Axios Generate: Pandemic's propane boost — Oil employment woes

Generate

By Amy Harder ·Oct 05, 2020

Good morning. Today's Smart Brevity count: 1,196 words, 4.5 minutes.

🖥 Join Axios' Erica Pandey tomorrow at 12:30pm ET for a conversation on how businesses build capacity for organizational change with MassMutual CEO Roger Crandall, Clorox Company SVP Troy Datcher, and Doctor on Demand CEO Hill Ferguson. Register here.

🚨 My latest column reflects something I suspect many of us are grappling with: safely socializing during a pandemic as the weather gets colder. I'll share a glimpse of that, and then Ben Geman will get you up to speed on other news.

1 big thing: Propane is on the COVID-19 menu

Illustration of a waiter holding a serving tray with a propane tank

Illustration: Sarah Grillo/Axios

Americans' plans to socialize outside in colder weather — when COVID-19 will still be a threat to indoor gatherings — are prompting an expensive and environmentally questionable rush on outdoor heaters.

Why it matters: Heating outdoor patios is a big new cost for businesses, and the energy sources (like propane and electricity) are almost always fossil fuels that contribute to climate change.

Where it stands: Nearly 50% of full-service restaurants say they're taking actions to extend outdoor dining seasons, including patio heaters, according to a survey by the National Restaurant Association. Other businesses, like ski lodges, are also buying more outdoor heaters.

Jeremy Sasson, president of Michigan-based Heirloom Hospitality, which runs three restaurants in the Detroit area, said he has increased the numbers of heaters he uses from eight or 10 in previous years to 25 this year.
The cost of fuel for heating — which is just one of numerous wholly new categories of costs for restaurants in the pandemic — is about the same as some of his rents, Sasson said, coming in at around $200 a day.
"I'm willing to spend the money to stay open," said Sasson, who employs between 200 and 250 people. "It stabilizes the jobs within the restaurants."

How it works: Propane, a liquid gas that comes from crude oil and natural gas, is typically the most popular type of energy source because it is freestanding and can be moved around. Electric heaters are another option, but are not mobile.

Among fossil-fuel products, propane is the second cleanest behind natural gas, according to the Energy Information Administration.
Electric heaters may appear cleaner, but considering almost two-thirds of America's electricity comes from natural gas and oil, they're not cleaner and can actually be less efficient, according to experts.
In any case, additional carbon emissions come with the use of outdoor heaters of any type unless renewable energy is powering an electric heater.

The intrigue: New York City, which has one of the most aggressive climate-change plans of any city, is allowing more use of outdoor heaters, including propane, in the wake of the pandemic.

What we're watching: The booming propane business. Paraco, a New York-based propane company, usually sells 100,000 fuel tanks per month this time of year to New York City and surrounding areas. Now, it's up to a monthly 250,000 tanks.

Its sales in this category are up 200%, and one big-box store told the company its patio heater sales are up 1500%.
Paul Sankey, an independent oil analyst, describes it as "the seemingly all-but COVID-proof propane market."
Shortages are not expected — for now, per Paraco officials and other propane experts.

Go deeper: My full column breaks down the economic and environmental numbers.

2. The oil industry is facing a long jobs slump

The oil, gas and chemicals industry shed 107,000 U.S. jobs in March–August as the pandemic hit prices and the wider economy, marking the fastest rate of layoffs in industry history, Deloitte analysts said.

Why it matters: Their new report released Monday warns that the sector's employment may remain depressed for a long time.

Just 30% of lost jobs will have returned by the end of 2021 in their "main scenario," which sees U.S. oil prices stuck at $45 per barrel and natural gas at $2.50 per million British thermal units.
A "pessimistic" case with oil at $35 and gas at $2/mmBtu shows just 3% of jobs coming back by then.
But even their "optimistic" case (where oil is at $55 and gas at $3) shows only 76% of those jobs will return by the end of 2021.
Note: The tally of 107,000 layoffs does not even include furloughs.

Threat level: Industry employment has gotten more sensitive to changes in prices thanks to the "short cycle" nature of shale projects. By the mid-2010s, this "cyclicality" was twice as high as the 1990s, per Deloitte.

