This developing field, known as aerial electroreception, opens up a new dimension of the natural world. “I find it absolutely fascinating,” said Anna Dornhaus, a behavioral ecologist at the University of Arizona who was not involved with the work. “This whole field, studying electrostatic interactions between living animals, has the potential to uncover things that didn’t occur to us about how the world works.”
“We know from all these brilliant experiments that electric fields do have a functional role in the ecology of these animals,” said Benito Wainwright, an evolutionary ecologist at the University of St. Andrews who has studied the sensory systems of butterflies and katydids. “That’s not to say that they came on the scene originally through adaptive processes.” But now that these forces are present, evolution can act on them. Though we cannot sense these electric trails, they may guide us to animal behaviors we never imagined.
Electrostatic Discoveries
In 2012, Víctor Ortega-Jiménez stumbled into electrostatics while playing with his 4-year-old daughter. They were using a toy wand that gathers static charge to levitate lightweight objects, such as a balloon. When they decided to test it outside, he made a startling observation.
PICTURE Caption: Studies by Víctor Ortega-Jiménez of the University of California, Berkeley, revealed that a negatively charged spiderweb attracts positively charged insect prey. Credit: Courtesy of Víctor Ortega-Jiménez
“My daughter put the wand close to a spiderweb, and it reacted very quickly,” recalled Ortega-Jiménez, who studies the biomechanics of animal travel at the University of California, Berkeley. The wand attracted the web. He immediately began to draw connections to his research about the strange ways insects interact with their environments.
All matter—wands, balloons, webs, air—strives for balance between its positive and negative particles (protons, electrons and ions). At an unfathomably small scale, Ortega-Jiménez’s toy buzzes with an imbalance: A motor draws negative charges inward, forcing positive charges to the wand’s surface. This is static. It’s like when you rub a balloon against your head. Friction sheds electrons from your hair to the rubber, loading it up with static charge, so that when you lift the balloon, strands of hair float with it.
In a similar way, Ortega-Jiménez considered, friction from beating insect wings could shed negative charges from body to air, leaving the insects with a positive charge while creating regions of negative static. He realized that if a web carries negative charge and insects a positive one, then a spiderweb might not just be a passive trap—it could move toward and attract its quarry electrostatically. His lab experiments revealed precisely that. Webs deformed instantly when jolted with static from flies, aphids, honeybees, and even water droplets. Spiders caught charged insects more easily. He saw how static electricity altered the physics of animal interactions.
Power shutoffs have expanded on the Palos Verdes Peninsula amid worsening land movement. After the loss of gas and electricity has thrown parts of Rancho Palos Verdes into turmoil, dozens of residents in the adjacent city of Rolling Hills are facing the loss of power.
Affected Rolling Hills residents are set to have their gas shut off Monday afternoon. The electricity shutoff will follow in about 48 hours.
Late last week, Rolling Hills officials — citing communications from utility companies — announced that 51 homes were slated to lose power by 6 p.m. Wednesday, and nearly three dozen were expected to lose gas service Monday at 3 p.m. because of ongoing land movement that has prompted evacuation warnings and at least one fire in recent weeks.
Like many of the power shutoffs affecting the Portuguese Bend area in Rancho Palos Verdes, these latest cutoffs are for an indefinite period.
The city said in last week’s statement that it had asked both Southern California Gas Co. and Southern California Edison to “look aggressively at engineering solutions” to provide service again as soon as possible. Rolling Hills Mayor Leah Mirsch reiterated that Sunday night in a statement to The Times.
“The safety and well-being of our residents remains the City’s top priority,” Mirsch wrote. “We are all impacted by the outages and are committed to holding the utility companies accountable — pushing them to implement solutions that will restore services both quickly and safely.”
Rolling Hills officials warned that the affected homes’ power could be shut off at any time between now and Wednesday evening. The city encouraged residents to contact utility companies directly for more detailed information through the Southern California Gas and SCE websites.
The news comes days after SCE shut off power to several dozen homes in the Portuguese Bend Beach Club and western Seaview neighborhoods of Rancho Palos Verdes. Power and gas were previously cut off to 140 homes in the Portuguese Bend neighborhood.
“The land movement there has created such a dangerous situation that we must make that difficult decision to disconnect power indefinitely,” David Eisenhauer, an SCE spokesperson, said at the time. “We have an obligation that’s higher than providing electric service, and that obligation is safety: safety of the community and safety of our teams.”
Some areas have been grappling with gas, cable and internet shutoffs and evacuation warnings as well — though some residents have decided to stay in their homes.
Local officials have worried that the loss of electricity could create additional safety concerns because sewer systems and the pumps needed to expel the groundwater that can cause land movement both require power to operate.
Previously, officials have said power shutoffs on the shifting peninsula are intended to reduce the risk of wildfires caused by electrified wires. Last month, a power line fell and sparked near dry vegetation, igniting a small fire in the Portuguese Bend neighborhood.
On Sept. 3, Gov. Gavin Newsom declared a state of emergency for the city of Ranchos Palos Verdes. In his declaration, Newsom said land in the area had been shifting as much as a foot a week, and that land movement had significantly accelerated after the severe storms of 2023 and 2024.
Adams County School District 14 will roll out 14 new electric school buses by 2025, adding to the 144 electric buses that already are ferrying school children in Colorado or are on-order for districts across the state.
The Adams 14 buses will phase out more than half of the 25 diesel buses used by the district. The school district also will build solar-powered canopies to house the new buses, and that solar power will be used to charge them, said Josh Cochran, the district’s operations director.
The solar power also will help electrify Alsup Elementary School, which is next to the district’s bus depot in Commerce City.
The company I work for recently built a new ticket office at the base of Buttermilk Mountain in Aspen, Colorado. Environmentally, we killed it: argon-gas-filled windows, super-thick insulation and comprehensive air sealing, 100% electrification using heat pumps instead of gas boilers. All within budget.
Yet one of the first comments we received was from a famous energy guru: “Nice building. But why do you have a heating system at all?” Or more simply put: “Why didn’t you build a perfect building, instead of just a really good one?”
Solving climate change could depend on how we answer that question. My answer: Society needs the Prius of buildings, not the Tesla X.
The green building movement didn’t originate only from a desire to protect the environment. It often had elements of the bizarre ego gratification that trumped practicality.
Recall “Earthships” that used old tires and aluminum cans in the walls. Geodesic domes were interesting looking but produced inordinate waste to build. They also leaked. Rudolf Steiner’s weirdly wonderful Goetheanum was an all-concrete structure designed to unite “what is spiritual in the human being to what is spiritual in the universe.”
Early practitioners such as Steiner, Buckminster Fuller, and Bill McDonough, among others, were often building monuments, whose ultimate goal became the concept of “net zero.” Net zero was a building that released no carbon dioxide emissions at all.
Designers achieved that goal by constructing well-sealed, heavily insulated, properly oriented, and controlled buildings–but then they did something wasteful. They added solar panels to make up for carbon dioxide emissions from heating with natural gas. The approach zeroed out emissions, but at extraordinary cost that came in the form of added labor, expense and lost opportunity.
While net zero wasn’t a good idea even when most buildings were heated with natural gas, the rapid decarbonization of utility grids — happening almost everywhere — and advances in electrification make the idea downright pointless.
