install solar panels and drive around in expensive (and subsidized) electric vehicles.

Rep. Polis can keep referring to a carbon tax as a “tax cut,” but repeating the same fallacy over and over again does not somehow make it true.

About The AuthorAFPM Communications provides insights from inside AFPM. To learn more about AFPM, visit AFPM.org.

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New Research Makes Divestment Folly Even Harder To Ignore

Further research from Arizona State University has been released today which highlights – yet again – just how damaging divestment will be for universities that bow to pressure from narrow-minded pressure groups, and shed their investments in fossil fuel companies.

Findings from Dr. Hendrik Bessembinder, a professor at ASU’s Carey School of Business, show that costs related to divestment have the potential to rob endowment funds of as much as 12 percent of their total value over a 20-year time frame. For large institutions, this could be as much as $7.4 billion, while medium-sized institutions could see a reduction of between $52 million and $298 million. For small institutions, the loss could stretch from $17 million to $89 million.

But the costs with divestment don’t stop at the loss of funds. Dr. Bessembinder’s findings show that heavy transaction and compliance costs will be incurred as fund managers sell off their fossil fuel holdings, as many of these are held in mutual funds, commingled funds and private equity funds. Substantial research and compliance costs will also be incurred as managers ensure their investments comply with their divestment goals.

Finally, the report also adds that the top 10 environmentally-focused funds charge management fees 10 basis points higher than their peers in the active management space, and 38 basis points higher than the passively-managed funds that long-term investors tend to favor.

As stark as these numbers are, they become even more grave when viewed in context. A 12 percent drop in endowment funds means a 12 percent drop in funds for the college. In turn, this means less money for research, fellowships, financial aid and professorships – among much, much more.

Although some reports state that the divestment movement has been “largely rebuffed,” pressure on campuses across the country to shed their fossil fuel investments still remains. However, while the divestment advocates claim to represent the best interests of American citizens, divestment merely politicizes energy production in favor of more expensive methods – harming the very people advocates think they are trying to save.

About The AuthorAFPM Communications provides insights from inside AFPM. To learn more about AFPM, visit AFPM.org.

 

Report: Foreign Direct Investment in SoCal

Today, LAEDC affiliate World Trade Center LA released a report on the role of Foreign Direct Investment in the Southern California region.

Read the report HERE

Read media coverage:

LA Daily News:  What growing global trade means for Los Angeles area businesses

KPCC:  Which country invests most in LA? The answer might surprise you

FDI cover

WTCLA Report: Foreign Direct Investment Plays Significant Role in SoCal

 LOS ANGELES, CA – (June 17, 2016) Today, at the SELECT LA Investment Summit, the World Trade Center Los Angeles (WTCLA) published a new report on the impact of Foreign Direct Investment (FDI) to the Southern California (SoCal) economy, revealing the number of foreign-owned establishments in the region and the jobs created by those employers, and ranking countries based on investment levels in the SoCal region.

The report, sponsored by Chair of L.A. County Board of Supervisors Hilda L. Solis in collaboration with JPMorgan Chase and other firms, underscores the tremendous amount of international connections that are essential to economic activities and jobs here in SoCal and L.A. County.  The research was conducted by WTCLA affiliate LAEDC.

Findings of the report include:

  • There are 9,105 foreign owned firms in SoCal, which directly employ 366,415 people, who receive estimated wages of $23.6 billion/yr. The economic impact of this activity sustains 8.1% of all jobs in SoCal (direct, indirect, and induced jobs).
  • Manufacturing is the sector in which foreign owned firms employ the most workers in SoCal, with 116,721 workers, providing $6.8 billion in estimated wages.
  • Foreign-owned enterprises in SoCal most commonly originate from 1) Japan with 2,440 firms and 79,421 jobs, 2) United Kingdom with 1,145 firms and 54,910 jobs, and 3) Germany with 825 firms and 32,594 jobs.
  • Over the period of study, China was a relatively minor source of investment in SoCal until 2013 and 2014, years when investment rose dramatically to $1.1 billion and $1.5 billion, respectively. A. County received the bulk of that investment.
  • In 2015, California had the most foreign investment “greenfield” projects of any state in the U.S., with 230 projects. New York ranked second (192) and Texas ranked third (147).  In terms of total project value, California ranked fourth ($4 billion), with New York ranked first ($8.8 billion).
  • Foreign investments in “greenfield” projects in SoCal totaled more than $29 billion from 2003-2015.
  • The report also isolates the data specifically for the counties of Los Angeles, Orange, San Diego, San Bernardino, Riverside, and Ventura.

