The Energy Journal: Big Protests in Iran Bear Watching

By John M. Biers

Here’s your morning jolt of news, insight and analysis on the global energy business.

THE MOST IMPORTANT THING TO READ THIS MORNING

Yesterday’s protests in major oil-producer Iran bear watching as merchants and others in the middle class took to the streets in the face of a huge drop in the Iranian currency in the last few days. The Wall Street Journal reports that tens of thousands of people packed into city squares in the biggest show of protest since the government quashed the February 2010 uprising that followed the Iranian presidential election. The Journal said the participation of the normally staid merchant class was a noteworthy facet of the protest. The New York Times describes a somewhat smaller protest dotted by forceful government crackdowns on currency traders. The Washington Post notes how rank-and-file consumers are being hit with higher prices for food and other staples. Bloomberg reports that some consumers have begun to stockpile food.

International sanctions continue to bite in Iran in response to its nuclear program, though experts see a variety of factors behind the currency’s drop. U.S. and European officials would like nothing more than to see Iran back at the negotiating table offering concessions. Whether that happens is anyone’s guess, but the advent of inflation and significant new protests add more pressure to the Ahmadinejad regime. In the coming days, it will be important to see if the protests build, or fade away.

FACT-CHECKING ENERGY IN THE PRESIDENTIAL DEBATE

The Washington Post has posted some nifty items this morning for viewers of the presidential debate who are curious about some of last night’s claims involving energy. Challenger Mitt Romney blasted the Obama administration for spending billions on renewable technology that went bust. The Post notes that some of the failures were expected in light of the fact that the technology wasn’t proven. The Post also looks at some of Romney’s statements over the Solyndra debacle and at the Obama administration’s coal policies. Hyperbole aside, the debate showcased energy as a core fundamental difference between the candidates and the extent they favor policies to expand renewable energy versus petroleum for the energy future of the U.S.

THE EU’S SURPRISE U.S. IMPORT: COAL

The European Union is increasing its imports of coal from the United States, a surprising twist given Europe’s heavy emphasis on climate change. The FT reports that European coal imports from the U.S. have been rising and are on track to exceed the previous record. The European relationship with coal is a kind of inverse situation to the U.S. dynamic, which has seen much coal-fired electric capacity lose ground to natural gas; in Europe, it pays to import coal instead of gas, which is far more costly than in the U.S. The European shipments are also noteworthy in light of Europe’s aggressive climate policies, where cheap carbon prices under the emissions trading system (ETS) mean coal use isn’t that costly. Whether Europe continues to import U.S. coal could depend on the success of efforts in Brussels to strengthen the ETS by raising carbon prices.

OIL’S MODEST RALLY

Oil prices are rallying somewhat early Thursday after tumbling more than 4% in trading on Wednesday. Nymex light, sweet crude futures for delivery in November traded at $88.20 a barrel at 0630 GMT. The market has been in retreat since oil prices hit a four-month high of $99 a barrel on Sept. 14. The current preoccupation centers on weak economic indicators from China. Friday’s closely watched release of nonfarm payroll data in the U.S. could be the next important trading inflection point.

- The Wall Street Journal