Instead, all you need to build an eventual net zero building is to go all-electric. It won’t be net zero today, but it will be net zero when the grid reaches 100% carbon-free power. So, all that really matters is that building codes require 100% electrification.
Yet many communities remain focused on that sexy goal of net zero, and therefore include requirements for solar panels, or “solar ready” wiring. Even apart from the issue of cost, many utilities don’t need rooftop solar because they increasingly have access to huge solar arrays, giving them more electricity than they need in peak times.
What utilities really need is energy storage and smart management.
That means home batteries and grid integration that allows utilities to “talk” to buildings and turn off appliances during peak times. The problem is that environmentalists haven’t evolved: Just like we can’t retire our tie-dyes, we think “green” means rooftop solar panels.
My company’s Buttermilk building passes the only test that matters: “If everyone built this kind of structure, would it solve the built environment’s portion of the climate problem?” The answer for our building is “yes.”
Still, aspirational monuments matter. We need the Lincoln Memorial, the Empire State Building. But if we’re going to solve climate change in buildings, which is about a third of the total problem, new structures will have to reconceive what we consider efficient and beautiful. And it doesn’t have to break the bank.
Electrification, for example, is getting cheaper every year. Years ago, I served on an environmental board for the town of Carbondale in western Colorado. The overwhelming interest there was ending dandelion spraying in the town park. But at one point, we worked on a building.
After a long conversation about the technical tricks and feats we could pull off, a Rudolf Steiner disciple named Farmer Jack Reed said: “We should also plant bulbs in the fall so colorful flowers blossom in the spring.” “Why?” I asked, stuck in my own technocratic hole. He said: “Because flowers are beautiful and they make people happy.”
So, too, are realistic solutions as we adapt to climate change.
Auden Schendler is a contributor to Writers on the Range, writersontherange.org, an independent nonprofit dedicated to spurring lively conversation about the West. He is senior vice president of sustainability at Aspen One. His book, Terrible Beauty: Reckoning with Climate Complicity and Rediscovering our Soul, comes out in November.
HOUSTON – Hurricane Beryl’s power outages in the Houston area are historic for CenterPoint, according to Jason Ryan, Executive Vice President of Regulatory Services and Government Affairs. And fueled by “unprecedented extreme weather” including not just Beryl, but freezes, drought and rain that have all contributed to conditions that caused debris — entire trees and limbs — to bring down or damage power lines.
In a live and exclusive interview with KPRC 2′s Gage Goulding this afternoon, Ryan said the amount of help they brought in was unprecedented too. on Wednesday, 11-thousand workers were out on 16-hour shifts, restoring power and making repairs.
Ryan — who said he also has no power — expects the company to reach its goal of restoring power for one million customers by the end of Wednesday, as promised.
What’s up with the outage tracker?
“So the outage tracker map that we put up, last night is still a temporary fix that shows kind of in groups where you are in our restoration process. We will update that map three times a day at noon, at 4 p.m., 8 p.m.,” Ryan said.
Starting Thursday, CenterPoint will also give customers estimated restoration times. That should help us all get a better handle on how long it will take to get power restored to most folks.
The company’s outage tracker crashed with more than 900,000 outages during May’s derecho and the company told everyone a new, better tool was coming.
“But we are bringing a completely new, outage tracker map that will be able to withstand the significant traffic that we saw during the derecho. It was that significant traffic on the map that brought that site down. We knew if we put that same site back up, it would not meet customer expectations this go-around either. So that’s why we came up with the outage map that we put out yesterday. We will continue to refine the information on that map and provide estimated restoration times starting tomorrow,” Ryan told Goulding. The new outage tracker was supposed to be ready by the end of this month, but Ryan didn’t have a date for the rollout.
More than a million customers were still without power in the Houston metro area Wednesday night after Hurricane Beryl’s destructive wind.
Transcript from the full interview:
Gage Goulding: Thank you so much. I know you’re incredibly busy. You and your entire team. On behalf of Houston, we thank you for all the hard work the men and women here at CenterPoint are doing. First and foremost, how are you and your team? Is everybody okay and safe?
Jason Ryan: We are. And you know, I want to start out by thanking our customers for their patience. We’re about 48 hours since the hurricane left the greater Houston area. And our team has performed well. We’ve had no serious injuries or fatalities. Very proud of that. Especially with the more than 10,000 additional resources that we brought in from other utilities. They’re not used to being in Houston. they’re working in dangerous conditions. And so, the men and women in the field are safe and super proud of them.
Gage Goulding: And that’s a staggering number. So let’s start there. I met, I think, of a crew as far away from Wheeling, West Virginia that I, whenever I was out and I worked in Wheeling, West Virginia, many moons ago. And I was just so shocked that they were here so quickly. And I believe the number was 12,000 people out working to restore power. Have you ever had an activation of that size before, or is this kind of historic proportions, if you will.
Jason Ryan: So we’ve never had this many customers out from a storm before. 2.26 million customers out at the height of the storm. so as a result of that unprecedented outage number, we needed to have an unprecedented response. So we brought those crews in as soon as it was safe to bring them into Houston, and got them to work. There are more than 11,000 people working on the system today.
Gage Goulding: 11,000?
Jason Ryan: Yes.
Gage Goulding: So let’s talk about that. That was an incredible goal of a million people restored by the end of today. Are you confident? Are we going to reach that?
Jason Ryan: Yes, we’re on track to reach that. We, restored 918,000 customers as of 1:00 today. So we’re on track to hit that million customer mark. Our crews are working 16 hour days. And we’re going to work non-stop around the clock until we get all of our customers back on. But we are confident in hitting, our goal for today.
Gage Goulding: So we put an article up earlier asking our KPRC 2 Insiders to, you know, give us some questions that they want to ask you if they can be in the hot seat with you right now. One of the questions was, and we saw some crews, you know, just in a parking lot. “There’s crews down the street for me, there in a parking lot. They’re not working. What are they doing?” Is that a shift waiting to go on? You know, what are these? How does that all work?
Jason Ryan: It could be a number of things. It could be them documenting the work that they’ve done so far. It could be them getting additional directions for the work they need to do. You know, some of these crews, they get on site. Based on the assessment that they’ve done, that we’ve done, they may need additional information before they can get started working. Again. 10,000 plus of these personnel are not CenterPoint energy employees. They need to understand the standards to which we have to build our system. They need to understand how high the clearances for the lines need to be to comply with local ordinances. So they may be getting that additional information before they start their work. Or they may be, recording the work that’s been done to date so that we can get those outage numbers constantly updated. You know, so there are a number of reasons why they may be, idle for a minute. They may also be on break. We know our customers are hot. The men and women doing this work are hot. So they are taking breaks. They are rehydrating. So that may be another reason why you see, the crews not actively working, but they are out there working.
Gage Goulding: What are some of the biggest problems that you’re dealing with right now? Is it you know, what we saw during the May storm? Transmission lines down. Is it vegetation? What are some of the biggest obstacles out there?
