Big Oil Goes Looking for a Career Change
(Bloomberg) — For most of the past century, Big Oil executives found it pretty easy to explain to investors how their businesses worked. Just locate more of the commodities that everyone needed, extract and process them as cheaply as possible, and watch the profits flow.That’s all over now. The change has been so profound that the chief executive officer of BP Plc recently found himself hyping the profit potential of another commodity. “People may not know—BP sells coffee. We sold 150 million cups of coffee last year,” Bernard Looney said in an interview in August, referring to beverage kiosks attached to the company’s fuel stations. “This is a very strong business. It’s a growth business.”Perhaps it was tongue-in-cheek, or a way for the leader of the world’s fifth-largest international oil company to emphasize a relationship with consumers. But it’s clear Looney and other oil bosses are struggling to sell their plans for a future in which the world wants more green energy. Last year, for the first time in history, solar and wind made up most of the world’s new power sources, according to BloombergNEF. If the margins on cappuccinos look good right now, that’s an indication of how hard it will be for Big Oil to rapidly ditch its winning formula of drilling, pumping, and refining while spending its way into renewables.“This is a time of energy transition,” says Daniel Yergin, the oil historian and vice chairman at consultant IHS Markit Ltd. “The supermajors were born of the trauma of the late 1990s,” he notes, and now “this global trauma of the pandemic will also be a decisive period.”Legacy energy companies are for the first time sketching out new strategies that in the near future—as soon as 2030, in some cases—would eliminate hydrocarbons. The industry would like everyone to believe it’s turning its back on fossil fuels for the good of the planet. After decades of denying its role in global warming, however, the reality is that Big Oil has been forced to change by green campaigners, local politicians, and pension funds.The green transition is more evident in Europe, but the same forces are hammering the industry in the U.S. In another unmistakable sign of the times, last month Exxon Mobil Corp. was dropped from the Dow Jones Industrial Average for the first time since 1928. In the S&P 500, the energy sector is now the smallest component. (The mostly state-owned oil giants of the Middle East, India, and China are, for now at least, largely carrying on as before.)What is the future of Big Oil without oil? At the extreme of this approach are the pathways sketched out by BP and Italian oil group Eni SpA. These companies claim that in the next decade they will come to resemble a cross between a slimmer version of a traditional oil company and what’s today more like a utility (with, yes, a coffee-selling convenience store chain for drivers of electric vehicles). As the legacy business fades, the theory goes, investments in renewable electricity, biofuels, and EV charging points will pay off.If in the past the biggest names of the industry were known as “international oil companies,” the new jargon describes this approach as creating “integrated energy companies.” Michele Della Vigna, the top oil industry analyst at Goldman Sachs Group Inc., expects to see oil giants attempt the same all-in strategy as before. “We believe the coming decade will see them integrating vertically in gas, already evident, and in power,” he says.Industry executives insist their legacy business is resilient even as they shift away from oil and natural gas, but their actions suggest otherwise. BP and Royal Dutch Shell Plc have already slashed their dividends—for Shell it was the first time in nearly 80 years. Returning profits to shareholders has long been a pillar of oil’s strength on financial markets. And those like Exxon who are keeping their shareholder payments untouched are taking on far more debt to do so.The fossil fuel industry as a whole has taken billions of dollars in writedowns, in part linked to the rise of U.S. shale production and the impact of the coronavirus pandemic. If demand peaks earlier than expected, as some in the industry now fear, the most expensive and polluting oil fields such as tar sands in Canada may never be developed. The term of art for these uneconomic oil resources is stranded assets. The consultants at Rystad Energy AS estimate that 10% of the world’s recoverable oil resources—some 125 billion barrels—could become obsolete.Add it all up, and the Not-So-Big Oil of tomorrow looks greener, smaller, and nimbler—and also less profitable, more indebted, and paying lower dividends. That spells the end of a business model that hasn’t changed much since it was pioneered by John Rockefeller: Integrate oil production with refining, and market it under a single umbrella.This formula built an industry that made possible 20th century automobile culture, reshaped cities, produced political dynasties, and defined modern life. With hydrocarbons occupying a central role in the global economy, the model became a cash machine and a darling of long-only shareholders who adored its fat and predictable dividends. Oil interests became a powerful political force. The model was durable enough to survive the oil crisis of the 1970s, the rise of OPEC, wars in the Middle East, and the emergence of the ecological movement in the ’80s.When crude prices plunged in 1998 and the oil giants appeared on the brink, the industry responded in true fashion: doubling down on oil in a series of mergers that created the modern petroleum industry. The five companies that have dominated since then—Exxon, Chevron, Shell, Total, and BP—have been doing roughly the same things their predecessors did decades earlier.This time is different. The existential crisis of the ’90s taught Big Oil how to do the same but better and cheaper. In the 2020s these companies are trying to figure out how to do something completely different—renewable energy—while quickly reducing or offsetting emissions from the oil and gas they sell.