Oil rediscovers its mojo
The gulf across the Atlantic can look unbridgeable. In Britain climate change activists from extinction Rebellion have held London hostage for a fortnight and offered a ‘pause’ to disruption.
UK-based supermajors BP and Shell are doing their best to pedal away from their oil heritage.
BP has acquired Chargemaster, the UK’s biggest operator of top-up pillars for electric vehicles. Shell is installing electric charge points on forecourts and moved away from oil to natural gas which is seen as a cleaner fuel.
In the US the Trump administration is backing a new era of oil dominance not seen since John D Rockefeller was at the height of his powers at the turn of the 20th Century, when Standard Oil controlled 90pc of world production.
That won’t happen again, but latest data from the International energy Agency shows the US is all but self-sufficient in oil and by 2021 will be an exporter. That’s quite a thing in that as recently as 2015, exporting oil from America was illegal.
Oil self-sufficiency is spawning significant trends. It allows Washington to flex its muscles when it comes to renegade oil exporting
countries, including Iran, Libya and Venezuela. It no longer has to make nice to regimes it detests. This policy spawned the rise in Brent crude prices this week which gushed to $75-a-barrel.
As America tightened the screws on Iran, there was a threat of global disruption to supplies, with Tehran muttering about closing the Strait of hormuz, as almost happened in the first US-Iraq war in 1990.
The other major impact is on America’s domestic oil industry. After decades of retrenchment, during which it has been the smaller drillers that made headway in harnessing fracking, the economics have changed. Firmer prices, cheap credit and economies of scale are triggering merger fever. earlier this month Chevron unleashed a £39bn bid for Anadarko Petroleum, which has substantial assets in the rich, west Texan Permian Basin.
Chevron’s intervention brought a response from houston-based Occidental. Chief executive Vicki hollub recruited Bank of America and Citigroup, and came back with a higher bid of £42bn in cash and shares. This would leave Anadarko’s investors with a 29pc stake in the enlarged company.
The danger for hollub and the banks is that the present surge in the oil price is a blip, and when output from the Middle east normalises she will have loaded up Occidental with a hefty bank debt.
This contested takeover is far from over. extinction Rebellion can make as much noise as it likes. But it is unlikely to make any impact at all on the biggest fossil fuel, carbon-emitting nations.
Rothschild switch
AMID all the attention on the resignation of Ross Mcewan from Royal Bank of Scotland, after five tumultuous years at the helm, another high level departure, that of Lord Rothschild from £3.2bn RIT Capital Partners, barely registered.
Operating out of modest, ramshackle offices in London’s elegant St James’s, the senior member of the London branch of the Rothschild dynasty spent 31 years building RIT from a £280m investment trust into a £3.2bn behemoth, increasing his personal share of the family fortune to £672m through a 21pc personal stake.
Lord Rothschild – Jacob – was banished from the family merchant bank NM Rothschild when he fell out with his cousin Sir evelyn. When evelyn retired he handed the reins to his French cousin Baron David, who recently let his son Alexander take the helm.
From his headquarters in St James’s, Jacob also teamed up with Sir Mark Weinberg to create J Rothschild Assurance, later renamed St James’s Place and now a FTSe 100 financial group in its own right.
Lord Rothschild may have once hoped his heir Nat Rothschild might succeed him. But for the moment the mantle of chairman passes to Sir James Leigh-Pemberton, former chief executive of Credit Suisse, who happens to run UK Financial Investments which holds the 58pc government stake in RBS. A full circle then . . .
Holding fire
NeIL Woodford continues to take flak for the disappointing performance of his Patient Capital investment trust. The net asset value has tumbled 3.24pc since its 2015 launch. A surprise? Shouldn’t be. The clue is in the name. Investors wanting something more racy should have looked elsewhere.