Jason Ryan: Yeah. So unlike that storm, unlike, Harvey before it, this is not a storm that caused material problems on our transmission system. The transmission system of the big poles and wires that move power across the state. We didn’t have material damage to the transmission system. We didn’t have material damage to our substations. Our substations didn’t flood, like they did during Harvey. This is a distribution system challenge. It is the poles and the wires that go from the substations to your home or business. That’s the distribution system. And it’s largely debris on that distribution system. It could be entire trees, that have fallen over. It could be limbs that have fallen over. You know, we’ve gone through significant freezes, significant drought, significant rain, unprecedented, extreme weather conditions on our large trees here in Houston. You’ve got large canopies without mature root systems and so that’s why you see entire trees coming over onto our infrastructure. So it is a vegetation tree problem on the distribution system. Our personnel as of the end of the day yesterday had walked 4,500 miles of distribution lines to assess the problem so they can assign the right crews to do the right work. You know before we can send the right crews out, we need to know do we need to send a construction crew out a large construction crew to rebuild the poles and the wires? Do we need to send a vegetation crew out to remove trees, or do we need to send a smaller crew out, to rework smaller parts of the distribution system? Knowing which crews to send out is the reason we do that assessment work in the first 48 hours.
Gage Goulding: And we we talked about, brought it up to the ratio back in May. That put quite a strain, actually, believe it or not, June 7 is when we did that interview. Fast forward a month to the day is whenever Beryl was about to make landfall. So just very ironic. And, you know, we talked back then about how during Ike, CenterPoint had 12 days to get, you know, ready to brace for it in duration. You had no time.
Jason Ryan: 15 minutes. Yeah.
Gage Goulding: How much time did you, you know, realize that? This is going to this is going to impact us and our customers.
Jason Ryan: eah. So we started watching this storm nine days out. And as everybody knows, at that time, it wasn’t looking like it was coming to Texas. Obviously, as the days got closer to Monday, that started to change. It really started to change over the weekend. When it was more clear that it was going to hit the Houston area. So we, lined up 3,000 mutual aid resources to come into Houston before the weekend. As it became more clear that this storm was going to have a direct hit on us, that’s when we increased the number of people that we asked for. And that’s where the, greater than 10,000 crews came in to play when it was clear that the storm was going to hit right here.
Gage Goulding: And one of the things that we talked about in depth that there’s already changed from the derecho to now was the outage tracker. And I, I want to quote our interview that we had. You said,”We didn’t meet customer expectations when that wasn’t available, when they needed it most. It’s not acceptable to us or our customers.” And this is what really stuck with me, “We know that we will not have that grace from our customers and communities to miss it again.”
Jason Ryan: That’s right.
Gage Goulding: The new outage tracker. You promised a new outage tracker in maybe a little bit quicker than you would have wanted to try it out. Are you happy with the new outage tracker? And is this the solution to make sure people are informed? [16:07:42][37.4]
Jason Ryan: So the outage tracker map that we put up, last night is still a temporary fix that shows kind of in groups where you are in our restoration process. We will update that map three times a day at noon, at 4 p.m., 8 p.m. We will update it three times a day. Starting tomorrow, we will have estimated restoration times. That’s more granular than what you see there today. That is still a temporary fix.
We are starting completely from scratch with a new outage map, that we unfortunately were aiming for the end of this month in advance of the typical hurricane, peak of hurricane season, right? August. September.
But we are bringing a completely new, outage tracker map that will be able to withstand the significant traffic that we saw during the derecho. It was that significant traffic on the map that brought that site down. We knew if we put that same site back up, it would not meet customer expectations this go-around either. So that’s why we came up with the outage map that we put out yesterday. We will continue to refine the information on that map and provide estimated restoration times starting tomorrow.
Gage Goulding: Another thing we talked about back in June, and it seems like such a long time ago, but in the broader, you know, business, there really isn’t. We talked about the supplies because that’s our concern back then was how does how did that the Rachel affect hurricane season where you have all your stock built up. And I remember you telling me that, you know, you said I can’t lie to you. We’re trying to get everything put back together. Were you able to replenish your stock in time, or are you facing any supply chain issues or we need more poles and we can’t get them?
Jason Ryan: We don’t have any material challenges with our supply right now. We did replenish that over the course of the last month plus, since the derecho. So we are not having supply issues, causing delays and restoration.
Gage Goulding: If I have no power, I see my neighbors still have it. I think there’s a lot of people. The number one question I get is, you know, when is you know, 77098 coming on when it was like a zip code or something like that, right. What can you tell people? Yeah. After. And I get it, I don’t have power either at home right now. It was a very uncomfortable sleep last night.
Jason Ryan: Same.
Gage Goulding: So you don’t have power, right?
Jason Ryan: Right. That’s right.
Gage Goulding: So even even one of the top dog doesn’t have that happen. So you’re you’re with us, you know, and I’m sure you’re wondering when is that beautiful white truck going to come down and fix my stuff. What can you offer to the CenterPoint customers and people of Houston to just help us get through this? You know what we dig For any information, what would you offer?
Jason Ryan: So, we know that customers want to understand the process. So yesterday we put out a visual of the process. It’s a five step process, right? It starts with our preparation post-storm. It starts with assessment. That’s step two of the process. Many of our customers are still in step two, but a number of our customers have gone on to step three, which is restoration at the circuit level. Think of, circuits being the main highways of the distribution system that bring on entire areas of town. And so we start working on circuits first with the theory of bring on the most people the quickest and you’ll get to the one-days, two-days later. We know that’s still frustrating for those, 1 or 2 people that are out in that neighborhood, but our priority is to get the most people on the soonest. So as soon as we finish those circuit level outages, that’s where you might see certain neighborhoods on, but other neighborhoods not on. Again, we work down the priority list. So, step threeare those circuit level, outages. Step four starts getting into the neighborhood specific outage and then step five is the premise-specific outage.
During Hurricane Ike, for example, I was the last house in the neighborhood to get on because the line to my house was on the ground. Nobody else had the line on the ground. And so I was one of the last ones because that’s the process that we use.
Gage Goulding: And everybody wants to have the priority status. Even you don’t have the priority status. Is there a priority leveling? Is there certain neighborhoods get power first because it’s, you know, status or anything like that or is it based off of where the hospitals are?
Jason Ryan: We do give priority to a number of public safety-related premises. So think water treatment facilities, 911 centers. So we do prioritize getting those facilities back up while at the same time we’re working on the circuit level outages for the homes and businesses. So we do prioritize those public safety necessary premises to get back up before you get into boil water notices unnecessarily, things like that. So we don’t want the problems to get bigger just because, you might be the one-days, two-days, but you’re an incredibly important public safety premise So we do prioritize those. We are working through those priority lists as we speak.
Gage Goulding: And we only have a couple of minutes. I want to get across two more things here. The last time we talked in June, you said Ike cost about $700 million in the derecho in May was around roughly at the time about $100 million. Is there any forecast on what this has already cost or what it will cost?
Jason Ryan: Not yet. We’re still in the first 48 hours of the event, but we have brought in many more crews than we brought in, for the derecho, so this will be, you know, a multitude or, you know, twice as much, probably as the derecho event, but we’re still working on that.
Gage Goulding: And, we talked about this in depth in June, and we reported on it and I think this is a really interesting thing, the Resilience Plan, a huge monumental investment by CenterPoint to make the grid stronger. A lot of the questions people had were actually answered by that like, “Why isn’t CenterPoint investing in making the grid and everything stronger?” That’s actually in the process of happening. Can you explain how and what the Resilience Plan is and how that’s going to help? If we knock on wood and hopefully don’t get one of these again. But if it [the plan] happens, how it will help prevent having these monumental numbers?
