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Angola dropping out of OPEC is not a surprise, says Rapidan's Clay Siegle

Angola’s announcement on Thursday that it will quit the oil producers’ Organization of the Petroleum Exporting Countries (OPEC) brings to a head longstanding tensions within the powerful group, but market impact is likely to be limited, according to analysts.

The move “did not come as a surprise, [as] the writing was on the wall already last month,” Clay Seigle, director of the global oil service at Rapidan Energy Group, told CNBC’s “Last Call” Thursday.

A meeting of the extended OPEC+ group in November was dominated by a deep disagreement on production baselines — the levels that determine quotas and compliance — with oil-reliant Angola and Nigeria both opposing efforts to deepen their baselines as they seek to boost their declining outputs. Angola’s oil minister said Thursday that OPEC membership no longer served the country’s interests.

Angola’s exit leaves OPEC with 12 members, with crude oil production of about 27 million bpd, or around 27% of the world oil market, according to Reuters. Angola accounted for less than 4% of OPEC production, Scotiabank analysts said.

Angola follows on the footsteps of Ecuador and Qatar, which left the organization in 2020 and 2018, respectively.

“We think it’s really a one and done move between Angola and OPEC,” Seigle told CNBC’s Brian Sullivan.

“The market should not get complacent, thinking that OPEC cohesion is falling apart and there’s going to be some kind of domino effect.”

Giovanni Staunovo, commodities analyst at UBS, noted that oil prices had already rebounded from a dip on Thursday.

“The explanation is that from an oil market supply perspective, the impact is minimal as oil production in Angola was on a downward trend over the last years,” he said in emailed comments Friday.

“No one expects that the departure of Angola from OPEC is likely to result in more barrels hitting the market, as higher production would first require higher investments.”

The market has concerns about unity, but there is no indication at present that heavyweights within the alliance intend to follow Angola’s path, Staunovo added.

Rising tension

Analysts at Scotiabank said in a note on Thursday that, while there would be no impact on global oil supply due to Angola already maximizing its production, the latest OPEC departure was “another example of the rising tension” in the group.

“We won’t be surprised if other more marginal players such as Congo, [Equatorial Guinea], Gabon, etc. revisit their OPEC membership,” they wrote.

The analysts therefore expect a slightly negative impact on energy shares in the near-term, since the move “provides a fresh excuse for the players to extend their negative bias in the oil market.”

More significant than Angola’s departure is the upcoming introduction of Brazil to OPEC+ — which reunites OPEC members and allies including Russia — and the fact that U.S. crude output is currently at record highs, Rapidan’s Clay Seigle said.

“[Those producers] are really moving the needle on global supply-demand balances and in a way presenting a bit of a challenge for the members of OPEC+ to manage a pretty well-supplied market, relative to demand, not just in the coming year 2024 but in the next several years.”

“That’s going to be the challenge they face, in trying to send the right signals to the market that they have the capability and the cohesion to continue that balance,” Seigle added.

Brazil has yet to accept a production quota, and its energy minister said in November that the country must still review the document that underpins the OPEC+ partnership.

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Illinois awards $100M for electric truck charging corridor, Tesla to get $40M

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Illinois awards 0M for electric truck charging corridor, Tesla to get M

In a move that’s expected to play a crucial role in supporting the transition to medium- and heavy-duty electric vehicles, $100 million of the Biden Administration’s last-minute $635M payout is headed to Illinois to help build out an electric truck charging corridor.

While Tesla failed to secure funding for its heavy-duty electric truck chargers at the Federal level, Tesla was one of four companies – the others being Prologis, Gage Zero, and Pilot Flying J – that will be splitting the $100 million awarded by the Illinois Environmental Protection Agency’s CFI program.

Tesla is understood to have requested fully 40% of the $100MM award, with Prologis requesting $60 million, Gage Zero requesting $16 million, and Pilot requesting $10 million.

The project will facilitate the construction of 345 electric truck charging ports and pull-through truck charging stalls across 14 sites throughout Illinois, with each of the awarded companies putting up some of its own money to support the infrastructure buildout as well. To that end, Prologis is expected to invest $18 million, Tesla $19 million, Gage Zero $4 million, and Pilot travel stations committing $2.5 million.

“Most of the development has happened on the coasts, and there’s nothing really happening in the Midwest, which is not great for long-haul trucking,” said Megha Lakhchaura, Illinois’ state EV officer. “We think that this hub could be of national importance.”

Lakhchaura isn’t wrong. More than 30,000 commercial trucks travel the state’s I-80 and I-90 corridor each day – and electrifying those trucks would make a huge impact in the public health and quality of life along the heavily populated roadways.

The Illinois EPA’s $100 million awards join Illinois utility ComEd’s $90 million push to build out a commercial EV charging infrastructure and encourage commercial EV adoption along the I-80/90 corridors, as well as the state’s own EV rebates for both private and company-owned battery electric vehicles.

SOURCES: TechCrunch, via Yahoo! Finance; MSN.

