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US backtracks on strict fuel-economy standards

  • : Crude oil, Emissions, Oil products
  • 24/06/07

President Joe Biden's administration has pulled back on tough fuel-economy standards for cars and light trucks for model years 2027-2031, after automakers balked at the possibility that stricter regulations could trigger billions of dollars in fines.

The US National Highway Traffic Safety Administration (NHTSA), in a rule finalized today, dropped its proposal to require pickup trucks and SUVs to achieve an average fuel-economy improvement of 4pc/yr. Instead, NHTSA will require no efficiency gains for those vehicles in the first two years of the program and a 2pc/yr gain in model years 2029-2031. For passenger cars, the agency retained a requirement for 2pc/yr fuel-economy improvements.

The Biden administration's retreat on fuel-economy effectively will leave it up to a different set of rules — including tailpipe CO2 standards from the US Environmental Protection Agency (EPA) and California's Advanced Clean Cars II rule — to support the switch to electric vehicles (EVs). By statute, NHTSA cannot factor in EVs when setting fuel-economy standards, which automakers warned could result in them paying billions of dollars in penalties even if they were complying with EPA's regulations.

NHTSA expects that under the final rule, the average light-duty vehicle will achieve a fuel-economy of 50.4 miles/USG in model year 2031, substantially less than the 58 miles/USG target the agency expected when it proposed the standards last year. But NHTSA said retaining its original target would have raised vehicle prices too much, in addition to imposing steep fines on automakers.

"Non-compliance means that manufacturers are choosing to pay penalties rather than to save fuel," NHTSA said.

Automakers cheered the changes to the final rule, which they said would prevent automakers from being subject to penalties that would have "foolishly diverted automaker capital away" from investments in EVs, Alliance for Automotive Innovation president John Bozzella said. NHTSA initially projected the standards could result in manufacturers paying more than $14bn in penalties.

"It looks like the left hand knew what the right hand was doing," Bozzella said. "That's the kind of coordination we recommended. So that's good and appreciated."

The administration said the new standards will save drivers an average of $600 over the lifetime of newly purchased vehicles. NHTSA estimates the regulation will cut gasoline consumption by 64bn USG through calendar year 2050.

"Not only will these new standards save Americans money at the pump every time they fill up, they will also decrease harmful pollution and make America less reliant on foreign oil," US transportation secretary Pete Buttigieg said.

US automakers have pushed for a slowdown in the switch to EVs, citing concerns about limited demand and the availability of charging stations. Although there are now 184,000 publicly available charging ports, a federal program supported with $7.5bn in funding from the 2021 infrastructure law has only built a total of eight charging stations, drawing outcry from Republicans.

The buildout of federally funded EV stations has been slowed by issues such as permitting, siting and the time needed to work with states, administration officials say. US energy secretary Jennifer Granholm said the administration expects the peak buildout of chargers will occur in 2027, but acknowledged the difficulty in starting up the program.

"Those are the hardest ones," Granholm said at an event Politico held earlier this week. "They're going to places where the private sector hasn't gone because there's no electricity, because they're remote."

The final rule disappointed environmentalists, who had hoped the standards would require larger efficiency gains in trucks, minivans and SUVs that accounted for 63pc of new vehicle sales in model year 2022.

The administration "caved to automaker pressure with a weak rule" that will waste gasoline and cede the clean vehicle market to foreign automakers, Center for Biological Diversity campaign director Dan Becker said. The outcome, he said, will be vehicles that will "guzzle and pollute for decades."

Oil industry groups remained critical of the regulations. NHTSA's fuel-economy standards, when combined with EPA's regulations, "amount to a de facto ban by the administration on the sale of new cars and trucks using liquid fuels," American Petroleum Institute downstream vice president Will Hupman said. The trade group has urged lawmakers to repeal the regulations.


