Trudeau Government Frets Over Trump Oil Tariffs
The federal government of Canada has signaled it worries about the possibility of the next U.S. administration imposing a 25% tariff on all Canadian exports south, Reuters has reported. “We have some work to do to make sure we are effectively articulating the way in which tariffs would be counterproductive, and that’s not just true of oil,” natural resources minister Jonathan Wilkinson said, as quoted by the publication. He added that “There’s a lot of time and effort that will need to go into ensuring that we’re having the appropriate conversations.” The Trudeau government has been highly critical of the oil and gas industry, singling it out as the largest contributor to the country’s carbon dioxide emissions and recently seeking to reduce these with a cap that would prompt a substantial reduction in production. The Canadian oil sands are essentially the only source of heavy crude for Gulf Coast refineries because of the sanctions on Venezuela and Russia, and the simple fact of Canada’s proximity to the United States. This essential nature of Canadian oil imports became reason for many to doubt Trump would go as far as to impose tariffs on Canadian imports. According to media reports, the president-elect has no plans for exceptions to his tariff regime but some observers have noted that this would push retail fuel prices in the United States higher and that would be the opposite of what Trump promised on the campaign trail. The Canadian government’s worry about the tariffs on oil they want themselves to greatly reduce in terms of supply echoes similar sentiment in the industry. Canadian oil and gas producers are worried about the possibility of Trump making their products 25% more expensive for their biggest clients south of the border—and so are the clients. A tariff of 25% on Canadian crude would put them in a tight spot because alternative suppliers are not really numerous and two of them are heavily sanctioned by Washington.
India cuts back cheap gas for vehicles even as bad air chokes Delhi
India is cutting back its supply of cheap gas for vehicles as it struggles to cope with domestic production shortages, a move that could add to toxic air woes in major cities including New Delhi. Supply constraints have left retailers like Indraprastha Gas Ltd and Mahanagar Gas Ltd increasingly reliant on more expensive imports — or costly production from new Indian fields, which have proven more technically challenging. Both have begun to raise prices for compressed natural gas, or CNG, which powers cars, buses, taxis and rickshaws across India. New Delhi, one of the world’s most polluted cities, was pushed into CNG well over two decades ago after a Supreme Court ruling that demanded the conversion of all public buses to cope with worsening air quality. It later banned all non-CNG cabs in the capital region. While the fuel is not entirely “green,” it does emit fewer smog-related pollutants and has a slightly lower carbon footprint than conventional alternatives. Now, as the city lives through some of the most toxic smog days on record, proponents fear that consumers previously attracted by low running costs may begin to look more closely at the disadvantages, including long queues at filling stations and fewer models to choose from. “This may deter the adoption of CNG vehicles and could even lead to a shift back to diesel and petrol, undermining efforts to promote cleaner transportation options,” said Amit Bhatt, managing director for India at the International Council on Clean Transportation. CNG vehicles have proven popular with India’s price-sensitive consumers, surging more than 13-fold between 2019 and now. Sales of vehicles powered by diesel and gasoline have fallen by 20 per cent and 13 per cent, respectively, during that period, according to data compiled by the transport ministry. “We need differential pricing policy to incentivize cleaner fuels and disincentivize polluting fuels,” said Anumita Roychowdhury, executive director at the Centre for Science and Environment. With its limited low-cost gas funneled to industrial use, India’s deliveries to retailers have been cut by as much as 40 per cent, according to exchange filings by the companies. That fuel, from older fields, is currently priced at $6.5 per million British thermal units — against about $10 for new local fields and $13 to $14 per mmbtu for imports. Mahanagar Gas has said it will explore options as it tries to ensure stability for its price-sensitive customers, but scarcity has already pushed prices for some areas up by more than 2 per cent this week. Further increases will be necessary to maintain margins, analysts say. India wants to increase the role of gas in the energy mix, and the government has announced plans to significantly increase the number of CNG stations across the country over the current decade from roughly 7,000 today, mostly in the north and west. That target may now be at risk. “The move also doesn’t gel with the government’s aim to almost triple the compressed natural gas station network in the country by 2030,” said Sabri Hazarika, analyst with Emkay Global Financial Services Ltd The underlying problem is the paucity of India’s homegrown output, which has not kept pace with a growing economy. Daily gas production has risen only about 3 per cent in the decade through March, while consumption has jumped 30 per cent, according to the oil ministry. That has been felt by consumers, with CNG prices in Delhi rising 73 per cent since 2021. Gasoline is up just 13 per cent and diesel has increased by close to a fifth, shrinking the price gap between gas and conventional fuels. “Lower prices have been working in our favor, despite long waiting times at fuel stations,” said Sukhdeep Singh, a taxi driver who was getting fuel for his car at a CNG outlet in New Delhi. “But if our costs jump without any commensurate increase in passenger fares, it will make life really very difficult for us.”
GAIL’s arm inks pact with process licensor for revival of PTA manufacturing plant
Gail (India) announced that its wholly owned subsidiary, GAIL Mangalore Petrochemicals (GMPL), re-engaged with process licensor INEOS to support the plant’s revitalization, formalizing renewed collaboration through an amendment agreement. This marks a significant step towards the revival of GMPLs 1.25 MMTPA purified terephthalic acid (PTA) manufacturing plant located in the special economic zone (SEZ), Mangalore. This collaboration marks a pivotal development in the efforts to bring the PTA plant back into production. The original agreement with INEOS was executed by JBF Petrochemicals (JBF), which could not be realized due to insolvency proceedings. Following GAIL’s acquisition of JBF through the Corporate Insolvency Resolution Process (CIRP) under the National Company Law Tribunal (NCLT) in June 2023, the company is now working to overcome the legacy challenges and ensure the plants successful on-streaming and long-term operational stability, it added.
Finance ministry weighs removing windfall tax amid falling crude prices: Report
The Finance Ministry is assessing the potential removal of the windfall tax and monitoring the trend of crude oil prices before making a decision, according to a Reuters report. Business Today was unable to verify the development independently. Introduced in July 2022, the windfall tax was a special levy on domestic crude oil production, aimed at capturing revenue from the unexpected profits of producers due to soaring global oil prices. In addition to the crude oil levy, the government imposed special taxes on the export of diesel, petrol, and aviation turbine fuel. By the end of August, the windfall tax on domestically produced crude oil was reduced to Rs 1,850 ($21.90) per tonne and was eventually eliminated on September 18. Taxes on the export of diesel and aviation turbine fuel were also removed. India first introduced windfall profit taxes on July 1, 2022, following the global trend of taxing extraordinary profits in the energy sector. The tax rates are reviewed every two weeks, based on the average oil prices of the previous fortnight. The finance ministry will evaluate scrapping windfall tax on domestic crude oil output, Tarun Kapoor, adviser to the Indian prime minister, said last month. Officials said after decline in global crude oil prices, there was little justification for maintaining the tax.