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Diesel wins this round as CARB backs away from Advanced Clean Fleets rule

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Diesel wins this round as CARB backs away from Advanced Clean Fleets rule

The California Air Resource Board (CARB) has withdrawn its request to enact the proposed Advanced Clean Fleets rule, which required fleets that are “well-suited for electrification” to reduce emissions through the phase-in of Zero-Emission Vehicles (ZEVs) and the banning of commercial diesel sales after 2035.

The state of California submitted its Advanced Clean Fleets (ACF) request to the EPA, which would have required trucking fleets in the state to transition to zero-emission vehicles beginning last year, in November of 2023, spurring a number of drayage fleets and port operators to accelerate their adoption of electric trucks and encouraging manufacturers to route the bulk of their BEV manufacturing capacity to California.

As the sun sets on the environmentally friendly Biden Administration, however, CARB is backing away from a fight with the incoming Trump Administration to enforce its state’s rights to enact emissions standards that are more strict than the federal regulations.

“Frankly, given that the Trump administration has not been publicly supportive of some of the strategies that we have deployed in these regulations, we thought it would be prudent to pull back and consider our options,” CARB chair Liane Randolph said in an interview. “The withdrawal is an important step given the uncertainty presented by the incoming administration that previously attacked California’s programs to protect public health and the climate and has said will continue to oppose those programs.”

The EPA has acknowledged the withdrawal of the state’s waiver request, which effectively delays implementation of CARB’s ACF rule for at least four years, contingent on the state’s maintaining its beliefe that it requires a waiver to enact a regulation that isn’t strictly an emissions standard. California governor Gavin Newsom, meanwhile, intends to continue to push for ZEV adoption in the state with a number of state-level incentives to promote further decarbonization.

Here’s hoping the BEVs and ZEVs have better luck next round.

Electrek’s Take

Daimler Truck certification
Freightliner eCascadia; via Daimler Trucks North America (DTNA)

While some may celebrate the delay of the Advanced Clean Fleets rule, their celebrations will undoubtedly prove to be myopic and short-lived. The reality is that America is no longer the world leader in technology or transportation that backward organizations like the American Trucking Association believe it to be, and the fact is that delaying a transition to cleaner, more efficient technology will only put the US further behind its economic rivals in Asia and the Middle East.

Even before this Pyrrhic victory for American truck brands that have been slow to push BEVs into production, demand for diesel was at a generational low, and companies like Volvo, Renault, and Mercedes-Benz have been logging millions of electric miles on their deployed trucking fleets.

All of which is to say: if you thought it was going to be hard for American brands to catch up before, it’s going to be even harder now.

SOURCES | IMAGES: ACT News, Overdrive; Reuters.

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Another one bites the dust as Canoo files for chapter 7 bankruptcy

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Another one bites the dust as Canoo files for chapter 7 bankruptcy

In an official announcement released at 8:15PM last night, Walmart-backed electric van company Canoo filed a voluntary petition for relief under Chapter 7 of the US Bankruptcy Code and will cease operations immediately.

Despite some early signs of promise with pilot programs at the USPS, US Army, and even a highly-publicized collaboration with NASA, the electric van company either failed to find a place in the market, failed to get enough vehicles produced to meet demand, or just failed to deliver in general. Regardless, the chapter 7 filing seems to be the end of the road for Canoo.

“We would like to thank the company’s employees for their dedication and hard work,” said Tony Aquila, Canoo CEO and one of the company’s largest investors (according to the press release). “We know that you believed in our company as we did. We are truly disappointed that things turned out as they did. We would also like to thank NASA, the Department of Defense, The United States Postal Service (‘USPS’), the State of Oklahoma and Walmart for their belief in our products and our company. This means a lot to everyone in the company.”

As a result of the chapter 7 filing, Canoo will cease operations effective immediately, 8:15PM on 17JAN2025. The next step in the company’s dissolution will see a court-appointed trustee manage the liquidation of the company’s remaining assets.

Electrek’s Take

Canoo-GOEV-stock
Canoo Lifestyle Vehicle; via Canoo.

Rumors fueled by outspoken former employees of Canoo began circling late last year, with furloughed employees urging Oklahoma state leaders to “hold the electric vehicle company accountable” after it shuttered the OK production line that had received more than $100 million in state incentives.

The same employee claims that the company was being wildly mismanaged, and that what few Canoo vehicles the company said it had built in the Oklahoma plant were actually built in Texas, and that no vehicles were actually ever built in OK. “Nothing was functioning,” the unnamed employee said, speaking to local news channel KFOR. “There was no, there was not one robotics line that actually worked to fabricate a part.”

You could argue that the employees should also be held accountable for happily collecting paychecks without actually producing anything this whole time, but that’s a conversation for another day. For now, I’ll be mourning the loss of what could have been a fun little domestic off-roader, and hoping Canoo’s employees find a soft landing and better jobs elsewhere.

SOURCES | IMAGES: Canoo; KFOR.

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