The Latest Trending Economic, Environmental and Infrastructure News Curated for You by The Balmoral Group
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Happy Friday!
Hello dear readers,
We hope your New Year has started off well! The Balmoral Group is getting back into the swing of things, and once again noting some interesting developments and stories for you that occurred since the last Economic Perspective.
As Confucius said, let us live in interesting times. This week, the Financial Times and other outlets reported that China's Central Bank has silenced local economists and stopped buying bonds, with Producer Price Index values for 2024 showing net increase of 0.1 percent and projections for a decade of Japan-like deflation. This situation has ripple effects, as China has financed billions of dollars in foreign investment across the globe, seeking allies through funding from Cuba to Africa. Meanwhile, investors in Mexico are betting that incoming administration blustering about Mexican imports are a bluff, given that Mexico is a safer bet for supply chains than China. Time will tell who is correct, but be prepared for volatility in markets, supply chains, and terms of trade - including the value of the dollar - over the coming quarter.
In this edition, we bring you articles on potential oil and gas drilling at a U.S. wildlife refuge, changes in the Florida citrus industry, Florida Everglades restoration, and more. Our data visualization this week covers changes in the global crude oil refining industry through the end of 2024, which may impact asphalt production as a byproduct of crude oil refining.
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Have a great weekend!
Alaska Wildlife Refuge Drilling Auction Yields No Bids, US Says
On Jan 8th, the U.S. Interior Department reported a congressionally mandated oil and gas drilling lease auction in Alaska’s Arctic National Wildlife Refuge received no bids from energy companies. President Biden has billed the outcome as proof the 19-million-acre refuge should remain protected and off-limits to fossil fuel development. Previous attempts to sell off leases in the refuge generated just $14 million in high bids, with Alaska’s state agency as the sole bidder for most of the acreage sold. Public relations, high costs of development, and concerns related to drilling near a wildlife sanctuary were noted by private companies. Some Native groups have stated that this is proof that drilling in the area is not worth the economic risk and liability to the region. Read more here.
Major Florida Citrus Grower to Exit Industry
This week, a major Florida citrus grower announced plans to end its citrus operations after the final crop harvest is done later this year. Alico, Inc., based in Fort Myers, FL, owns over 53,000 acres across eight counties in Florida, approximately a quarter of which is estimated to be up for potential residential or commercial development. Florida’s citrus industry has seen a steep production decline over the past decade due to crop disease and hurricane damage, leading to the company’s assessment that their citrus operations are no longer economically viable in the state. Overall, the state’s citrus production is forecast to drop 33% in the 2024-25 season compared to the 2023-24 season. Read more here.
Everglades Restoration Updates
This week, Governor DeSantis held a news conference announcing a proposed $805 million investment for Everglades restoration in the upcoming fiscal year. This funding includes over $670 million for the Comprehensive Everglades Restoration Plan (CERP), aiming to improve water quality and restore natural water flow. The governor emphasized the state's commitment to environmental conservation, highlighting the total investment of $3.3 billion in Everglades restoration and water quality projects over the past two years. Read more here for details and view Everglades Restoration Initiatives here.
FL Manatees Migration More Recent Than Previously Thought
A new study indicates that the Florida manatee population may have arrived at the peninsula's shores more recently than previously believed, with manatees actually only having migrated north from the Caribbean in the 19th century. This is supported by archeological analysis of Native American sites in Florida that show few remains of manatees, in contrast to sites in the Caribbean that show significant indication of manatees. Additionally, Spanish records of settlements in the 1500s show little mention of sea cows. While this may indicate that manatee populations are higher now than in the past, this study highlights the importance of protecting current populations, as a recent Florida Fish and Wildlife Conservation Commission report showed that over 500 manatees died in Florida waters in 2024. Read more here.
Continued Protection for Grizzly Bears in Rocky Mountains
Around 2,000 grizzly bears in the Rocky Mountains will continue to be protected, the Biden Administration stated this week; a decision that was both welcomed by wildlife advocates and criticized by some state representatives. Grizzly bears have been on the threatened species list in the contiguous U.S. for 50 years. Although the bears will continue to be protected, restrictions will be eased as potential conflicts between bears and humans rise (such as livestock or dog attacks). The western U.S. originally had 50,000 grizzly bears, but these were hunted to near extinction and by 1975 only 700 remained. Advocates claim these protections will continue to facilitate the grizzly recovery effort, while critics cite potential conflicts between the bears and people. Read more here.
Data Visualization of the Week
Global Crude Oil Refining Margins Fall in 2024
According to a recent Argus Media report, global crude oil refining margins normalized in 2024 after spiking in 2022 over supply concerns related to the Russia-Ukraine war. Argus calculated 3-2-1 crack spreads to measure the profitability of Northwet European (NWE), U.S., and Asian refining. This method compares the price of one barrel of diesel and two barrels of gasoline against three barrels of crude. While 3-2-1 cracks were above the pre-Covid 2019 average through much of 2024, refined product margins have largely returned to historical norms. This correction could make room for increased asphalt production as diesel and gasoline profit margins decline. U.S. refining was markedly more profitable over the last few years, remaining elevated compared to the other two benchmarks through the end of 2024. Read more here.
Click the visual below for more information.
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