"A monthly correlation of oil prices and employment ... reveals that a dollar movement in oil prices affected 3,000 exploration and production and [oilfield services] jobs vs. 1,500 in the 1990s."

What's next: Companies should use the crisis to better position themselves via steps like embracing low-carbon energy transition and trying harder to lure young talent in fields like "data scientists, emissions officers, or user-experience designers."

Go deeper: The oil and gas industry has lost more than 100,000 jobs this year (Fortune)

3. Report: Exxon projects big CO2 increase

Internal ExxonMobil documents show that the oil giant "has been planning to increase annual carbon-dioxide emissions by as much as the output of the entire nation of Greece," Bloomberg reports this morning.

Why it matters: The projection and Exxon's planned production increases reinforce how U.S.-based oil majors have split with European-headquartered players on climate and production strategy, the story notes.

The big picture: "Exxon's own assessment of its $210 billion investment strategy shows yearly emissions rising 17% by 2025, according to the internal documents," Bloomberg writes.

The emissions from their production increases greatly outweigh their pollution-curbing initiatives, it adds.

Yes, but: Exxon, in a statement to Bloomberg, calls the projections "an early assessment that does not include additional mitigation and abatement measures that would have been considered as the next step in the process."

4. ICYMI: High court to weigh climate litigation venue

Illustration of suited hand with gavel about to hit the oil barrel

Illustration: Eniola Odetunde/Axios

The Supreme Court said Friday that it will review a petition from Big Oil companies — including BP, Exxon and Chevron — that argues that mounting climate lawsuits against them should be kept out of state courts.

Why it matters: "The high court's interest in the issue is good news for oil and gas companies, which have tried for years to push climate liability cases to federal courts, and ultimately defeat them," Bloomberg Law reports.

The court specifically agreed to weigh in on the venue for Baltimore's case against oil majors seeking damages over the harmful effects of global warming.
But it's one of many similar suits against oil companies that local and state governments have filed in state courts.

5. Gates-led energy group expands D.C. advocacy

The Bill Gates-founded group Breakthrough Energy has formally registered lobbyists for the first time.

Driving the news: The group has retained the firm Kountoupes Denham Carr & Reid, a newly available filing shows.

They'll work on "issues related to energy innovation, research & development, industrial decarbonization and decarbonization of liquid fuels," it states.

The big picture: The 5-year-old Breakthrough Energy is really several things: It spans U.S. policy advocacy plus a VC arm, a Europe-focused pilot fund, and more.

Yes, but: While the formal lobbying registration may be new, Gates and allies have long been pushing policymakers to bolster federal support for clean energy R&D and demonstration initiatives.

6. Nikola won't die

Data: FactSet; Chart: Axios Visuals

Shares of electric truck maker Nikola have jumped higher in recent days, despite unequivocally negative coverage from ratings analysts and news that the company has not yet settled what was thought to be a done deal with GM valued at $2 billion, Axios' Dion Rabouin writes.

The stock jumped 14.5% on Sept. 30, 17.7% on Oct. 1 and even edged up 0.5% on Friday.

Why it matters: Even after a report stated the company is a fraud, a reported SEC investigation and the resignation of its founder, some traders continue to buy Nikola shares.

7. Catch up fast: finance, Tesla, U.K.

Climate: "Members of the Rockefeller family are leveraging their fortune and network of wealthy friends to pressure major U.S. banks to stop investing in fossil fuels that are driving climate change." (Politico)

EV sales: "Tesla said Friday it delivered 139,300 vehicles in the third quarter, and produced 145,036 vehicles. That sets a new quarterly record for Tesla." (CNBC)

"[Tesla's] steady growth in China and Europe more than offset weakness in the United States. The company does not provide a geographic breakdown of its sales." (NYT)

Policy: "Boris Johnson is drawing up a major package of green energy policies to help the UK meet its ambitious climate targets — including hydrogen fuel, carbon capture and storage, more wind farms and bringing forward the ban on the sale of new petrol cars." (FT)