“All the companies are swimming in the same water of energy transition,” says Yergin, “but they are adopting different strokes to get to the other side.”The answer from BP is far more radical than from Chevron. But even the smaller steps by American supermajors are remarkable by the standards of a conservative and slow-moving industry. Chevron’s last update to its shareholders in July highlighted an oil project, a deal to buy fuel stations, and investment in solar power. It looks like the end of an era.Which also means “past profitability is no longer a guide to the future,” says Martijn Rats, who covers the energy industry at Morgan Stanley. The writedowns and diminished dividends demonstrate “that the oil majors have entered a new phase.”Many are skeptical of the green drive in this new phase. BP promised to move “Beyond Petroleum” in the ’90s, only to return to business as usual once prices rocketed above $100 a barrel in 2008. If crude and natural gas prices rise again, these skeptics say, Big Oil will go back to basics—perhaps even under pressure from shareholders.The difference this time around is that most top oil executives are adamant there’s no going back. “Our transformation is irreversible,” says Claudio Descalzi, CEO of Eni, the sort of comment that’s widely echoed by his peers. Most senior executives simply don’t believe hydrocarbon prices will ever come back to the above-$100-a-barrel days for any sustained period. And the social, and investor, pressure to tackle climate change is unlikely to abate.And then there’s oil consumption. In BP’s long-term energy outlook, released on Sept. 14, the company acknowledged that the appetite for refined petroleum has all but peaked. “Demand for oil falls over the next 30 years,” BP wrote in its report. “The scale and pace of this decline is driven by the increasing efficiency and electrification of road transportation.”That’s why most of the industry—even Chevron—is spending billions of dollars on renewable electricity generation, particularly investments in solar and wind power. BP has pledged to generate 50 gigawatts of renewable electricity by 2030, up from 2.5GW now. Reaching that goal would mark a tremendous shift; it’s more than the renewable output of some large utilities today. But it’s still a drop in BP’s hydrocarbon bucket, even as that bucket shrinks. In 2019, BP’s oil-and-gas production was the equivalent of 2.6 million barrels per day. By 2030, the company has told investors, daily oil and gas output will drop to 1.5 million barrels. Renewables won’t fill the hole left by the missing million barrels.The question is whether Big Oil can deliver on any of its pledges and make money doing so.Paul Sankey, a veteran oil analyst, has doubts about the supermajors’ ability to rebuild outside their traditional business. “If they can’t make returns in their core competency, what chance do they stand in a new competition?” he says. The new areas that are supposed to become the heart of Big Oil’s future are, at least today, less profitable than the fossil fuels business. Renewable energy usually delivers a return on capital, a typical measure of profitability, of about 8% to 10%. A conventional oil project yields a return of around 15%. One way to generate higher returns is by taking on more debt, something the companies appear to be open to. The supermajors also face strong competition from incumbents that have already mastered the renewables business, including the likes of Italian utility Enel SpA or its Spanish rival Iberdrola SA.The strategy shift poses a question to investors: Why pour money into legacy players trying to prove a new concept rather than back a utility that’s already making money in the sector? Take an example: Enel today pays a 4.6% dividend yield—virtually the same as Shell’s 4.3%.The supermajors have some advantages as they move into greener sources. One is the size of their balance sheet, which allows them to invest more and faster than many of the renewables players. Another is they can learn from the mistakes that others made before them. In theory, the oil giants are also well suited to manage big projects.And green projects can help legacy giants because renewables are, surprisingly, the steadier sector. “Volatility is lower compared to the oil-and-gas sector, and thus more stable,” says Atul Arya, a consultant who used to work at BP in business strategy.In the end, that less-profitable stability from solar and wind resources will matter. Because even the oil giants most committed to turning green won’t complete their long goodbye to oil and gas anytime soon. The supermajors will depend on fossil fuels for the next 10 to 20 years, at the very least, to generate enough cash to keep shareholders happy and have some money left to invest in clean-energy projects. And perhaps, as Looney of BP says, in more coffee, too. For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Apple is temporarily scrapping its controversial 30% App Store fee for Facebook’s new online events feature
Facebook said on Friday that businesses holding online paid events on the social platform will be able to avoid Apple’s 30% fee through the end of the year.
