⛽ Price risks

Plus: EV charging equity | Wednesday, August 24, 2022

Open in app View in browser   Presented By Global X ETFS   Axios Generate By Ben Geman and Andrew Freedman · Aug 24, 2022 🐪 Halfway there! Today's newsletter, edited by Mickey Meece, has a Smart Brevity count of 1,082 words, 4 minutes.  📬 Did a friend send you this newsletter? Welcome, please sign up. 🎸 Rush guitarist Alex Lifeson has a birthday this weekend, so we'll celebrate early with today's intro tune...     1 big thing: Democrats' energy price peril isn't over Data: Yahoo Finance; Chart: Skye Witley/Axios The White House is more than happy to point out gasoline prices have been falling for over two months. But Democrats aren't out of the political woods on energy costs, Ben writes. The big picture: Crude prices — the biggest variable in gas prices — have regained ground over the last couple of weeks after falling steeply in recent months. WTI, the U.S. benchmark, is trading in the mid-$94 range this morning. Who knows what lies ahead, but if the oil market has found its floor at what remains elevated levels, the gas price declines will eventually level off, too, given the lag between crude price drops and gas price declines. GasBuddy analyst Patrick De Haan tells me that if the oil price drop is over, for now, average U.S. prices should level out around $3.69 per gallon or maybe somewhat lower. That's way below the $5 average reached in mid-June (I'm smart!), but still fairly steep by historical standards. Threat level: Gasoline prices are the most visible energy cost but hardly the only one. Axios' Matt Phillips reports that Europe's natural gas crisis is spilling into the U.S. market. U.S. natural gas prices briefly hurdled $10 per million British thermal units (BTUs) on Tuesday, the highest since 2008. They are up more than 150% this year. Why it matters: U.S. prices are nowhere near European levels, but they'll still almost certainly push electric and heating bills higher. So keep an eye on the political impact of heating bills heading into the fall and winter, which could reinvigorate voter angst about rising costs of living, despite progress elsewhere on inflation. Read Matt's whole story. The intrigue: Getting back to gasoline, Bloomberg has a good story on the politics as prices have come down under $4 per gallon (currently $3.88 per AAA). The decline blunts a key political weapon for Republicans, the piece points out, but also quotes analysts saying gas prices are still a factor — especially if they go back up. What we're watching: What's next for volatile oil prices? They got a lift this week after the Saudi energy minister floated the idea that OPEC+ could cut production. It's just tea leaves, but that could suggest the cartel hopes current prices are something of a floor. Whether and when European efforts to isolate Vladimir Putin start taking a significant bite out of Russian supplies is another variable.     2. Biden team pressed on EV charging payment equity Illustration: Aïda Amer/Axios   An array of groups is pressing the Transportation Department to ensure federally funded EV charging stations are accessible to drivers who lack contactless credit cards and face other barriers, Ben writes. Why it matters: Operating regulations risk freezing out people in low-income and communities of color who lack banking services or are "underbanked," the National Consumer Law Center warns. Zoom in: They're among several groups, in comments on the pending rules, saying DOT should require stations to accept chip and swipe payments in addition to contactless payment. The NCLC goes further by urging the rules to require that states provide drivers with EV payment cards. "Nearly twenty percent of Americans are unbanked or underbanked, with markedly higher rates for Black and Hispanic Americans," the center said. Catch up fast: DOT is writing standards to govern billions of dollars in EV charging station funding under the bipartisan infrastructure law and payment requirements are one element. GM suggests several reasons for providing options beyond contactless payment with credit cards. Among them: helping unbanked customers by providing more ways to use prepaid cards. The EV advocacy group Plug In America's comments cite several equity concerns around payment methods and more. One of its suggestions is that states getting federal funding for charging stations should be "encouraged to reward bidders who provide subsidized charging to income-qualified EV drivers."     3. 