Jason Ryan: So our Resilience Plan that we filed with the state back in March has 28 different programs associated with it. Some of them are on hard infrastructure, like distribution lines, where we’re replacing wooden poles with harder composite poles. Some of them are cybersecurity related. Some of them are physical security related. But let me stick with the pole example. And we’ve seen during the duration that we’ve seen during this storm where we’ve already started putting those composite poles up. In these severe weather events, those composite poles remain standing, and right next to them, wooden poles that we haven’t yet replaced are on the ground, snapped in half. So we know from these early tests that the Resilience Plan will yield better results once it’s fully implemented.
Gage Goulding: Well, Jason, thank you very much. I appreciate you taking the time. We appreciate all the work that CenterPoint is doing and you know, look, a lot of people still in Houston without power it’s going to take time, but 12,000 people, that’s a lot of people that are out there working right now. Anything else you want to add in there that we didn’t get to?
Jason Ryan: You know, only again recognizing that our customers are feeling the brunt of this. And understanding that in addition to the power being out, many of them have suffered significant, loss to property, right? Trees on their houses, trees on their cars. Trees on their businesses. And so our hearts go out to our customers. We thank them for their patience as we continue to do restoration. But we do know, that there’s a lot of suffering out in the community and we’re we will not stop working until the work is done.
It’s easy to overlook the importance of good lighting design. Sure, a few bulbs can give you the light you need to see by, but light is more than just practical illumination. It creates beauty and art in its own…
There was recently a groundbreaking ceremony for 52 at Park, a 300-unit apartment complex for lower-income families and individuals in Orlando.
Lincoln Avenue Communities (LAC), a mission-driven acquirer and developer of affordable housing, broke ground on the future site of 52 at Park during a ceremony with LAC leaders, local lawmakers and partners. 52 at Park will provide 300 affordable housing units to individuals and families in Orange County earning no more than 60% of the Area Median Income.
“Lincoln Avenue Communities is proud to grow our portfolio of affordable housing developments in Florida,” said Jordan Richter, LAC vice president and regional project partner. “Once completed, 52 at Park will provide hundreds of high-quality, affordable homes in one of the state’s fastest-growing metropolitan areas.”
The property will include eight residential buildings, with all units expected to be completed by the end of 2025.
“The City of Orlando remains committed to ensuring that everyone who wants to call Orlando home has access to quality housing that is safe and affordable,” said Orlando Mayor Buddy Dyer. “Through the power of partnership by working alongside Lincoln Avenue Communities, we look forward to welcoming the addition of 300 new affordable apartments and continue to leverage funding and offer incentives to make it easier for developers to build affordable housing in Orlando.”
52 at Park will offer amenities including a fitness center, pool, clubhouse, central laundry and a playground. The property will also include a sprawling solar installation that will offset 100% of the community’s electricity usage, making it one of the first affordable housing communities in Florida to provide full solar offsetting.
“LAC is committed to ensuring the long-term sustainability and resiliency of our developments,” said Cricket Cleary, LAC director of development. “52 at Park represents a major step toward a new generation of high-quality sustainable housing in Florida, and throughout the country.”
The project was financed through an issuance of tax-exempt bonds from the Orange County Housing Finance Authority; a Low-Income Housing Tax Credit equity investment from Freddie Mac, syndicated by Berkadia; a Construction Inflation Response Viability Funding loan from the Florida Housing Financing Corporation; construction and permanent loans from Deutsche Bank, serviced by Berkadia; and solar energy credit equity.
LAWRENCE — A man was arrested and charged with drunken driving and related charges after crashing into a utility pole at Lawrence Street near Erving Avenue late Wednesday night.
The driver of a sedan hit a utility pole which caused others in the area to snap, knocking out power in the area, police said.
Efren Alvarez, 36, of Lawrence was arrested and charged with operating under the influence of alcohol, destruction of property, operating to endanger, speeding, marked lanes violations, leaving the scene of a property damage accident, attaching plates and driving an unregistered motor vehicle.
After crashing at 11:20 p.m., Alvarez attempted to flee, but was immediately taken into custody. He was treated on scene by paramedics and EMTs from Lawrence General Hospital and then transported by ambulance to the hospital.
Police asked motorists to avoid the area because of the ongoing work to replace the utility poles.
More were reported earlier but only a handful of National Grid customers were without power early Thursday afternoon.
A restoration time of 2:45 p.m. was listed on the National Grid website.
Follow staff reporter Jill Harmacinski on Twitter/X @EagleTribJill.
BOSTON — A divided state commission is calling for more aggressive steps to shift Massachusetts away from its reliance on natural gas for energy, but it’s not clear if state lawmakers will take up any of the proposed changes.
In a report to the state Legislature, the Gas System Enhancement Working Group takes more steps to shift the state’s utilities away from installing gas infrastructure in the state. In some cases, the changes include only those to one or two words in the state laws on fixing gas leaks.
But the panel, which included state regulators, environmental groups, labor leaders and representatives of utility companies, was unable to reach a consensus on many of the proposed regulatory changes.
One proposal called for a shift from “replacement” to “repair” of leak-prone natural gas lines, which proponents argued would save ratepayers money and accelerate the state’s transition from fossil fuels to wind, solar and other renewable energy. But the utility panelists voted against in opposition, arguing that it would compromise safety and exceed the working group’s mandate.
“A shift in policy that prioritizes repair over replacement does not reduce the risk that leak-prone pipes pose to people, property, and the environment,” they wrote in a summary of the report. “Both cast iron and cathodically unprotected steel will continue to pose concerns as they age.”
The panel was created under a 2014 state law that requires utilities to track and grade all gas leaks on a scale of 1 to 3, with 1 being most serious, and immediately repair the most hazardous.
The panel’s report noted that Massachusetts gas companies are spending more than $800 million a year installing new gas mains to replace aging leak-prone pipes. The new pipes have a lifespan of 50 years and will be paid for by energy consumers in the form of higher rates, they noted.
But the report’s authors said estimates suggest utilities will spend $34 billion on new gas infrastructure, which would not be fully paid for until 2097. They noted that as more properties are retrofitted with heat pumps to replace gas, fewer customers will be on the gas distribution system.
“However, that gas system will still have the same number of miles of pipe, with the same fixed maintenance costs,” Audrey Schulman, a panelist and director of the Home Energy Efficiency Team, a Cambridge nonprofit, wrote in a summary of the report. “These maintenance costs will be shouldered by fewer and fewer gas customers, making the customers overall gas bills increase.”
Schulman said the state is “wasting money and time now by installing long-lived combustion infrastructure, while knowing that combustion is going away.”
“Instead we are investing significantly and actively in the gas and electric system at the same time, without thinking through how to synergize the work to reduce the cost and increase the speed,” she wrote.
“It is as though we are taking out a mortgage to replace the foundation on our horse’s stable, even after we’ve ordered an electric car,” Schulman added.
Massachusetts utilities are under increasing pressure to employ alternatives to natural gas to comply with requirements of a climate change bill approved last year that requires the state to reduce its emissions to “net-zero” of 1990 levels by 2050.
Meanwhile, environmental groups have been prodding the state to force utilities to move away from new natural gas infrastructure as the state seeks to diversify its energy portfolio to include solar, wind and other renewable sources of power.
But industry officials argue the state will continue to need natural gas for a large portion of its energy, even as it turns to more renewable sources.
Roughly half of New England’s energy comes from natural gas, according to ISO New England, which oversees the regional power grid.
Critics have also noted the pocketbook costs to consumers from replacing natural gas infrastructure in homes and businesses.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com.
The Biden administration’s announcement Friday that it’s pausing liquefied natural gas export approvals sparked political backlash, drew cheers from climate activists and stoked uncertainty in energy markets, but is unlikely to see the U.S. give up its title as the world’s top LNG exporter.
The U.S. will delay its decisions on new LNG exports to non-free trade agreement countries, allowing time for the Energy Department to update the underlying analyses for LNG export authorizations, the White House said.
Those analyses are roughly five years old and “no longer adequately account for considerations” such as potential cost increases for American consumers and manufacturers or the “latest assessment of the impact of greenhouse gas emissions,” it said.
The Biden administration likely “realizes the role of LNG in foreign policy, but at the same time it needs to show the Democrat base that it is doing something for climate change,” said Anas Alhajji, an independent energy expert and managing partner at Energy Outlook Advisors, pointing out that the announcement comes during a presidential election year.
“Delaying one project or stopping it may not be a big deal, but it is a problem if it becomes a trend,” he said in emailed commentary.
Environmental groups, which have pushed for action, cheered the decision.
The 12 impacted projects in the U.S. “would spew out as much climate-warming pollution as 223 coal plants per year, and they present explosion risks to the communities where they’re located and emit other health-harming chemicals,” the Sierra Club, an environmental group, said in a statement welcoming the decision.
Top exporter
The announcement is particularly important for a nation that became the world’s biggest LNG exporter in the span of less than a decade.
The U.S. became the world’s largest LNG exporter during the first half of 2022 on the back of increases in LNG export capacity, international natural gas and LNG prices, and global demand, particularly in Europe, according to the Energy Information Administration.
The country’s exports of LNG climbed to a fresh record in November 2023, with the EIA reporting domestic exports of 386.2 billion cubic feet, up from 384.4 bcf a month earlier. Exports in December 2016 were at just 41.8 bcf.
U.S. LNG exports soared after 2016.
EIA
With 90% of U.S. LNG going to non-free trade agreement destinations, withholding licensing effectively “halts project development,” John Miller, managing director, ESG and sustainability policy at TD Cowen wrote in a Friday note.
Equities
LNG equities with operating facilities likely won’t benefit from the administration’s announcement, at least not immediately, until the impacts of this pause in export approvals to non-FTA countries becomes more clear, Jason Gabelman, director, sustainability & energy transition at TD Cowen said.
U.S. companies with government approvals that have not been sanctioned, “could have a higher probability of moving forward this year, albeit modestly” as offtakers may be hesitant to sign up to new U.S. projects with LNG development getting “politicized,” he said. Among those, he pointed out approvals for proposed liquefaction units at NextDecade Corp.’s NEXT, +2.30%
Rio Grande LNG export facility project in Brownsville, Texas.
At the same time, it would not be a surprise if U.S. LNG companies pursuing growth that do not yet have non-FTA approval see downside pressure, said Gabelman.
LNG projects take around 4 years to build and any delays to project sanctions today will take “multiple years to manifest in the market,” he said.
Still, the U.S. announcement “introduces the risk of more stringent oversight that could limit new U.S. capacity” more than four years out, Gabelman said.
Companies that supply equipment to LNG liquefaction projects include Baker Hughes Co. BKR, +0.59%
and Chart Industries Inc. GTLS, -7.54%,
said Marc Bianchi, a senior energy analyst at TD Cowen.
Any slowing of approval would create “overhand on order growth,” he said.
Climate change
The White House said Friday that its decision will not impact the ability of the U.S. to continue supplying LNG to its allies in the near term but also acknowledged environmental concerns.
“I think we’ve got to be clear eyed about the challenges that we face. The climate crisis is an existential crisis, and we’ve got to be, I think, really forward leaning into making sure that we’re taking that head on,” said Ali Zaidi, the White House national climate adviser, told reporters Friday.
He added that given the number of approvals already completed, the number of projects under construction are set to double existing capacity with approvals beyond that set to double capacity yet again.
“So there’s a long runway here, and we’re taking a step back and thinking, OK, let’s take a hard look before that runway continues to build out,” he said.
Rob Thummel, senior portfolio manager at Tortoise, argued that U.S. LNG exports actually reduce global carbon emissions as natural gas typically “displaces coal to generate electricity in countries such as China and India.”
They also improve global energy security as U.S. natural gas is becoming Europe’s primary energy supplier, replacing Russia, he said.
In a statement Friday, Sen. Joe Manchin, a West Virginia Democrat and chairman of the U.S. Senate Energy and Natural Resources Committee, said that if the Biden administration has facts to prove that additional LNG export capacity would hurt Americans, it needs to make that information public. But if the pause is “another political ploy to pander to keep-it-in-the-ground climate activists,” he said he would “do everything in my power to end this pause immediately.
Manchin plans to hold a hearing on the decision in the coming weeks.
Market impact
The U.S. decision to delay new LNG export permits is unlikely to have an impact on domestic natural-gas supplies or prices, said Energy Outlook Advisors’ Alhajji.
LNG prices and the rate at which new LNG export terminals can be constructed help determine LNG export volumes, the EIA said, and higher LNG exports can result in upward pressure on U.S. natural-gas prices, while lower U.S. LNG exports can pressure prices.
On Friday, natural gas for February delivery NG00, +0.23%
NGG24, +0.26%
settled at $2.71 per million British thermal units, up 7.7% for the week.
Meanwhile, the U.S. is likely to keep its position as the world’s top LNG exporter, according to Tortoise’s Thummel.
The U.S. is the currently the largest LNG exporter at almost 12 bcf per day, with Qatar coming in second, he said.
Qatar is expanding its LNG export capacity and is expected to have the ability to export almost 20 bcf per day by 2028, he said. The EIA reported recently that Qatar has averaged 10.3 bcf per day in exports during the last 10 years.
That would mark sizable growth. But the EIA reported in November that LNG export capacity from North America is likely to more than double from around 11.4 bcf per day to 24.3 bcf per day by the end of 2027.
The EIA said North America’s LNG export capacity is likely to more than double by 2027.
EIA
Given expected growth in U.S. LNG export capacity, the U.S. is likely to “remain the largest exporter of LNG in the world” despite the U.S. announcement, said Thummel.
Oil futures fell on Friday, but finished off the session’s lows to eke out a gain for the week — the first for U.S. and global benchmark crude prices in eight weeks.
Attacks on ships traveling through the Red Sea, blamed on Yemen’s Houthi rebels, raised the potential for disruptions to the transport of oil and other goods, providing some support for prices.
Oil saw larger declines early Friday after a Federal Reserve official walked back dovish comments made earlier this week by the Fed Chair Jerome Powell, helping to strengthen the U.S. dollar.
Price action
West Texas Intermediate crude for January CL00, +0.49%
CLF24, +0.49%
declined by 15 cents, or 0.2%, to settle at $71.43 a barrel on the New York Mercantile Exchange, with prices ending 0.3% higher for the week, according to Dow Jones Market Data.
BRNG24, +0.52%,
the global benchmark, fell 6 cents, or nearly 0.1%, to $76.55 a barrel on ICE Futures Europe, settling 0.9% higher for the week.