Previously, Facebook said it could not get Apple to budge on its policy, which stipulates that the iPhone maker takes up to a 30% cut on transactions made through the App Store.
Now, Apple will allow Facebook to use its own payment system called Facebook Pay, enabling businesses to avoid the commission rate.
Apple’s App Store fee has been at the center of antitrust concerns surrounding the tech giant.
Visit Business Insider’s homepage for more stories.
Little more than a month after Facebook called out Apple for collecting its App Store fee on a new feature aimed at helping small businesses, the iPhone maker is changing course.
Facebook announced on Friday that businesses hosting paid events on the social platform will be able to keep all of their online event earnings through December 31.
Previously, small businesses holding paid events and classes on Facebook were subject to the commission Apple charges for transactions made through the App Store, which can reach up to 30%. That’s because Apple requires apps in the App Store to use its in-app payment system rather than their own.
But Apple’s App Store policies also stipulate that apps offering goods and services experienced outside of the app — like a class, for example — can offer other alternative payment methods besides Apple’s in-app purchase system.
However, many of these businesses have gone virtual during the pandemic, meaning this rule technically wouldn’t apply since the event is being experienced in the same app through which the access was purchased. Apple is giving Facebook, and other apps like ClassPass and Airbnb, until the end of the year to implement an in-app purchase system for businesses hosting online paid events through their platforms.
Facebook acknowledged that it had approached Apple about reducing its commission or enabling Facebook to use Facebook Pay to absorb the costs back in August when it announced that businesses would be able to earn money from online events hosted on Facebook.
Facebook said at the time that Apple had dismissed its requests.
Now, however, Facebook says it will be permitted to process paid events using Facebook Pay rather than Apple’s payments system, meaning businesses will be able to avoid the 30% commission through the end of 2020.
Creators on Facebook Gaming, the company’s Twitch rival, however, and will still be subject to Apple’s usual rules.
“Apple’s decision to not collect its 30% tax on paid online events comes with a catch: gaming creators are excluded from using Facebook Pay in paid online events on iOS,” Vivek Sharma, vice president of Facebook Gaming, said in a statement. “We unfortunately had to make this concession to get the temporary reprieve for other businesses.”
Facebook has also said it will not collect any fees from paid online events until at least August 2021.
Apple’s App Store policies, particularly its commission on in-app purchases, have been a point of contention for app developers and lawmakers who argue that the rule gives Apple an unfair advantage in the industry. Apple CEO Tim Cook testified on the topic alongside the CEOs of Facebook, Google parent Alphabet, and Amazon in July, where lawmakers grilled Cook on whether Apple treats all developers fairly.
Apple commissioned a report ahead of the hearing showing that its 30% commission on App Store transactions is standard for the industry, drawing comparisons to other online marketplaces.
But part of those concerns center not only on the fee itself, but the ways in which Apple enforces them. Documents revealed during the House antitrust subcommittee’s investigation have shown that Apple offered Amazon a special deal that only charged a 15% fee on subscriptions, for example.
Apple said in a statement to Business Insider that its App Store guidelines are “clear” and “consistent” and apply to all developers.
“The App Store provides a great business opportunity for all developers, who use it to reach half a billion visitors each week across 175 countries,” the company said. “To ensure every developer can create and grow a successful business, Apple maintains a clear, consistent set of guidelines that apply equally to everyone.”
App makers have started to speak out about their concerns more prominently over the last year. After publicly accusing Apple of unfair treatment, companies like Spotify, Epic Games, Basecamp, and Tile among others have created an advocacy group called the Coalition for App Fairness.
