Wall Street extends losses as geopolitical risks mount

U.S. stocks extended losses on Tuesday, setting up for their worst day in three weeks in a broad decline as mounting geopolitical tensions drove investors to safe-haven assets.

The White House said on Monday President Donald Trump was open to authorizing additional strikes on Syria if its government uses chemical weapons again or deploys barrel bombs, while North Korea warned of a nuclear attack on the United States if provoked as a U.S. Navy strike group moved towards the western Pacific.

Prices of safe-haven gold XAU= rose more than 1 percent, up the most in nearly one month. Investors also ditched riskier assets for the Japanese yen and U.S. Treasuries.

The dollar softened, while oil prices eased from five-week highs.

The moves in bonds, foreign exchange and stocks are suggesting a risk-off trade because of the geopolitical concerns, said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

"The question is, is there going to be an escalation, and that's always what the market is worried about, particularly with a new administration."

At 10:45 a.m. ET, the Dow Jones Industrial Average .DJI was down 95.14 points, or 0.46 percent, at 20,562.88, the S&P 500 .SPX was down 16.04 points, or 0.68 percent, at 2,341.12 and the Nasdaq Composite .IXIC was down 54.81 points, or 0.93 percent, at 5,826.12.

Ten of the eleven major S&P 500 sectors were lower. Technology .SPLRCT was the biggest loser, with a 1.1 percent decline, pulled down by Apple .AAPL.O.

The iPhone maker's shares fell 1.7 percent, the biggest drag on all the three major Wall Street indexes.

The financials .SPSY sector was the second-biggest loser, down 0.93 percent, weighed down by Bank of America (BAC.N) and Wells Fargo (WFC.N).

A rally in financial shares stalled recently as investors fretted over lofty valuations ahead of first-quarter earnings season that begins later this week and Trump's ability to make good on his pro-growth promises.

Real estate .SPLRCR - considered a defensive play of the broader index - was the sole gainer. Utilities .SPLRCU and consumer staples .SPLRCS, the other defensive sectors, declined the least.

The CBOE Volatility index .VIX, also called Wall Street's "fear gauge", shot up to its highest level in five months.

Thursday will be the last trading day of the week on Wall Street ahead of the Good Friday holiday.

Shares of online coupon provider RetailMeNot (SALE.O) jumped nearly 50 percent to $11.55 after agreeing to be bought by marketing services company Harland Clarke [MFWH.UL].

Walt Disney (DIS.N) rose 0.5 percent after being added to Goldman Sachs' conviction list.

Declining issues outnumbered advancers on the NYSE by 1,783 to 985. On the Nasdaq, 1,648 issues fell and 954 advanced.

The S&P 500 index showed four 52-week highs and one low, while the Nasdaq recorded 34 highs and 27 lows.

U.S. Trade Growing, But No Thanks To Top 10 Trade Partners

Here's a bit of a statistical oddity in recently released U.S. Census Bureau trade data:

While it is finally growing again, not one of the top 10 U.S. partners' trade is advancing at the national average.

The good news is that after an unprecedented two consecutive years of U.S. trade declining, 2016 is off to a positive start. U.S. trade with the world is up a moderately robust 6.44% through the first two months of the year, according to an analysis of the most recent U.S. Census data by WorldCity, where I am president.

A quick rundown on the top 10:

1. China. U.S. trade is up 4.96 percent through the first two months, with exports up sharply, 22.19%, and imports only up 1.14%.
2. Canada. Overall trade is up 5.65%, with exports up 2.99% and imports up 8.11%.
3. Mexico. Trade is up 3.89%, with exports advancing 3.83% and imports rising a similar 3.95%.
4. Japan. Total U.S. trade is up 3.48%, with exports up 5.72% and imports another 2.38%.
5. Germany. The United States' top European trade partner's trade is up 3.05%, with exports and imports up similarly, 3.12% and 3.02%, respectively.
6. South Korea. Overall trade narrowly increased through the first two months, up 0.22%, with exports advancing 10.63% and imports down 5.48% -- one of only two decreases in exports or imports among the top 10.
7. The United Kingdom. Trade up a slight 1.01%, with exports up 0.04% and imports, 1.98%.
8. France. Overall, 4.74%, with exports up 7.23% and imports, 3.14%.
9. India. One of the United States' fastest-growing major trade partners over the last several years due to the diamond trade, its trade increased 5.41%, with exports up 20.83% and imports down 3.63%. It joins South Korea as the only other top 10 trade partner with a decrease in either exports or imports.
10. Taiwan. Overall trade with the United States through the first two months of 2017 increased 2.84%, with exports up 7.02% and imports up 0.15%.