January gasoline RBF24, -0.16%
added 0.9% to $2.14 a gallon, up almost 4.3% for the week, while January heating oil HOF24, +0.20%
climbed 1.1% to $2.62 a gallon on Nymex, marking a weekly rise of 1.5%.
Natural gas for January delivery NGF24, -0.88%
gained 4.1% to $2.49 per million British thermal units, but still logged a weekly loss of 3.5%.
The Red Sea is “one of the hot pockets of seaborne crude flows,” accounting for approximately 10% of global volume, said Manish Raj, managing director at Velandera Energy Partners. “Although the attackers lack sophistication … shipping crews are even less sophisticated, making them easy targets.”
A potential blockage of the Red Sea route would be “chaotic indeed, but not nearly as detrimental as blockage of [the] Strait of Hormuz near Iran, for which there is no viable alternative,” Raj said.
For now, there is concern over higher insurance costs for these ships, said Phil Flynn, senior market analyst at the Price Futures Group.
“With ships in the Red Sea continuing to be at high risk, ‘it won’t take that much for the market’ to see oil prices spike if an oil tanker should be hit.”
— Phil Flynn, Price Futures Group
Obviously, the risk to oil supply is large, although “so far, most of the attacks have been on cargo ships and not oil-related ships,” Flynn told MarketWatch.
However, as ships in the Red Sea continue to be at high risk, “it won’t take that much for the market” to see oil prices spike if an oil tanker is hit, Flynn said.
For the week, both U.S. and global benchmark crude prices posted gains.
“The combination of lower U.S. inventories, stronger economic data, and improved OPEC compliance [with production cuts] for the month of November were the highlights of the week,” said Peter McNally, global head of sector analysts at Third Bridge.
“However, there are ongoing seasonal challenges that forced OPEC to sustain production cuts through the first quarter of 2024, so it remains to be seen if they have done enough to prevent inventories from continuing their upward trend,” he said.
Oil had been trading lower early Friday after New York Federal Reserve President John Williams told CNBC that it is “premature” to discuss whether it is time to cut interest rates. “We aren’t really talking about cutting interest rates right now,” Williams said.
That ran contrary to Powell’s comments Wednesday that Fed officials were starting to discuss when to cut rates.
After the euphoria in the U.S. stock market over the Powell “pivot party” on Wednesday, we got a “wake-up call” from Williams when he pushed back on market expectations for a March rate cut, Michael Hewson, chief market analyst at CMC Markets UK, said in market commentary.
Electricity rates in the U.S. soared to all-time highs in September, with Americans facing the sting of higher energy bills.
The Bureau of Labor Statistics reported a spike to $0.171 per kilowatt-hour in September, presenting a harsh reality against the backdrop of a seemingly robust economy. While costs moderated to $0.169 per kilowatt-hour in October, industry experts point to a web of causes including geopolitical tensions, global pandemics, and green energy transitions which indicate that the days of stable, low-cost electricity might be fading and a new reality may be emerging.
As households gear up for winter, there’s cautious optimism for a slight respite in electricity costs. A recent downtick in natural gas prices—a key determinant of electricity rates—hints at a potential but modest decrease in upcoming electric bills.
Newsweek’sprevious analysis of Energy Information Administration (EIA) data indicates that while a 2 percent reduction in residential electricity rates is projected, stemming from a 14 percent year-over-year drop in wholesale natural gas prices, consumers should still brace for relatively high energy expenses.
That’s because the complexity of the energy market means that lower fuel costs don’t always equate to lower electricity rates for consumers, according to experts. Deloitte’s 2024 power and utility industry outlook analysis paints a picture of an industry grappling with the costs of modernizing the grid and transitioning to green energy, pointing to a 1.9 percent overall increase in retail electricity prices by the end of the year.
The Federal Reserve’s warning of a ‘higher for longer’ interest rate environment aimed at curbing inflation resonates within the energy sector. Capital expenditures have surged to a record-breaking nearly $171 billion in 2023 for the most significant electric and gas utilities, according to Deloitte, indicating a trend that may not reverse soon.
As interest rates climb, the cost of borrowing increases, which can ripple through the economy, affecting utilities and, by extension, electricity rates.
These higher borrowing costs come at a time when utilities are investing heavily to modernize and transition towards more sustainable energy sources, meaning a return to prices that electricity enjoyed over the 2010s may not happen anytime soon because “much of the increase over time is due to inflation and has often lagged inflation,” Jim Thomson, U.S. Power, Utilities & Renewables leader at Deloitte Consulting, explained to Newsweek.
That lag indicates that while consumers may be feeling the immediate sting of higher prices, the energy sector and the utility companies that monetize it might be contending with the rising costs for a longer period. Thomson said that in the short term, “utilities will likely continue to face high costs as they modernize and decarbonize the electric grid.”
Why Did Costs Increase in the First Place?
The decade-long stability of electricity prices that consumers enjoyed for years was upended in 2022 when a confluence of factors caused the price spike. A surge in natural gas prices, fueled by lower production and amplified by geopolitical tensions stemming from the Russian invasion of Ukraine, played a key role, Thomson told Newsweek. Additionally, Thomson said the energy sector was not insulated from the pandemic’s inflationary effects and supply chain disruptions, which drove up costs.
Will I Have High Electric Bills Forever?
There is light at the end of the tunnel. “Some of these factors are subsiding,” Thomson explained, “and since regulated utilities are required to pass cost decreases through to customers as well as cost increases, some customers could see lower bills in the coming year.”
The U.S. Power Utilities & Renewables leader told Newsweek that as the industry increasingly turns to renewable sources like wind and solar, which are not fuel-reliant, the potential for moderating costs emerges. “Over time, as the share of electricity generated by renewables such as wind and solar continues to grow, it could tend to moderate costs since those energy sources do not use fuel, and those savings would be passed on to customers,” he noted.
He remains optimistic about the long-term impact of renewable energy, adding, “As the energy transition progresses, households that electrify their energy use by replacing fossil-fueled cars, heating systems, and other appliances with EVs, heat pumps and electric appliances could potentially see as much as a 40 percent decrease in household energy bills by 2045.”
A young lady sits at her kitchen table at home checking over the household bills. Experts say that high energy costs may be the new norm as the industry grapples with the costs of modernizing the grid. In Pictures Ltd./Corbis via Getty Images
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Oil futures fell Monday to their lowest levels in more than two weeks, building on recent declines that came after a round of voluntary production cuts announced by OPEC+ left traders skeptical about compliance.
Price action
West Texas Intermediate crude for January delivery CL00, -0.63%
BRNG24, -0.44%
dropped $1.29, or 1.6%, $77.59 a barrel on ICE Futures Europe.
January gasoline was down 0.1% at $2.1198 a gallon, while January heating oil HOF24, +0.85%
edge down 0.4% to $2.6501 a gallon.
January natural gas NGF24, -4.48%
declined 5.3% to $2.664 per million British thermal units.
Market drivers
The OPEC+ deal last week was “unconvincing, to say the least, and oil prices have been in decline ever since,” said Craig Erlam, senior market analyst at OANDA.
“With markets seemingly anticipating more of an economic slowdown next year, the announcement simply doesn’t go far enough,” he said in market commentary. “It’s another large cut but how much will actually be delivered on? And are we at the limits of what the alliance is willing to achieve to balance the markets?”
Crude prices ended last week with back-to-back losses after OPEC+ producers on Thursday agreed to voluntarily cut around 2.2 million barrels a day (mbd) of crude from the market in the first quarter of next year, a figure that included a widely expected extension of Saudi Arabia’s 1 mbd voluntary output cut and Russia’s 300,000 barrel a day cut to crude exports.
OPEC+ cuts “look like they have rebalanced the market” for the first quarter of next year, but without further OPEC+ cuts in supply from the second quarter, “oil looks to register a 1 mbd surplus in that quarter, analysts at Citi wrote in a note dated Monday.
The voluntary nature of the overall reductions sparked skepticism around enforcement and compliance, analysts said.
“Soft price action since the OPEC+ meeting is reflective of an investor cohort that remains perplexed on how to deploy risk. The near-term path of least resistance is lower, given the degree of ambiguity and lack of catalysts,” Michael Tran, commodity and digital intelligence strategist at RBC Capital Markets, said in a Sunday note.
“Oil has become a ‘show me’ type market. Now here comes the hard part: Prices will likely remain volatile and potentially directionless until the market sees clear data points pertaining to the voluntary output cuts,” he said.
Those cuts won’t be implemented until next month, with country-level production and export data to follow. That means it will be a “long and volatile” two months before there is even preliminary clarity on compliance — “a long stretch for a market that is seeing a high degree of uncertainty, lack of risk deployment and a liquidity vacuum,” Tran wrote.
Traders were also monitoring developments in the Middle East following an escalation of maritime attacks related to the Israel-Hamas war.
Ballistic missiles fired by Yemen’s Houthi rebels hit three commercial ships Sunday in the Red Sea, while a U.S. warship shot down three drones in self-defense during the hourslong assault, according to the U.S. military. The Iranian-backed Houthis claimed two of the attacks.
Oil futures spiked higher following the Hamas attack on southern Israel on Oct. 7 but failed to challenge their late September highs. Crude subsequently fell back as fears of a broader conflict that could threaten crude flows faded, trading well below levels seen just before the start of the conflict.
KYIV — In the largest aerial attack since its invasion started, Russia barraged Ukraine with 75 Shahed drones overnight, Ukrainian officials said on Saturday.
Most of the drones were aimed at Kyiv and the region around the capital, the Ukrainian Air Force said in a statement.
Ukrainian forces managed to shoot down all but one of the Shahed kamikaze drones, as well as an X-59 cruise missile over the Dnipro region, the Ukrainian air force said.
The assault included the highest number of Russian drones to be deployed in one night since Moscow launched its all-out invasion of Ukraine in February 2022.
The air attack lasted more than six hours, Kyiv Mayor Vitaliy Klitschko said in a statement. Anti-aircraft missiles, tactical aviation, mobile fire groups, and electronic warfare units were involved in repelling the air attack.
No deaths were reported as a result of the barrage, but falling debris damaged buildings. In Kyiv, a fire broke out at a kindergarten, while windows were damaged in neighboring houses. Debris damaged the second floor of a five-story building, where two women had to be evacuated, Klitschko said.
Five people were injured in total, the mayor said.
As a result of the attack, more than 12,000 households in the capital were temporarily cut off from electricity, Ukraine’s state energy operator Ukrenergo said. Power cuts were also reported in the Donetsk, Kharkiv, Kherson, Cherkasy and Sumy regions.
Last winter, Europeans faced exorbitant energy bills as the Continent rapidly weaned itself off Russian gas. This year the EU is better prepared — but now a second war also threatens to roil its energy markets.
The conflict between Israel and Hamas threatens to disrupt Europe’s relationships with the Middle East, or even draw Iran into direct confrontation with Israel and its Western partners. While markets are relatively calm for now, either of those scenarios could cause chaos.
Nevertheless, Europe is “equipped to face oil and diesel global market tightness,” Energy Commissioner Kadri Simson told POLITICO in an interview. Officials have learned lessons from Russia’s war on Ukraine, and are working to build “a good understanding of all our vulnerabilities to best address them and how we can be prepared for any incidents or emergencies.”
EU officials have held a slew of meetings with oil-producing nations in recent weeks, both old friends like Norway and emerging partners such as Algeria and Nigeria, to get ahead of any potential disruptions, she said.
“After the Gaza crisis unfolded, we are faced with two conflicts in the European neighborhood. The Eastern Mediterranean is an important theater for European energy security, as Europe’s energy transition is still entangled in geopolitical uncertainties,” Simson said, attributing the lack of drama in the markets to “the preparedness and crisis management that the EU put in place to respond to Russia’s energy blackmail.”
Fighting in Gaza and, to a lesser extent, along Israel’s northern border with Lebanon has had only a limited impact on oil markets. Prices initially rose on the news of the attack by Hamas militants on October 7 and Israel’s massive response, but key crude benchmark Brent dropped back by 4.2 percent this week to around $81 per barrel, around the levels seen before the start of the violence.
Markets have avoided a repeat of 1973, when the Yom Kippur War between Israel and its neighbors prompted the big Arab producers, led by Saudi Arabia, to embargo their exports to Israel’s allies. Gulf country relations with Israel have improved markedly in the past 50 years: The UAE and Bahrain recognized its sovereignty under the 2020 Abraham Accords, while Saudi Arabia is in negotiations to do the same.
Traders are therefore betting that as long as the conflict doesn’t expand, supplies of oil will remain more or less stable, said Viktor Katona, lead crude analyst at energy intelligence firm Kpler.
The risk stems more from Iran, he said. In the worst case, an expansion of the conflict could cause Iran to disrupt shipping from Gulf Arab countries through the Strait of Hormuz. Iran’s own crude oil, while sanctioned by the West, is exported in large quantities to China. “If Israel starts to strike the Iranian territory and Iran as a consequence needs to export less, then China doesn’t have enough crude and needs to buy from somewhere else,” sending global prices rocketing, Katona said. “It’s an entire spiral that gets triggered immediately.”
While Iran’s theocratic leadership has consistently vowed to destroy the state of Israel and publicly endorsed Hamas’ attacks last month, it denies involvement in their planning and execution. The Israel Defense Forces say they have carried out strikes on militant groups in Syria with close links to Iran’s Islamic Revolutionary Guard Corps, but have so far stopped short of hitting targets inside Iran itself.
Lessons learned
Gas markets felt a more immediate impact from the war. Israel turned off the taps at its Tamar offshore gas field in the hours following Hamas’ surprise attack, amid reports that it was a target for rocket attacks. While Israel produces only relatively small quantities of natural gas — around 21 billion cubic meters last year, compared to Russia’s 618 billion — it is a key exporter to neighboring Egypt, and the downtime worsened regular rolling power outages there. The flow has since been resumed, albeit in smaller quantities.
Any escalation with Iran could affect gas as well as oil markets, given a third of the world’s liquefied natural gas and a sixth of its oil is shipped through the Strait of Hormuz. “If things stay as they are there’s no problem, but if there’s a war where Iran was included and they [block trade through] the Hormuz strait then prices will go up for sure,” said one EU diplomat with knowledge of internal energy strategy talks, granted anonymity to speak candidly.
However, “all the big players want to avoid escalation, Iran wants to avoid this” because of threat of sanctions, the envoy insisted.
Absent that dire scenario, the impact on EU gas markets is likely to be limited, says Tom Marzec-Manser, head of gas analytics at commodities intelligence company ICIS — but more because of the last conflict than the most recent one.
“From a European gas pricing perspective, we’re still looking relatively OK and that’s been driven largely by weak demand. Many industrial consumers continue to use noticeably less gas than they did prior to the energy crisis last year, so consumption in Europe has remained low,” he said.
According to the European Commission, member states collectively shaved almost 20 percent from their natural gas use in the run-up to last winter, with industry slowing output and renewable power playing a much larger role in electricity generation. Despite that, consumption actually rose in October for the first time since the start of the war, in an early sign that businesses could be tentatively trying to restore lost productivity.
But even though the bloc’s gas reserves are more than 99 percent full ahead of schedule, prices have still remained stubbornly high across the Continent compared to other regions. That means Europeans are more at risk of short-term spikes in the cost of energy, with industry potentially having to slow down again if bills become unaffordable.
“We are in a much better situation than in 2022,” said Georg Zachmann, a senior fellow at the Bruegel energy think tank. “We have more heat pumps, power plants are back in the picture that we didn’t have available last year, and we’ve built more liquified natural gas terminals.” However, he warned, if member states lose focus on reducing demand and try to give their own industries a head start with subsidies, that could spark a wasteful race “that is essentially to everyone’s detriment.”
At the same time, winter in Europe isn’t what it used to be. Record-breaking temperatures have been recorded across the globe for the past four months, according to an EU Copernicus satellite monitoring report published this week, while last winter was the second-warmest ever recorded on the Continent. While that might be good news for conflict-prone fossil fuel supplies in the short term, it’s probably bad news for just about everything else in the not-so-much-longer term.
The World Health Organization described Gaza’s al-Shifa hospital as a “death zone,” after a U.N. team visited the largest medical complex in the Palestinian enclave on Saturday.
“The team saw a hospital no longer able to function: no water, no food, no electricity, no fuel, medical supplies depleted,” WHO’s director general, Tedros Adhanom Ghebreyesus, wrote on social media.
He announced WHO was trying to set up an urgent evacuation plan from the current situation, which was described as “unbearable and unjustifiable,” and called for a cease-fire.
Some 290 patients, including 32 babies in extremely critical condition, were left at al-Shifa, according to the U.N.-led mission, which accessed the facility briefly. The team also saw a mass grave at the entrance of the hospital, it said.
Meanwhile, the White House said the U.S. was working “hard” to get a deal between Israel and Hamas that would see the release of hostages seized by the militant group in exchange for a five-day pause in the fighting, after the Washington Post reported that the two sides are close to agreement on a U.S.-brokered deal. Israeli Prime Minister Benjamin Netanyahu and U.S. officials said no deal had been reached yet.
More than 11,500 Palestinians have been killed, while another 2,700 have been reported missing, according to Hamas-run health authorities in the Gaza Strip, following the group’s attack into southern Israel six weeks ago, which triggered the war. The count does not differentiate between civilians and combatants.
Around 1,200 people have been killed on the Israeli side, mainly civilians from Hamas’ attack, in which the group also took 240 hostages back into Gaza.
Israel has repeatedly said the al-Shifa hospital houses a Hamas command center and announced it would soon release photos of the military’s findings of the hospital which include a tunnel shaft, Israel’s spokesman Daniel Hagari said during a news conference Saturday evening.
A weak session is setting up for Tuesday, with oil under pressure after unexpectedly downbeat China export data. So the preference is for bonds this morning, as stock futures tilt south.
Onto our call of the day, which deals with another worry — a wall of government debt that will be with us for decades. It comes from Bridgewater’s highly regraded co-chief investment officer Bob Prince, who was speaking at the Global Financial Leaders’ Investment Summit on Tuesday, hosted by the Hong Kong Monetary Authority.
Prince touches on asset liability mismatches, such as what was seen during the banking crisis earlier this year. He explains that one big factor behind a crisis is when a certain economic regime exists for an extended period of time and “people extrapolate that into the future on the basis of leverage and asset liability mismatches. Then you get a shift in that regime.”
The events of March, which saw the collapse of SVB, Signature Bank and Silvergate, were a perfect example of that, Prince says. Then he turns to what he calls the “broader effects of a transition from 15 years of abundant free money,” that was first used to battle deleveraging pressures in the financial system in 2008 and then the pandemic.
One long-term effect of that gets particular attention by Prince, who points out how U.S. government Treasury debt to GDP was about 70% in 2008, around where it had been for decades.
“The after effects of offsetting deleveraging and pandemic, you’ve had a massive wealth shift from the public sector to the private sector and that’s left the government with debt to GDP up from 70% up to 120%. And the particular vulnerability of that is in the debt rollovers and the gross issuance that you’re going to see in the coming decades . You’re stuck with that debt until you pay it off and that means you have to roll it over like anybody else does,” said Prince.
“Gross debt issuance will be running at 25% for as far as the eye can see, that means every year you’re issuing 25% of GDP in debt. In 1960, the average amount of debt issuance was 12% of GDP,” he said.
Prince says most people really don’t pay attention to debt rollovers because they just assume those will get done, but notes that when countries have experienced balance of payments crisis in the past, mostly emerging markets, that is because they have been unable to roll over that debt.
In the U.S. case, it’s crucial to look at who is holding the debt, particularly the 27% held by foreign investors and 18% by central banks. “Foreign investors would normally be a reliable source of investment but it does heighten sensitivity to geopolitical risk, and so geopolitical risk converges with debt rollovers and gross issuance of the Treasury is an issue that you need to pay attention to in the coming years.
While not an “acute problem,” he says, it’s a lingering one, and when it comes to central banks it’s also unclear whether their holdings also present a “rollover risk.”
Prince also touches on the fact that that all that “abundant free money” has fueled a private-equity boom, but with interest rates now at 8% instead of 2% or 3%, “the pace and transaction cycle is bound to slow,” and they are starting to see that.
“When we talk to institutional investors around the world, many of them are experiencing liquidity issues right now and the liquidity issues result from the fact so much money was allocated to private assets and the transaction cycle is slowing,” he said.
A team of analysts at Citigroup led by Nathan Sheets have also weighed in on government debt, telling clients in a new note that “it’s unwise for policy makers to experiment or test” where the threshold for too much debt lies. Here’s their chart showing the bleak trajectory:
Dirk Willer, head of global asset allocation at Citigroup, said a debt crisis scenario in the U.S. would likely mean a selloff of risk assets globally. He notes that bonds in rival countries may not be the best bet as they don’t always benefit. And both gold and bitcoin underperformed during the U.K. gilt crisis, so those may be out.
UBSG, +2.79%
swung to a $785 million quarterly loss on lingering effects of its Credit Suisse takeover, but it pulled in $33 billion in new deposits and shares are up.
The U.S. trade deficit climbed 5% in September to $61.5 billion as imports rebounded. Still to come is consumer credit at 3 p.m. Fed Vice Chair for Supervision Michael Barr speaks at 9:15 a.m., followed by Fed Gov. Christopher Waller at 10 a.m.
According to this recent JPMorgan survey, two-thirds of investors are ready to start pumping more money into equities, while just 19% plan to increase bond exposure. Also, note that 67% also said they did not expect performance of the Magnificent 7 stocks — Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta — to “crack before the end of the year.”
Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
