“There’s about a billion people that live a lifestyle remotely recognisable to you and I … There’s seven billion people that want to live a lifestyle like that. The only way from here to there is just massively more energy,” said US Energy Secretary Chris Wright, during his visit last week to the UAE.
“Larger energy, more affordable energy … stable and lower-priced energy, that’s good for America and good for the world,” Mr Wright advocated.
More abundant and cheaper oil and gas would be helpful for energy consumers, particularly following the gas price shock and inflation of 2022. Massively expanded energy needs for the developing world, and for emerging uses such as artificial intelligence (AI) seem to cry out for such an increase.
The International Energy Agency (IEA) thinks that the worldwide electricity consumption of data centres will more than double by 2030, because of the rising use of AI. Data centres consume 1.5 per cent of global electricity. The IEA thinks that about 80 per cent of this electricity increase will come in the US and China.
This forecast may be an underestimate. The US may use as much as 12 per cent of its electricity for data centres as soon as 2028, a near-tripling from today’s share. New AI methods and more efficient chips may cut energy use, although it’s more likely they will accelerate it, by making AI cheaper and therefore widening its use.
Impressive though this increase is, most of the gain in electricity use will come from other sectors – industry, electric vehicles and air-conditioning. The people of newly industrialising countries across South and South-East Asia, and after them, Africa, will aspire to the energy-intensive lifestyles, Mr Wright mentioned.
So how is Mr Wright going about achieving his objectives and those of his boss, US President Donald Trump? Will he succeed? And should the Gulf be worried about more competition and lower oil and gas prices?
The US oil and gas industry hated the regulations of former president Joe Biden, Mr Trump’s predecessor in the White House. The new administration has moved rapidly to ease rules on leaks of the powerful greenhouse gas methane, pollution from coal power plants, leasing of coal-mining areas, and to end Mr Biden’s moratorium on approval of new liquefied natural gas (LNG) export plants.
It has sought to revive the long-stalled plant to sell LNG from Alaska. As part of its Hobbesian trade war against all, it has encouraged former allies in Europe and east Asia to increase their purchases of American oil and gas to remedy the purported bilateral trade deficits.
However, this policy suffers from so many contradictions, that it cannot possibly work.
First, the administration has moved against solar, wind and nuclear power in the US. The latest, most dramatic move, is Interior Secretary Doug Burgum’s order to Norwegian company Equinor to halt construction of the Empire Wind I offshore project in New York state. This was fully permitted and approved. Equinor had already spent $2 billion on it. No one will invest in major energy projects in the US under this kind of uncertainty.
This means traditional fuels have to carry all the burden. There will be less US gas to export as more is needed at home, and it will be more costly. The industry cannot even make turbines fast enough for all the proposed gas power plants to supply AI.
Coal in the US is on life-support. From providing half the country’s electricity in 2000, it now supplies 15 per cent. Companies do not want to build new coal power stations, and could not even if they wanted to.
Second is the impact of the tariff war. This pushes up costs for domestic energy suppliers who need steel and aluminium for their projects – particularly oil and gas drilling, pipelines, electricity cables, wind farms, nuclear plants, and LNG plants.
Third is the domestic market dynamics. No president can command an increase in US oil or gas production, though several have tried. Actual production depends on the interplay of technology, prices, costs, investment appetite and industry structure.
Today, only technology is on the side of US shale. Oil prices have dropped while costs are rising. Companies want to return money to shareholders rather than investing in the breakneck growth of earlier years. The shale industry has consolidated around a few giant companies such as ExxonMobil, Chevron, Occidental and EQT, who invest cautiously.
Shares of Liberty Energy, the fracking company previously led by Mr Wright, have lost 40 per cent of their value this year. Oil services companies are the first in line to suffer when oil prices and activity levels drop.
And fourth is the reality of the international market.
The US exported $320 billion of energy products last year, helping to keep its $1.2 trillion trade gap in goods from being even wider. Mr Trump said: “We can knock off $350 billion in one week” by exporting more energy.
LNG exports will double by the end of the decade. But there is no way the US can double the rest of its already huge energy exports. Counter-tariffs by China mean that huge market is now closed off to US oil and gas exports. Europe might buy more, but its hydrocarbon use is declining, and it does not want to be overdependent on Washington any more than on Moscow.
A slower global economy, and countries hit by US tariffs, will find their energy imports dropping rather than rising. And even if the US shale industry can crank out more oil, higher exports will bring lower prices.
So, the Gulf has plenty of things to worry about from Mr Trump’s policies, but much higher US oil and gas exports are not one of them. Opec+ can even use lower prices to its advantage, to recapture market share. Flexibility and resilience in the face of gross uncertainty will be the winning combination to win the world’s new energy consumers.
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
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Pox that threatens the Middle East's native species
Camelpox
Caused by a virus related to the one that causes human smallpox, camelpox typically causes fever, swelling of lymph nodes and skin lesions in camels aged over three, but the animal usually recovers after a month or so. Younger animals may develop a more acute form that causes internal lesions and diarrhoea, and is often fatal, especially when secondary infections result. It is found across the Middle East as well as in parts of Asia, Africa, Russia and India.
