Daily Energy report
Russia bans diesel exports, Lego’s oil reality, Impact of $100 oil, Saudi Arabia & nuclear, Peak oil demand, Toyota’s EV dreams, Macron’s economic ignorance, Carbon offsets worthless, and more.
Chart of the Day: Who will suffer the most from the Russian ban on diesel exports?
Summary
Figure (1) above shows the Russian Federation’s exports of gasoil and diesel by destination in 2023, according to Kpler. Russia announced a ban on such exports last week but today issued a clarification that low-quality diesel is not included in the ban. The chart shows that the countries most affected include Turkey, Brazil, Saudi Arabia, Libya, Morocco, Tunisia, the UAE, and Egypt. What is common among those countries? All except Brazil are Muslim countries and all except Turkey are Arab countries. Regardless, most exports went to Turkey.
Related News:
Reuters: Russia Lifts Export Ban on Low-Quality Diesel, Marine Fuel
Summary
Russia has amended its fuel export ban by removing restrictions on some specific fuels and allowing the export of fuel already approved by Russian Railways and Transneft before the initial ban announcement. Despite these changes, the indefinite prohibition on all gasoline types and high-quality diesel persists.
S&P Global: Russian diesel export ban to hit Turkey, Brazil hardest but curbs seen short-lived
Summary
Russia has temporarily banned most of its diesel and gasoline exports due to rising domestic fuel prices, significantly impacting Turkey and Brazil. Russia exports around 1 million b/d of diesel annually, and after the Ukraine conflict, shifted its diesel export focus from Europe to other markets. Now, Turkey and Brazil are the primary recipients, with both absorbing 55% of Russia's diesel exports in August.
EOA’s Main Takeaway
While the S&P global story sums up the situation, we would like to warn our readers that some of these countries are a point of transshipment. While there were no European countries listed on the chart, some European countries import diesel from the States listed in the chart, especially Turkey. Turkey’s gasoil, and diesel customers include Italy, Greece, Netherlands, Spain, and Bulgaria. But this one could be striking to some readers: Ukraine!
In short: Europeans are still importing Russian oil, even refined products through third countries.
Story of the Day
Reuters: Lego Abandons One of its Projects to Make Oil-Free Bricks
Source: Lego.com, 2023
Summary
Lego has halted its primary initiative to replace oil-based plastics in its bricks after discovering that the alternative material resulted in increased carbon emissions. The company experimented with bricks made from recycled polyethylene terephthalate, but it led to higher carbon outputs. Despite testing numerous materials, Lego CEO Niels Christiansen said they couldn't find a suitable replacement.
EOA’s Main Takeaway
The retreat from climate change goals is all over the place. (You’ve been seeing it repeatedly in our reports, including this one in a few stories below.) The Lego CEO claimed it was backing off the change because the alternatives produced MORE emissions. That’s almost certainly true, however, we believe the most important reason is economic.
The retreat of Lego proves two points: Plastic substitutes are expensive and not as durable. Companies, in the end, will look at the bottom line: profit. As Lego was looking for plastic substitutes, its costs went up and raised prices for many of its high-end items.
News of the Day
Wall Street Journal: Wall Street is Hoping $100 Oil Is Not What It Used to Be
Summary
Rising oil prices are causing concern for the Federal Reserve's ability to manage inflation. Although the U.S. is less sensitive to oil price fluctuations now compared to the past, due to more efficient consumption habits, these rising costs can still have significant economic implications. Controlling inflation goes beyond the scope of U.S. monetary policy, as global factors, such as decisions by major oil producers like Saudi Arabia and Russia, play a significant role.
EOA’s Main Takeaway