“Fortnite” maker Epic Games has also been locked in a legal spat with Apple recently over the game’s removal from the App Store after it intentionally skirted Apple’s payment policy.
Facebook has also come under increased scrutiny when it comes to the size and scope of its business. Lawmakers’ concerns around Facebook have hinged on the reasoning behind its acquisitions of rivals like Instagram.
The ability for small businesses to avoid Apple’s App Store commission is just one change to Apple’s policies that Facebook has been pressing for recently. Facebook is now pushing for Apple to enable Facebook Messenger to be a default messaging option on the iPhone, according to The Information. Facebook has also spoken out about how changes in Apple’s iOS 14 iPhone update could hurt its advertising business.
Read the original article on Business Insider
Ron Paul hospitalized after apparently suffering medical emergency during livestream
Former Rep. Ron Paul says he’s “doing fine” after being hospitalized in Texas.
After alarming video emerged on Friday showing Paul starting to slur his words as he spoke during a livestream, Fox News reported that the former congressman was hospitalized for “precautionary” reasons. Fox News’ Harris Faulkner also reported that Paul is “lucid and optimistic” at the hospital, according to the Washington Examiner.
A picture that was soon posted to Paul’s Twitter account showed him giving a thumbs up at the hospital, while a message from the former congressman said, “I am doing fine. Thank you for your concern.” His son, Sen. Rand Paul (R-Ky.), also tweeted, “Thank God, Dad is doing well. Thank you for all your prayers today.”
Sen. Ted Cruz (R-Texas) was among those who had quickly wished Paul well on Twitter following the livestream, tweeting, “For many decades, he has been an extraordinary warrior for liberty. May God’s healing hand be upon Dr. Paul, and may God’s peace and grace be upon the entire family.”
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Trump’s proposed college student visa changes worry international students — again
Leon Lewis-Nicol can still hear the gunshots. If he closes his eyes, he can picture the burning buildings.
As a child in Freetown, Sierra Leone, a nation in West Africa devastated by civil war, Lewis-Nicol often imagined a better, safer life. His family fled the fighting, then returned to Sierra Leone, before ultimately moving to Ghana, some 900 miles away, when he was 15. But friends who traveled around the world used to speak of an even safer place, with clean streets and unlimited opportunities: the United States.
Lewis-Nicol knew he had to go.
Now, the 24-year-old is here, studying to receive his master’s degree in jazz performance from Millikin University, a small, private school in Decatur, Illinois. He’s been in the states four years, set to graduate in 2022. But he wonders if other West African natives like him will soon have the same chance.
This week, President Donald Trump’s administration unveiled proposed rule changes that would dramatically alter student visas, leaving the international student community reeling just a few weeks into the 2020-21 academic year. The proposed changes — which are detailed in a 256-page document online and have already drawn hundreds of public comments — could devastate science research and tech innovation nationwide, experts warn.
“The overall tone of the proposed rules sends a chilling message to current and prospective international students that we are no longer a welcoming nation,” said Stephen Yale-Loehr, a professor and attorney at Cornell Law School who specializes in immigration law. “It says we’re more focused on national security threats, and that we suspect they could be coming here to do harm rather than help the U.S.”
Put another way: “It feels terrible,” Lewis-Nicol said. “The stigma is that if you’re from Africa, you’re not wanted and that your dreams are not as valid.”
The proposal comes on the heels of the Trump administration’s introduction — and then abandonment — of a controversial rule barring international students from living in the U.S. while taking fall classes online due to the pandemic. The administration scrapped the policy after a slew of lawsuits.
According to Yale-Loehr’s analysis, the latest proposed changes would, among other things:
Require most international students to finish their studies in four years — even though, according to the National Student Clearinghouse, most first-time college students take more than five years to earn a bachelor’s degree, and many doctoral programs also take more than four years;
Limit stays for some international students to just two years;
Require many international students to apply for extensions to their visas with no guarantee that they’d receive them, especially if the immigration agency determines that the student is not making sufficient progress toward their degree.
Students born in certain countries — particularly African nations, as well as Middle Eastern countries such as Afghanistan, Iran and Iraq — would be limited to two-year visas, which means no four-year degrees.
To stay in America, or go home? Coronavirus pandemic brings stress, fear for international students.