Another oddity: Overall U.S. imports to the world have increased 6.28% this year but only one of the top 10 nations shown above bested that average: Canada.

On the other side of the ledger, U.S. exports to five of the top 10 bested the overall total of 6.68%: China, South Korea, France, India and Taiwan.

So, if these 10 nations aren't driving U.S. trade -- even though they account for almost two-thirds of the total -- who or what is?

Well, if you look at the second 10, the United States' No. 11- through No. 20-ranked trade partners, nine of them are growing at a faster pace that the U.S. average:

• Italy
• Ireland
• Brazil
• The Netherlands
• Hong Kong
• Switzerland
• Vietnam
• Malaysia
• Singapore

The only exception is No. 20 Belgium. In fact, it is the top-ranked U.S. partner showing a decline in trade, down 11.08%.

Eye-balling those nine nations doesn't provide quite as clear a picture of what is going on as it should. In fact, it might throw you off track a little.

A better slice of the data is to look at the top 50 U.S. trade partners and rank them by percentage of trade growth.

I chose the top 50 because, in addition to it being a round number, those nations account for just south of 96 percent of all U.S. trade.

Here then, are the 10 fastest-growing top 10 trade partners:

1. Iraq. Overall rank, No. 39. Trade up 236.74%.
2. Nigeria. Rank is No. 49. Trade up 70.44%.
3. Kuwait. Rank is 47. Trade up 63.45%.
4. Venezuela. Rank is No. 31. Trade up 50.42%.
5. Hong Kong. Rank is 15. Trade up 30.20%.
6. Peru. Rank is 34. Trade is up 29.62%.
7. Brazil. Rank is 13. Trade is up 28.73%.
8. Russia. Rank is No. 32. Trade is up 25.13%.
9. Ireland. Rank is No. 12. Trade is up 16.36%.
10. The Dominican Republic. Rank is No. 37. Trade up also up 16.36%.

11. Now the story comes into a little sharper focus.

    The price of oil, largely depressed for a number of years -- or is it the new normal, with the United States become a major player? -- is up over the first two months of 2015. In fact, the value is up 68% through the first two months of the year.

    That is affecting trade with seven of the 10 fastest-growing trade partners: Iraq, Nigeria, Kuwait, Venezuela, Brazil and Russia -- all on the import side -- and the Dominican Republic, on the export side, largely as gasoline, but also including liquid national gas and other petroleum gases.

    U.S. gold exports are up also in value, 83% through the first two months of the year and generally a sign of skittishness among the investor class, affecting U.S. trade with Hong Kong, one of the leading nations where it is shipped, and Peru, one of the leading nations with deposits that are mined and shipped to and through the United States.

    Ireland is largely a pharmaceutical story, with a large surge on the import side for medicines, generally in pill form for things like anti-depression, high blood pressure and cardiac issues, as well as the category that includes plasma, vaccines and blood fractions.

    Talking about trade in the first two months of the year isn't exactly like forecasting a nine-inning baseball game in the second inning, but it is early in the trade year. Lots can happen. But the trends are positive -- with an increase in overall trade, exports and imports.

Weak crude oil stunts U.S. energy IPOs, boosts outlook for M&A

The stream of U.S. energy companies going public at the start of 2017 has dried up on concerns over the future direction of oil prices, but private buyers seeking mergers and acquisitions are ready to take advantage of the volatility to secure cheap deals.

Texas-based FTS International and Select Energy Services are among six U.S. energy companies that filed for listings in the first quarter but delayed, even after receiving the green light from local regulators, Thomson Reuters data showed.