Falconpox
Falconpox can cause a variety of types of lesions, which can affect, for example, the eyelids, feet and the areas above and below the beak. It is a problem among captive falcons and is one of many types of avian pox or avipox diseases that together affect dozens of bird species across the world. Among the other forms are pigeonpox, turkeypox, starlingpox and canarypox. Avipox viruses are spread by mosquitoes and direct bird-to-bird contact.
Houbarapox
Houbarapox is, like falconpox, one of the many forms of avipox diseases. It exists in various forms, with a type that causes skin lesions being least likely to result in death. Other forms cause more severe lesions, including internal lesions, and are more likely to kill the bird, often because secondary infections develop. This summer the CVRL reported an outbreak of pox in houbaras after rains in spring led to an increase in mosquito numbers.
UAE currency: the story behind the money in your pockets
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
The Great Derangement: Climate Change and the Unthinkable
Amitav Ghosh, University of Chicago Press
Duterte Harry: Fire and Fury in the Philippines
Jonathan Miller, Scribe Publications
MATCH INFO
World Cup 2022 qualifier
UAE v Indonesia, Thursday, 8pm
Venue: Al Maktoum Stadium, Dubai
SQUAD
Ali Khaseif, Fahad Al Dhanhani, Adel Al Hosani, Mohammed Al Shamsi, Bandar Al Ahbabi, Mohammed Barghash, Salem Rashid, Khalifa Al Hammadi, Shaheen Abdulrahman, Hassan Al Mahrami, Walid Abbas, Mahmoud Khamis, Yousef Jaber, Saeed Ahmed, Majed Sorour, Majed Hassan, Ali Salmeen, Abdullah Ramadan, Khalil Al Hammadi, Fabio De Lima, Khalfan Mubarak, Tahnoun Al Zaabi, Ali Saleh, Caio Canedo, Muhammed Jumah, Ali Mabkhout, Sebastian Tagliabue, Zayed Al Ameri
How Tesla’s price correction has hit fund managers
Investing in disruptive technology can be a bumpy ride, as investors in Tesla were reminded on Friday, when its stock dropped 7.5 per cent in early trading to $575.
It recovered slightly but still ended the week 15 per cent lower and is down a third from its all-time high of $883 on January 26. The electric car maker’s market cap fell from $834 billion to about $567bn in that time, a drop of an astonishing $267bn, and a blow for those who bought Tesla stock late.
The collapse also hit fund managers that have gone big on Tesla, notably the UK-based Scottish Mortgage Investment Trust and Cathie Wood’s ARK Innovation ETF.
Tesla is the top holding in both funds, making up a hefty 10 per cent of total assets under management. Both funds have fallen by a quarter in the past month.
Matt Weller, global head of market research at GAIN Capital, recently warned that Tesla founder Elon Musk had “flown a bit too close to the sun”, after getting carried away by investing $1.5bn of the company’s money in Bitcoin.
He also predicted Tesla’s sales could struggle as traditional auto manufacturers ramp up electric car production, destroying its first mover advantage.
AJ Bell’s Russ Mould warns that many investors buy tech stocks when earnings forecasts are rising, almost regardless of valuation. “When it works, it really works. But when it goes wrong, elevated valuations leave little or no downside protection.”
A Tesla correction was probably baked in after last year’s astonishing share price surge, and many investors will see this as an opportunity to load up at a reduced price.
Dramatic swings are to be expected when investing in disruptive technology, as Ms Wood at ARK makes clear.
Every week, she sends subscribers a commentary listing “stocks in our strategies that have appreciated or dropped more than 15 per cent in a day” during the week.
Her latest commentary, issued on Friday, showed seven stocks displaying extreme volatility, led by ExOne, a leader in binder jetting 3D printing technology. It jumped 24 per cent, boosted by news that fellow 3D printing specialist Stratasys had beaten fourth-quarter revenues and earnings expectations, seen as good news for the sector.
By contrast, computational drug and material discovery company Schrödinger fell 27 per cent after quarterly and full-year results showed its core software sales and drug development pipeline slowing.
Despite that setback, Ms Wood remains positive, arguing that its “medicinal chemistry platform offers a powerful and unique view into chemical space”.
In her weekly video view, she remains bullish, stating that: “We are on the right side of change, and disruptive innovation is going to deliver exponential growth trajectories for many of our companies, in fact, most of them.”
Ms Wood remains committed to Tesla as she expects global electric car sales to compound at an average annual rate of 82 per cent for the next five years.
She said these are so “enormous that some people find them unbelievable”, and argues that this scepticism, especially among institutional investors, “festers” and creates a great opportunity for ARK.
Only you can decide whether you are a believer or a festering sceptic. If it’s the former, then buckle up.
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
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More on Quran memorisation:
The specs: 2018 Genesis G70
Price, base / as tested: Dh155,000 / Dh205,000
Engine: 3.3-litre, turbocharged V6
Gearbox: Eight-speed automatic
Power: 370hp @ 6,000rpm
Torque: 510Nm @ 1,300rpm
Fuel economy, combined: 10.6L / 100km
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
More from Neighbourhood Watch:
Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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Profile
Company: Libra Project
Based: Masdar City, ADGM, London and Delaware
Launch year: 2017
Size: A team of 12 with six employed full-time
Sector: Renewable energy
Funding: $500,000 in Series A funding from family and friends in 2018. A Series B round looking to raise $1.5m is now live.
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