“In this global economy, the L.A. region is uniquely suited and appealing to foreign investors,” said Supervisor Solis. “Our draw combined with our international connections result in jobs and economic opportunity that provide benefits locally and throughout Southern California.”

As part of its commitment to foreign-direct investment in the region, JPMorgan Chase contributed $230,000 to WTCLA today to advance this effort.

“It’s eye opening to learn there are almost 10,000 foreign-owned firms in SoCal, employing more than a quarter of a million people,” said Joni Topper, Managing Director, JPMorgan Chase Commercial Bank Los Angeles. “Los Angeles is competing on a global stage and our competitors for jobs and investment are putting their best feet forward as regions, with solutions. We too must understand and embrace that when investment comes to Riverside and San Bernardino, to Ventura, or to Orange and San Diego Counties – Southern California benefits as a whole.“

The report release coincides with the 2016 SELECT LA Investment Summit, hosted by LAEDC affiliate World Trade Center Los Angeles.

In addition to the FDI report, WTCLA affiliate LAEDC also released its annual International Trade Outlook at SELECT LA.  For details, visit www.LAEDC.org.

About World Trade Center Los Angeles (WTCLA)

As the leading international trade service and promotion organization in the Los Angeles region, WTCLA supports the development of international trade and business opportunities through our business assistance, matchmaking and educational services, and promotes Los Angeles as the premier destination for international trade and foreign investment. WTCLA has led or assisted in the attraction of more than $1 billion of foreign investment into Los Angeles County. The WTCLA is an affiliate of the Los Angeles County Economic Development Corporation (LAEDC).  www.WTCLA.org

About the LAEDC

The Los Angeles County Economic Development Corporation (LAEDC) provides strategic economic development leadership to promote a globally competitive, prosperous and growing L.A. County economy to improve the health and wellbeing of our residents and communities and enable those residents to meet their basic human need for a job.  We achieve this through objective economic research and analysis, strategic assistance to government and business, and targeted public policy.  Our efforts are guided and supported by the expertise and counsel of our business, government and education members and partners.  www.LAEDC.org

Media Contact:   Lawren Markle / 213-236-4847 / [email protected]

Report: International Trade Outlook for Los Angeles region

LAEDC has released the 2016-2017 International Trade Outlook, providing and overview and forecast for this important industry in the Los Angeles region.

Read the report HERE 

ITO coverRead media coverage:

LA Daily News:  What growing global trade means for Los Angeles area businesses

KPCC:  Which country invests most in LA? The answer might surprise you

This edition is the 11th Annual International Trade Outlook from LAEDC.  To learn more about this industry cluster visit LAEDC’s page HERE.

During 2016, LAEDC will also be producing an industry cluster report on the Trade and Logistics industry cluster of our region.

First new U.S. nuclear reactor in almost two decades set to begin operating

photo of Watts Bar nuclear generating station, as explained in the article text

Source: Republished with permission from the Tennessee Valley Authority

The Tennessee Valley Authority’s (TVA) Watts Bar Unit 2 was connected to the power grid on June 3, becoming the first nuclear power plant to come online since 1996, when Watts Bar Unit 1 started operations. Watts Bar Unit 2 is undergoing final testing, producing electricity at incremental levels of power, as TVA prepares to start commercial operation later this summer. The new reactor is designed to add 1,150 megawatts (MW) of electricity generating capacity to southeastern Tennessee.

Watts Bar Unit 2 is the first nuclear plant in the United States to meet new regulations from the U.S. Nuclear Regulatory Commission (NRC) that were established after the 2011 earthquake and tsunami that damaged the Fukushima Daiichi Nuclear Plant in Japan. After the NRC issued an operating license for the unit in October 2015, 193 new fuel assemblies were loaded into the reactor vessel the following month. TVA announced at the end of May that the reactor achieved its first sustained nuclear fission reaction.