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24/11/04

US railroad-labor contract talks heat up

US railroad-labor contract talks heat up

Washington, 4 November (Argus) — Negotiations to amend US rail labor contracts are becoming increasingly complicated as railroads split on negotiating tactics, potentially stalling operations at some carriers. The multiple negotiating pathways are reigniting fears of 2022, when some unions agreed to new contracts and others were on the verge of striking before President Joe Biden ordered them back to work . Shippers feared freight delays if strikes occurred. This round, two railroads are independently negotiating with unions. Most of the Class I railroads have traditionally used the National Carriers' Conference Committee to jointly negotiate contracts with the nation's largest labor unions. Eastern railroad CSX has already reached agreements with labor unions representing 17 job categories, which combined represent nearly 60pc of its unionized workforce. "This is the right approach for CSX," chief executive Joe Hinrichs said last month. Getting the national agreements on wages and benefits done will then let CSX work with employees on efficiency, safety and other issues, he said. Western carrier Union Pacific is taking a similar path. "We look forward to negotiating a deal that improves operating efficiency, helps provide the service we sold to our customers" and enables the railroad to thrive, it said. Some talks may be tough. The Brotherhood of Locomotive Engineers and Trainmen (BLET) and Union Pacific are in court over their most recent agreement. But BLET is meeting with Union Pacific chief executive Jim Vena next week, and with CSX officials the following week. Traditional group negotiation is also proceeding. BNSF, Norfolk Southern and the US arm of Canadian National last week initiated talks under the National Carriers' Conference Committee to amend existing contracts with 12 unions. Under the Railway Labor Act, rail labor contracts do not expire, a regulation designed to keep freight moving. But if railroads and unions again go months without reaching agreements, freight movements will again be at risk. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexico GDP outlook dims in October survey


24/11/04
24/11/04

Mexico GDP outlook dims in October survey

Mexico City, 4 November (Argus) — Private-sector analysts have again lowered their projections for Mexico's gross domestic product (GDP) growth this year, with minimal changes in inflation expectations, the central bank said. For a seventh consecutive month, median GDP growth forecasts for 2024 have dropped in the central bank's monthly survey of private sector analysts. In the latest survey conducted in late October, analysts revised the full-year 2024 growth estimate to 1.4pc, down from 1.46pc the previous month. The 2025 forecast also dipped slightly, to 1.17pc from 1.2pc. The latest revisions are relatively minor compared to the slides recorded in preceding surveys, suggesting negativity in the outlook for Mexico's economy may be moderating. This aligns with the national statistics agency Inegi's preliminary report of 1.5pc annualized GDP growth in the third quarter, surpassing the 1.3pc consensus forecast by Mexican bank Banorte. Inflation projections for the end of 2024 inched down to an annualized 4.44pc from 4.45pc, while 2025 estimate held unchanged at 3.8pc. September saw a second consecutive month of declining inflation, with the CPI falling to 4.58pc in September from 4.99pc in August. The survey maintained the year-end forecast for the central bank's target interest rate at 10pc, down from the current 10.5pc. This implies analysts expect two 25-basis-point cuts to the target rate, most likely at the next meetings on 14 November and 19 December. The 2025 target rate forecast held steady at 8pc, with analysts anticipating continued rate reductions into next year. The outlook for the peso remains subdued, following political shifts in June's elections that reduced opposition to the ruling Morena party. The median year-end exchange rate forecast weakened to Ps19.8 to the US dollar from Ps19.66/$1 in the previous survey. The peso was trading weaker at Ps20.4/$1 on Monday, reflecting temporary uncertainty tied to the US election. Analysts remain wary of Mexico's political environment, especially after Morena and its allies pushed through controversial constitutional reforms in recent months. In the survey, 55pc of analysts cited governance issues as the primary obstacle to growth, with 19pc pointing to political uncertainty, 16pc to security concerns and 13pc to deficiencies in the rule of law. By James Young Mexican central bank monthly survey Column header left October September Headline inflation (%) 2024 4.45 4.44 2025 3.80 3.80 GDP growth (%) 2024 1.40 1.46 2025 1.17 1.20 MXN/USD exchange rate* 2024 19.80 19.66 2025 20.00 19.81 Banxico reference rate (%) 2024 10.00 10.00 2025 8.00 8.00 Survey results are median estimates of private sector analysts surveyed by Banco de Mexico from 17-30 October. *Exchange rates are forecast for the end of respective year. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil launches reforestation plan


24/11/04
24/11/04

Brazil launches reforestation plan

Sao Paulo, 4 November (Argus) — The Brazilian government launched its plan to reforest 12mn hectares (29.6mn acres) with native vegetation by 2030 as part of its efforts to meet its emissions-reductions target under the Paris Agreement. Of the 12mn ha of reforestation projected, 9mn ha will be on properties currently not in compliance with the 2012 forestry code, which requires property owners to maintain standing forest on a percentage of their land. Depending on the biome, property owners are required to preserve 20-80pc of native vegetation. The government estimates that nearly 24mn ha of privately owned land is currently not in compliance with the forestry code. The plan also foresees 2mn ha of reforestation on public lands, including conservation preserves and areas controlled by indigenous peoples. The remaining 1mn ha of reforestation will take place on degraded land which will be converted to be used for low-carbon agriculture. The government will provide financing and technical support for the reforestation program. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Construction spending up in September, asphalt weakens


24/11/04
24/11/04

Construction spending up in September, asphalt weakens

Houston, 4 November (Argus) — US construction spending rose slightly in September, with spending on highways and streets higher. Still, asphalt prices declined. Total highway and street spending rose by 0.4pc in September from August to a seasonally adjusted annual rate of about $141.95bn, according to the latest data from the US Census Bureau. This was 1.5pc above September 2023 levels. Despite the increase in highway spending, wholesale asphalt prices in the US midcontinent hit a four-year low for September on excess supply and subdued demand. Midcontinent railed asphalt prices dropped by $45/st for September delivery to $290-$320/st from August. Waterborne prices in the region saw a similar, $45/st decrease to $300-$335/st. The sharp decline stemmed from turnaround activity beginning in late August at BP's 435,000 b/d Whiting, Indiana, refinery which boosted supplies as adverse weather in the southeastern US stifled wholesale demand. The National Weather Service reported above-average precipitation from Louisiana to Virginia in September with Tennessee seeing its fourth wettest September on record. Hurricane activity in early July and late September also impacted demand for the month with construction firms reporting lower third quarter product shipments because of extreme weather conditions. Total spending was up 7.3pc through the first nine months of 2024 compared to the same period in 2023. Private construction spending was supported by residential investment while nonresidential spending fell. Manufacturing spending fell while commercial spending rebounded from August, reversing previous month's trends. Spending on water supply continues to grow. By Aaron May and Cobin Eggers US Construction Spending $mn 24-Sep 24-Aug +/-% 23-Sep +/-% Total Spending 2,148,805.0 2,146,048.0 0.1 2,055,216.0 4.6 Total Private 1,653,624.0 1,653,160.0 0.0 1,592,388.0 3.8 Private Residential 913,632.0 912,186.0 0.2 877,629.0 4.1 Private Manufacturing 234,302.0 234,803.0 -0.2 194,941.0 20.2 Private Commerical 119,191.0 118,927.0 0.2 139,861.0 -14.8 Total Public 495,182.0 492,888.0 0.5 462,829.0 7.0 Public Water/Sewage 76,805.0 76,462.0 0.4 69,634.0 10.3 Public Highway/Road 141,049.0 140,349.0 0.5 138,694.0 1.7 US Census Bureau Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Saudi Luberef’s profit down on year in Jan-Sept


24/11/04
24/11/04

Saudi Luberef’s profit down on year in Jan-Sept

Singapore, 4 November (Argus) — State-controlled Saudi Aramco's base oil subsidiary Luberef posted a significant decrease in profit in January-September as a result of lower margins. Profit in January-September dropped by 38pc from the previous year to 764mn Saudi riyals ($203mn), although revenue rose by 6.5pc on the year to SR7.4bn. This is because base oil and by-products margins decreased. Luberef's base oil sales volumes in the first nine months of this year were up 1pc to 929,000t as compared with 918,000t in the same period last year. Luberef's profit in the third quarter was down by 34pc on the year to SR226mn, against a 2pc on the year drop in revenue to SR2.5bn. Argus -assessed Asian fob Group I and II base oil export prices were largely lower over the third quarter, especially for light grades, while heavy-grade prices were relatively supported because of tighter supply. The Yanbu "Growth II" expansion project is expected to completed at the end of 2025, the company said. This will bring the base oil production capacity at the Yanbu facility to around 1.3mn t/y. Luberef is also studying a project to produce Group III/III+ base oils, which is at the pre-front end engineering design stage. By Chng Li Li Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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