At Millikin in Illinois, roughly 50% of the international student population comes from countries whose citizens would be restricted by the rules, such as Rwanda, Senegal, Sierra Leone, Cameroon and Nepal, among others.
The college’s Center for International Education is “sending things out almost constantly trying to calm the fears of our international students,” Director Briana Quintenz said.
“It’s so unfair to them that they can’t just enjoy their college experience,” Quintenz said. “They have to continually dissect these very confusing regulations that seem to be coming out all the time. … My biggest concern is that the already very rigid restrictions are going to become even more complicated, and international students are just going to stop trying to come to the U.S.”
Yale-Loehr said the proposed changes don’t necessarily come as a surprise.
“This is part of a larger anti-immigrant trend coming from this administration,” Yale-Loehr said.
If the rule passes, it would be the biggest change to international student regulation in almost 20 years.
Trump admin. drops visa rule against online-only classes: But some new international students were still barred from U.S.
After 9/11, the Department of Homeland Security started a new program requiring colleges to monitor international students to ensure they were here studying and not for alternative purposes. Schools track if international students don’t take a full course load or suddenly drop out.
The system is “cumbersome,” Yale-Loehr said, but it works: Universities are able to see which students are falling through the cracks. The proposed rule changes imply the existing system needs revamping, he said, “when colleges would tell you it’s working just fine.”
But the Trump administration said the rule would strengthen the system for making sure only legitimate students friendly to the U.S. come to the country’s universities.
“Amending the relevant regulations is critical in improving program oversight mechanisms; preventing foreign adversaries from exploiting the country’s education environment; and properly enforcing and strengthening U.S. immigration laws,” said Ken Cuccinelli, a senior immigration official in the Department of Homeland Security.
Foreign students could apply to extend their stay or reapply for admission to the country, Cuccinelli said.
Economic impact would be ‘detrimental’
International students make up roughly 5% of students at American universities and colleges, and their economic impact alone is staggering. According to NAFSA, the association of international educators, 1 million international students contributed $41 billion to the U.S. economy in the 2018-19 academic year.
COVID-19, visas, Trump: International students turning away from US colleges for lots of reasons
Most international students pay full, out-of-state tuition costs, a boon to universities and one that allows them to keep costs lower for domestic students. And the money they spend on rent and at local restaurants is especially important in Midwest college towns that have been hit hard by recessions, said Gaurav Khanna, an economist at the University of California, San Diego. Then there’s the academic concerns.
“This wouldn’t just affect the university sector,” Khanna said. “While international students are here, they do critical research, but then after they graduate, a lot of them join the science and tech sector, where a lot of innovation happens.”
But international students say their contributions go beyond the economy.
Dev Purandare is a doctoral computer science student at the University of California, Santa Cruz, who came to the U.S. from India four years ago. Like most international students, he grew up believing the American higher education system was second to none.
“For education, you can’t do much better,” Purandare said. “We can come here and get degrees, participate in research. But we also contribute. Over the course of my career, I’ve been a teaching assistant, I’ve taught courses, and right now I’m mentoring undergraduate and graduate students. And many of them are from California.”
The uncertain future has shaken Purandare and other students.
“It’s demoralizing to international students to have to face a new crisis every month and wonder if we’ll be able to continue what we’re doing,” he said. “The lack of stability is really harmful for productivity. I can’t make any sort of life plans. I can’t even get a cat — because what if I have to leave the next day, or the next week?”
Purandare is in the middle of his doctoral program, and his visa will be up for renewal in the next year. He’s worried about how that process could play out. But even if he’s OK, he said he’s likely to accept a post-doc position outside of the U.S., where he feels more welcome.
Lewis-Nicol, the graduate student from Sierra Leone, agrees.
Lewis-Nicol dreams of becoming such an accomplished musician, he can tour the world and win Grammys. But mostly, he wants to go back to Africa, build music schools and help his people. He thought the U.S. would be the best place to go to help fulfill his dreams, but he’s wondering now if he needs to look elsewhere. Maybe another country won’t define him solely by his birth place.
“That’s why we’re leaving our countries, because we don’t want to be put in a box. We want opportunities,” he said. “If America doesn’t want me, maybe I’ll go to Canada, or somewhere else.”
This article originally appeared on USA TODAY: Trump student visa rule: DHS pushes F1 changes for US colleges
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