Construction on Watts Bar Unit 2 originally began in 1973, but construction was halted in 1985 after the NRC identified weaknesses in TVA’s nuclear program. In August 2007, the TVA board of directors authorized the completion of Watts Bar Unit 2, and construction started in October 2007. At that time, a study found Unit 2 to be effectively 60% complete with $1.7 billion invested. The study said the plant could be finished in five years at an additional cost of $2.5 billion. However, both the timeline and cost estimate developed in 2007 proved to be overly optimistic, as construction was not completed until 2015, and costs ultimately totaled $4.7 billion.

graph of U.S. nuclear reactors that began construction and came online since 1973, as explained in the article text

Although Watts Bar 2 is the first new U.S. nuclear generator to come online in 20 years, four other reactors are currently under construction and are expected to join the nuclear fleet within the next four years. Vogtle Electric Generating Plant Units 3 and 4 in Georgia and Virgil C. Summer Nuclear Generating Station Units 2 and 3 in South Carolina are scheduled to become operational in 2019–20, adding 4,540 MW of generation capacity.

Principal contributors: Sara Hoff, Marta Gospodarczyk

Total U.S. electricity sales projected to grow slowly as electricity intensity declines

June 15, 2016graph of electricity sales by sector, as explained in the article text

Electricity sales, as projected in the U.S. Energy Information Administration’s most recent Annual Energy Outlook (AEO2016) Reference case, increase in each sector through 2040. In 2015, 3.7 trillion kilowatthours (kWh) of electricity were sold, and total electricity sales are projected to rise 0.7% annually through the projection period. The residential sector currently purchases the most electricity, with a 38% share of total electricity sales in 2015. However, sales in the commercial sector are projected to surpass those in the residential sector in the early 2020s.

The AEO2016 Reference case, which reflects current laws and regulations, includes the U.S. Environmental Protection Agency’s Clean Power Plan (CPP). The CPP allows state regulators to encourage customers to purchase specified energy-efficient technologies as a part of state compliance strategies. The AEO2016 Reference case assumes that consumers will receive subsidies of 10% or 15% between 2020 and 2025 for certain energy efficient appliances, equipment, and building envelope improvements.

graph of residential, commercial, and industrial energy intensity, as explained in the article text

The residential sector currently is the largest electricity-consuming sector, with 1.4 trillion kWh sold in 2015. Electricity sales in the residential sector are projected to grow by 0.3% per year in the Reference case from 2015 through 2040 as the number of households increases by 0.8% per year. Residential energy intensity is expected to decline, with the average purchased electricity per household falling 11.3% from 2015 to 2040. Federal efficiency standards for most major end uses, including lighting, space cooling and heating, and water heating, as well as state and local building energy codes, are the main reasons for the electricity intensity decline.

Electricity sales to commercial consumers are projected to increase at an average annual rate of 0.8% from 2015 to 2040. Commercial sector electricity intensity (electricity sales per square foot of floorspace) is projected to decline 0.3% per year as total commercial sector floorspace increases 1.1% per year. Federal energy efficiency standards, as well as technological improvements in lighting, refrigeration, space heating, and space cooling, contribute to the decline in electricity intensity.

Electricity sales to industrial consumers are projected to rise 1.1% per year on average, from 1.0 trillion kWh in 2015 to 1.2 trillion kWh in 2040. With the value of industrial shipments projected to grow 1.9% per year in the Reference case, industrial sector electricity intensity, or electricity sales per dollar of industrial shipments, declines at an average annual rate of 0.8% from 2015 to 2040. The decline in projected electricity intensity results from the adoption of more energy-efficient technologies and structural changes in the economy toward less electricity-intensive industries.

A recent extension of federal tax credits for residential and commercial solar photovoltaic (PV) systems, combined with the expected continuation of declining PV prices, spurs increased adoption of residential and commercial PV in the AEO2016 Reference case projection. Total building PV capacity grows at 8.6% annually in the AEO2016 Reference case. Generation from residential PV systems reaches 90 billion kWh, and commercial system generation reaches 36 billion kWh by 2040. Residential and commercial electricity sales would be 5.0% and 1.7% higher, respectively, in 2040 without the electricity generated by rooftop PV systems.

Principal contributor: Kimberly Klaiman

New LAEDC Research: People, Industries and Jobs details occupational forecasts and skills requirements

LAEDC’s Institute for Applied Economics has published the new 2016 People, Industry, and Jobs, an annual study on LA County’s workforce needs, occupational forecasts, and skills required by occupations, to provide workforce development intelligence as part of our ongoing partnership with our regional Workforce Development Boards (WDBs) and other education and workforce development partners.   Both the City of Los Angeles and Los Angeles County regions are detailed, and LAEDC would like to thank both County of L.A. and City of L.A. for their support.

To read the new 2016 People, Industry, and Jobs please click HERE

San Gabriel Valley Tribune – Report predicts LA County will add 346,000 jobs by 2020

Los Angeles Times – Most new jobs in L.A. County will be low-paying, report warns

KPCC – Forecast: LA County will add nearly 350,000 jobs over 5 years, but many won’t pay well

people cover

For those who wish to review the prior version
from 2015, please click HERE.

LAEDC Report Analyzes Industries and Jobs Forecasts for Los Angeles

 LOS ANGELES, CA – (June 1, 2016) Today, the Los Angeles County Economic Development Corporation (LAEDC) published the second edition of the annual report, People, Industries and Jobs.  The report provides occupational forecasts and industry growth forecasts for the region.  The research was conducted to inform workforce development efforts and identifies the skills requirements of projected job openings in the coming years.  The report offers findings for both the City of Los Angeles and County of Los Angeles, and was sponsored by the Workforce Development Boards (WDBs) of both the County and City of Los Angeles.

The report supports implementation of the Workforce Innovation and Opportunity Act of 2014 (WIOA) which requires WDBs to engage in a holistic and regionally cooperative approach to programs, so that workforce development is better aligned with economic development priorities, and indeed aligned with the specific occupations where job opportunity is likely to increase.

Findings of the report include:

  • Employment growth of 1.5 percent annually over the next five years is expected to add 346,100 jobs in Los Angeles County and 122,700 jobs in LA City, across a broad range of industry sectors.
  • The most competitive industries in L.A., in terms of regional concentration, include motion picture and sound recording, apparel manufacturing, performing arts and spectator sports, air transportation, and broadcasting.
  • Industry sectors with the highest projected growth rates (in percentage) are construction, professional and business services, education and health care services, and leisure and hospitality.
  • Industries forecast to create the most overall jobs are administrative and support services, food services, social assistance and professional and technical services.
  • Middle-skilled occupations (those requiring more than a high school credential but less than a bachelor’s degree) with the greatest hiring potential are registered nurses, teaching assistants, heavy and tractor-trailer truck drivers, nursing and medical assistants, and licensed practical/licensed vocational nurses (LPN/LVN).
  • Largest total job growth (new and replacement) is forecast in office and administrative occupations and food preparation and serving occupations, with 115,770 and 114,680 jobs respectively (in LA County). Those are also the largest occupational groups in the region now.
  • Occupations that provide the greatest overall quantity of job openings in the next five years generally require lower levels of education and training.

“The good news is that our region is adding jobs across most industries, and is expected to continue its expansion,” said Dr. Christine Cooper, LAEDC Senior Vice President and lead author of the report. “However, although we are seeing some job growth in high-paying industries, it is clear that not enough of our projected job gains are skilled, well-paying jobs that will support middle class incomes. We need to work together to change this trajectory, by fostering  job creation in our leading export-oriented industries, which tend to pay higher wages and strengthen regional prosperity overall.”

Industry Cluster growth strategies and workforce development strategies for the Los Angeles region are outlined in the 2016-2020 L.A. County Strategic Plan for Economic Development, which identifies key industries and lists steps our region can take collaboratively to foster growth of these industries and jobs, and ensure more of our residents can access those opportunities.

 

About the LAEDC

Established in 1981, the Los Angeles County Economic Development Corporation (LAEDC) provides strategic economic development leadership to promote a globally competitive, prosperous and growing L.A. County economy to improve the health and wellbeing of our residents and communities and enable those residents to meet their basic human need for a job.  We achieve this through objective economic research and analysis, strategic assistance to government and business, and targeted public policy.  Our efforts are guided and supported by the expertise and counsel of our business, government and education members and partners. Since 1996, the LAEDC’s Business Assistance team has directly helped to retain or attract over 200,000 annual jobs in Los Angeles County.  www.LAEDC.org

 

LAEDC Media Contact:   Lawren Markle / 213-236-4847 / Lawren.Markle@laedc.org

 

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