WUEG February 2015 Newsletter

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While Apple’s deal is the first of its kind for solar, many other large companies have already struck similar deals. Just last year, Google signed a 400 MW deal power-purchase deal in wind, bringing the company’s total to 1 GW. Amazon signed a 150 MW deal for wind just last month, and Microsoft has done deals for a total of 285 MW itself. Outside of Silicon Valley, large retailers like Wal-Mart have been installing solar arrays on its roofs, and Ikea joined a group of large companies in a commitment to be fully renewable by 2020. Apple’s new deal inspires questions as to whether this represents the beginning of a new age of environmental responsibility among American companies. For his part, Tim Cook has taken the lead on the issue. While speaking at the Goldman Sachs Technology and Internet Conference, he said: “We know at Apple that climate change is real. The time for talk has passed and the time for action is now.” He went on to say: “We’re doing this because it’s right to do. But you may also be interested to know that it’s good financially to do it.” If the world’s biggest company can do it, perhaps all the other companies aspiring to be the next Apple will take their cue and follow suit. Sources: Bloomberg The Verge Oil Prices Update - February 2015 Thomas Lee – senior member, Academic Committee the start of the year down to about 1,000 units, according to Baker Hughes data. Also, Bloomberg reports that amidst OPEC's refusal to cut output, international oil majors like Shell and Chevron have announced capital expenditure cuts of more than $40 billion since last November. After the last few months’ drop to a historic 6- year low, crude oil prices have begun to rally. On February 25, WTI front month futures traded at $50 per barrel, up from around $44 at its lowest in January; Brent traded at $61 dollars, showing an increase in the Brent-WTI spread that seemed to disappear at the end of January. This crude price rise reflects supply adjustments to overall low prices--WTI is still down 50% from highs last June. For example, U.S. weekly oil-rig count decreased 31% from Downstream, gasoline prices also rose. On February 24, RBOB (reformulated blendstock for oxygenate blending) futures traded at $1.62, up from lows of $1.28 in January. The RBOB-Brent crack spread increased to 18 cents per gallon, doubling since the start of the year. This additional price hike above crude is driven significantly by the largest U.S. refinery strike since 1980, yet unresolved as of February 25. The massive United Steelworkers walkout by more than 6,000 union members closed 12 refineries, or one-fifth of U.S. refining capacity. Similarly, the February 18 explosion and fire at an ExxonMobil refinery in Torrance, California negatively impacted capacity (although this
incident's effect on crude indices is less since the California market is relatively isolated from other U.S. and international markets). Without these incidents, consumers would have seen even lower prices at the gas station. The diminished refining capacity contributes to the fact that, despite the slowdown in crude supply, large crude oil inventory buildups are occurring. The weekly U.S. change in crude oil inventories is around positive 8.4 million barrels. These factors suggest that prices are not increasing indefinitely but rather are stabilizing. A senior Gulf OPEC delegate commented to Reuters that a price level of $60 is acceptable; they will likely not cut output. Americans should be expecting gasoline prices to remain low well into 2015. Sources: Bloomberg CNBC Energy Information Administration Forbes LA Times Reuters
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WUEG February 2015 Newsletter

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