🏃🏽‍♀️Catch up fast: nuclear, EU, California 🇯🇵 Japan will explore the construction of next-generation nuclear power plants and also eyeing the restart of more existing reactors, several outlets report on comments by Prime Minister Fumio Kishida. Why it matters: The announcement is a major shift for Japan, which moved away from nuclear power after the 2011 earthquake and tsunami led to the disaster at the Fukushima plant. The big picture: The plans "highlight how the Ukraine crisis and soaring energy costs have forced both a change in public opinion and a policy rethink toward nuclear power," Reuters reports from Toyko. 🇪🇺 "Power prices for Wednesday soared to records around Europe, heaping further pressure on governments to accelerate plans for how to shield households from devastating bills and rising inflation," Bloomberg reports. 🇺🇸 "Toyota has joined the growing list of automakers that have recognized the state of California's authority to set vehicle emissions standards under the U.S. Clean Air Act," TechCrunch reports.     A message from Global X ETFS Reasons to consider a covered call strategy     Seeking to retain equity exposure while mitigating downside risk? The time could be right for covered call strategies. Navigate volatile markets with the Global X Nasdaq 100 Covered Call ETF (QYLD) — it writes call options on the Nasdaq-100 Index, aiming to generate monthly income. Explore QYLD.     4. Auto giants turn to Canada for EV materials Illustration: Rebecca Zisser/Axios   Back to EVs for a moment: Two auto giants this week announced plans to boost access to raw materials and other parts of the battery supply chain from Canada, Ben writes. Why it matters: It's evidence of the wider global scramble as automakers ramp up electric vehicle production. And it also comes as the new U.S. climate law ties consumer incentives to strict rules on sourcing batteries and materials from North America and other free-trade partners. Driving the news: Volkswagen and Canadian officials yesterday announced a "memorandum of understanding." They see opportunities in cathode material production and in offering Canadian suppliers to provide raw materials, refining and processing. A similar announcement between Canada and Mercedes-Benz arrived Tuesday. And alongside the statement, Mercedes announced a supply deal with Rock Tech Lithium. Reuters has more.     5. Notes from a parched planet Orange areas represent drought "warning" areas; red regions represent drought "alert" conditions. Image courtesy of the European Union's Copernicus climate service   Well over half of Europe is facing drought, per a new European Commission report, Ben and Andrew write. Driving the news: Forty-seven percent is under "warning" conditions, while 17% of the continent faces "alert" conditions that signal vegetation is under stress, the analysis from the Joint Research Centre (JRC) finds. "Cumulatively, 64% of Europe is under warning or alert, which is also contributing to spread widely the areas of fire danger across the EU," the commission said in a summary. Why it matters: The drought "appears to be the worst" in at least 500 years, the commission said, citing JRC experts. European droughts and heat waves are worsened by human-induced climate change. What they're saying: "The combination of a severe drought and heat waves has created an unprecedented stress on water levels in the entire EU," Mariya Gabriel, the commissioner for innovation and research, said in a statement. The big picture: Europe is one of several areas worldwide facing droughts and heat waves. The BBC has a remarkable collection of images from China.     A message from Global X ETFS Reasons to consider a covered call strategy     Seeking to retain equity exposure while mitigating downside risk? The time could be right for covered call strategies. Navigate volatile markets with the Global X Nasdaq 100 Covered Call ETF (QYLD) — it writes call options on the Nasdaq-100 Index, aiming to generate monthly income. Explore QYLD.   🙏Thanks for reading and see you back here tomorrow. Why stop here? Let's go Pro. Join the thousands of professionals reading Axios Pro: Climate Deals to better understand the forces shaping their industry.   Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here. Sponsorship has no influence on editorial content. Axios, 3100 Clarendon B‌lvd, Arlington VA 22201   You received this email because you signed up for newsletters from Axios. Change your preferences or unsubscribe here.   Was this email forwarded to you? Sign up now to get Axios in your inbox.   Follow Axios on social media: