Senate Goes Back To Middle School For Impeachment Trial

There are a lot of similarities between the Senate and middle school. The inhabitants of both sit at small, cramped desks; both have a heightened sense of self-importance; and both aren’t afraid to bend (or break) the rules if they think they can get away with it.

Case in point: During the Senate impeachment trial of President Trump, senators are supposed to adhere to a rather strict set of rules meant to keep the decorum of “the world’s greatest deliberative body” intact while allowing the proceedings on the floor to run smoothly. The rules, most of which don’t apply when the Senate is in normal session, require senators to remain seated and silent during the trial. Electronic devices, including cell phones, laptops and tablets, are prohibited inside the chamber. And senators are not allowed to eat or drink anything but water when the trial is in session. The one exception is milk (yes, milk). Continue reading “Senate Goes Back To Middle School For Impeachment Trial”

New Trade Deals Give Trump a Political Boost Amid Impeachment Turmoil

While impeachment dominated the headlines this week, there was also plenty of big news on the trade front, most notably the long-awaited signing of the Trump administration’s “phase one” trade deal with China.

So what’s in the deal? Plenty of ink has been spilled about China’s commitment to purchase an additional $200 billion of U.S. goods and services over the next two years. For reference, U.S. exports to China totaled $185 billion in 2017, the baseline year, meaning that they would have to increase a whopping 54% in 2020 to keep pace.

Continue reading “New Trade Deals Give Trump a Political Boost Amid Impeachment Turmoil”

What To Expect From The Looming Senate Impeachment Trial

The impeachment of President Trump is about to enter a new, historic phase. Beginning next week, a president will be forced to defend himself at an impeachment trial for only the third time in U.S. history.

After Democrats initiated impeachment in the House, it’s now the Republicans’ turn in the Senate. Barring some extraordinary new evidence or developments, Trump is almost certain to be acquitted by the GOP-run upper chamber. But that doesn’t mean the trial won’t be filled with drama and potentially damaging consequences for one party or the other, or both. Continue reading “What To Expect From The Looming Senate Impeachment Trial”

Congress, The Big Tent Circus

The two “I” words completely dominated Capitol Hill this week – Iran and impeachment. And in typical congressional fashion, lawmakers have no clear path or consensus for dealing with either. So just when you thought the three-ring circus that is Congress couldn’t get any crazier, more confusing or more conflicting, it just did. If the first week of the new year is any indication of how the rest of 2020 will go in Washington, buckle up.

Let’s take Iran first. President Trump’s decision to kill Iranian Gen. Qassem Soleimani via drone strike near Baghdad sparked intense debate in Congress. No tears were shed on Capitol Hill over the slaying of Iran’s top military commander, as Soleimani was responsible for the deaths of hundreds of Americans. But many in Congress – mostly Democrats but also a handful of Republicans – are troubled by the president’s penchant for carrying out military actions without their OK, or even their consultation. Trump bypassed longstanding protocol when he launched the attack without first giving Congress a heads-up, adding to many lawmakers’ frustrations that the White House is usurping legislative branch authority. Continue reading “Congress, The Big Tent Circus”

Oil Markets Muted in Wake of Soleimani Assassination

In an earlier era, the risk of war between the U.S. and Iran would likely have sent oil prices skyrocketing, resulting in significant financial pain for consumers and a serious hit to the U.S. economy. But when news broke late last week that the U.S. had assassinated a top Iranian general in Iraq by drone strike, oil prices rose a fairly modest 3%. Today, they’re largely flat.

Why? In a word: Fracking, or hydraulic fracturing, the drilling technique that, combined with horizontal drilling and other tech advances, has unlocked more oil in more places across America. The Middle East is still a crucial source of supply for global markets, but thanks to the resurgence in domestic production, the U.S. is now largely self-sufficient in petroleum. In fact, we now export more crude oil and refined fuels than we import, according to the Department of Energy. (It also helps that our biggest source of imported crude oil by far is Canada. Saudi Arabia ranks a distant third.)

There’s no telling what comes next in the slowly intensifying confrontation between Washington and Tehran. But I think we can identify a couple of outcomes that won’t happen: Violence in the Persian Gulf region won’t result in physical shortages that require American drivers to queue up at gas stations the way they did during oil crises in the 1970s. And oil prices won’t climb high enough to do the U.S. economy any real damage, again unlike in the 70s, when oil price shocks helped stoke double-digit inflation and two recessions.

Since 2005, when U.S. crude production fell to a multidecade low of 5 million barrels per day, output has steadily climbed to today’s nearly 13 million barrels. Energy companies are also producing a bounty of other liquid hydrocarbons, such as ethane and propane, plus about 1 million barrels per day of ethanol. Add it up, and U.S. output roughly equals consumption. Less than a decade ago, the country depended on 10 million barrels per day of imported crude and refined fuels.

Of course, even with all that production, America isn’t independent of global energy markets. Supply disruptions on the other side of the world still affect prices here. And the Persian Gulf is a key chokepoint for the oil market. The tankers transiting its waters carry roughly a fifth of the world’s petroleum supplies, according to the DOE. A full-blown shooting war there would seriously crimp those volumes and likely lead to a significant price increase.

Yet so far, the Soleimani killing and resulting rhetoric from Iran has only caused benchmark West Texas Intermediate crude to rise by about $2, to $63 per barrel in recent trading. Retail gas prices have not yet registered any of that increase, though they probably will rise by several cents a gallon later this week.

For now, it appears that oil traders are betting that something less than World War III is imminent in the Gulf, and that global oil supplies aren’t in serious danger. Given the added production that fracking has brought to market in recent years, that seems like a good bet.

It also helps that the U.S. economy is less exposed to oil price spikes than it used to be. During the 1970s crises, say economists at Wells Fargo, “gasoline and other energy goods” made up 4% of American consumers’ spending. Today that figure is now 2%, thanks in part to significant increases in the gas mileage of modern vehicles. So oil prices would have to really soar to have the same macroeconomic effect that they did four decades ago.

Ringing in 2020 With Mixed News on Energy Prices

When it comes to your energy bills, 2020 is arriving with good news and bad news. Drivers are in for higher prices at the pump, but it should cost most folks less to heat their homes this winter.

Per travel website AAA, the national average price of regular unleaded gas now stands at $2.59 per gallon. That’s not too painful when you think back to the days of $3 gas that prevailed up until 2014 (unless you live in a state like California, where prices average about a buck higher than the nation as a whole). Still, today’s average is about 25 cents higher than it was at the beginning of 2019. Given that crude oil prices are higher than they were a year ago, that’s not surprising. And unfortunately, odds are good that the price at the pump is only going to trend up as winter turns to spring.

In each of the past several years, retail gas prices have tended to bottom out around Christmas or early in the new year and then drift higher, often peaking in the late spring or early summer. That makes sense, given that Americans tend to drive less during the depths of winter and then hit the road for spring and summer vacations. Plus, refiners start to switch over to summer-blend gasoline formulations in advance of warm weather, which adds a bit to the final cost.

A big drop in oil prices could buck that pattern this year. But with energy firms paring back their oil drilling in the U.S. to improve financial results, and OPEC committed to keeping a lid on its exports, a big drop in crude doesn’t look likely at the moment. If the U.S. and China can make more progress on patching up their trade fight, oil could even creep a bit higher as traders bet on a stronger global economy.

In the near term, the bump in oil prices resulting from the U.S. strikes that killed a prominent Iranian general in Iraq will push gas prices a bit higher. Unless the Iranians retaliate in such a way that makes full-blown war a realistic threat, I expect oil prices to ease after a few days or a week. Still, it’s one more reason to expect fuel prices to trend up.

In fact, 2020 may be the year the national average price returns to the psychologically important $3 mark for the first time since October of 2014. (It came close in May of 2018, but topped out around $2.96.)

So budget more for road trips. But most consumers should see lower heating bills.

Per the Department of Energy, retail propane prices are running more than 40 cents per gallon less now than a year ago. Heating oil: Down 7 cents. Price data for residential natural gas deliveries aren’t available yet, but gas futures contracts are down substantially from their level of one year ago, so at least some gas customers ought to catch a break on rates.

Long-range weather forecasts are notoriously difficult, but for what it’s worth, the National Weather Service’s Climate Prediction Center sees most of the country experiencing normal to above-average temperatures this winter, versus a relatively small swath of the upper Midwest that is more likely to be below average. If that forecast pans out, and heating fuel prices don’t spike, most households should see some savings on their utility bills to balance out the higher cost of filling up their gas tanks.

10 Tech Developments to Watch in 2020

As 2020 draws near, I’ve rounded up 10 technology stories that bear watching over the next 12 months. The list is a sampling of some of the most important tech trends on my radar. I’ll be covering these stories and many more next year. Feel free to contact me with questions or comments on any of the topics. Continue reading “10 Tech Developments to Watch in 2020”

The Do Little Congress

Despite the drama that unfolded this week in the U.S. House of Representatives, which for only the third time in U.S. history voted to impeach a president, the mood on Capitol Hill was largely anticlimactic. That’s because the votes on the chamber’s two impeachment articles went down as expected. About the only surprise was how few Democrats broke party rank and didn’t support impeachment. Only two Democrats voted against impeaching President Trump on the first article (abuse of power), while three voted no on the second charge (obstruction of Congress). Rep. Tulsi Gabbard (D-HI), who is running for president, voted “present” on each. Continue reading “The Do Little Congress”

Another Leg Down for the Coal Industry in 2020

2020 will mark another milestone in the steep decline of the U.S. coal industry. Many plants have already shut down because of environmental or economic pressures, and U.S. coal consumption has been mostly shrinking for over a decade now. So the industry’s woes are old news. But consider: In 2020, the U.S. will likely see coal use fall to a 45-year low.

2019 is not yet over, and government statistics on coal consumption get reported with a lag of several months. But the Energy Department has reported on the first eight months of the year, which gives us a reasonably good estimate of how the year as a whole will end up. During that period, coal consumption fell by about 12% from the same period in 2018. Assuming that pattern holds – and given the low price of natural gas, coal’s chief competitor in the power sector, the pattern probably will hold – total coal consumption in 2019 will come in near 600 million tons. For reference, the U.S. burned a billion tons per year as recently as 2011.

What happened? A combination of factors. Under President Obama, the Environmental Protection Agency tightened air quality regulations that made many older coal plants uneconomical to keep in operation. At the same time, the fracking revolution unleashed huge reserves of cleaner-burning natural gas, driving down its price to the point where gas became competitive with coal. What’s more, a host of federal and state policies incentivized utilities to ramp up wind and solar power, even as the cost of solar panels and wind turbines was falling. For coal, it was a triple whammy. The fuel that once supplied half of the nation’s power has since seen its share of the generation mix drop to a quarter.

The declines will continue. With more plants slated to shut down in 2020, I expect U.S. coal consumption to drop to between 550 million and 570 million tons. According to government records, the last time the nation burned so little coal was 1975. That’s roughly half of the peak hit in 2007, when demand came in at more than 1.1 billion tons.

For coal miners and regions tied to mining, this collapse has been devastating. Back in 2011, when the nation burned a billion tons of coal, employment in the industry stood at more than 90,000. By last year, that figure had shrunk to a bit over 53,000. According to the Department of Energy, just 16 mines in the Powder River Basin of Wyoming and Montana now account for 43% of total U.S. production, whereas the traditional mining regions of southern Appalachia have fallen to about 15%. And even in the prolific Powder River Basin, some of the major producers have filed for bankruptcy.

What about the export market? Can overseas demand make up for falling consumption at home? Probably not. Exports jumped in 2017 but peaked in 2018 and have since started to pull back. And the long-term outlook for U.S. coal exports isn’t bright. The International Energy Agency expects global coal demand to either stagnate or drop sharply, depending on what actions countries take to reduce carbon emissions in their power sectors. Either way, the rest of the world does not look like a growth market that can easily take up the slack left by shuttered American coal plants.

Congress is a Strange Place These Days

If ever there was a single day that highlighted just how chaotic, conflicting and outright strange a place Congress is, it was Tuesday. At 9 am, House Speaker Nancy Pelosi (D-CA) held a historic press conference to declare that the Democratic-controlled chamber had prepared two articles of impeachment against President Trump. The commander in chief and his fellow Republicans howled, though they certainly weren’t surprised.

Then, just an hour later, Pelosi surprisingly stepped to the microphones again to announce that she and the Trump administration had reached a deal on a long-stalled free trade agreement with Mexico and Canada. Talk about a schizophrenic morning! Continue reading “Congress is a Strange Place These Days”