Four U.S. oil and gas companies went public in January, when more stable crude prices gave them confidence to tap into investor demand after a barren listings period that followed a slump in U.S. crude prices in late 2015.

Share prices for that quartet tumbled 14 percent on average by March 31, according to Thomson Reuters data, as crude prices retreated to end the first quarter 6.5 percent lower, the biggest quarterly decline since late 2015.

Two Canadian oilfield services firms, STEP Energy Services and Source Energy, pulled their March public offerings due to adverse market conditions, further undermining the case for energy IPOs.

"There was talk of upwards of 20 IPOs getting ready to go at the start of the year, but now everyone is slowing down their processes as share prices have gone down as rapidly increasing production raised concerns about how fast and how far the recovery in oilfield activity would go,” said Brian Williams, managing director at Carl Marks Advisors.

Most are in the oilfield services sector, with many looking to relist and raise fresh capital after going through bankruptcy proceedings during the last oil price downturn.

With the sharp cost cutting by oil producers in the last 18 months continuing to hurt profits at service firms, companies that listed in 2017 often did so based on expected performance for coming years. Sliding crude prices in March undermined hopes for future growth.

"The market was looking past current conditions to 2018 and 2019 projections with valuations of eight or nine times 2018 EBITDA (earnings before interest, tax, depreciation and amortization), on the assumption that if you wanted to get in ahead of the future upside, you'd have to pay now," said Williams.

SWITCHING TRACK

Bankers said that lower IPO valuations and lingering caution on oil prices would encourage energy companies to sell themselves to private buyers instead.

Some are owned by distressed debt investors and hedge funds that bought them out of bankruptcy and could still secure a substantial profit even though valuations have declined in recent weeks.

Such a switch in focus should not be too difficult. Many IPO processes have been run as dual-track, where concurrent attempts to list and sell the company are made by advisors. Private equity and similar investors seeking energy assets have adequate capital.

"In the current market, when the IPO valuations start to come down, if buyers are still optimistic, the sale proceeds might be more attractive to sellers than what they would get in an IPO," said Jeffery Malonson, a capital markets partner at King & Spalding.

He noted the owners would also secure the benefit of a full exit from their investment as opposed to a partial one through a listing.

Companies could also use the delay in listing plans to bulk up their own operations using acquisitions, which will mean they have bigger and more valuable companies when they eventually go public.

This is particularly true for oilfield services and equipment providers, which need to cut costs in the face of stalling cash flows and shrinking capex, bankers said.

Improved scale was seen as one of the main drivers of Schlumberger NV's agreement last month to form a $535 million joint venture with Weatherford International Plc to deliver oilfield products and services for unconventional resource plays in the United States and Canada.

While some could fund deals with their own reserves, others will need to borrow cash. With banks likely reluctant to lend substantial sums to recently-restructured companies, private equity firms and other non-bank lenders could step in here as well. However, terms for borrowers would be more onerous than they would get at banks.

Wall Street bounces back from Wednesday's Fed-led decline

Wall Street's three major indexes on Thursday rebounded from Wednesday's sharp decline as investors reconsidered their reaction to Federal Reserve meeting minutes.

Energy stocks rose with oil prices and financial stocks were on track for their first percentage gain this week.

The stock market had closed lower on Wednesday, reversing a rally after signals that the Fed would start to trim its $4.5 billion balance sheet this year.

"People in hindsight decided the market over-reacted," said Stephen Massocca, Senior Vice President at Wedbush Securities in San Francisco. "The Fed isn't going to be indiscriminately pulling the prop out from under the market. There will be some sensitivity to what's going on in the economy."

He also said that investors appeared to react positively to news that Republicans had pushed through a rule change that would likely pave the way for the confirmation of President Donald Trump's conservative nominee for the U.S. Supreme Court.

At 2:45 P.M. EDT (1845 GMT), the Dow Jones Industrial Average .DJI was up 54.97 points, or 0.27 percent, to 20,703.12, the S&P 500 .SPX had gained 6.69 points, or 0.28 percent, to 2,359.64 and the Nasdaq Composite .IXIC had added 14.40 points, or 0.25 percent, to 5,878.88.

Some investors were cautious ahead of Trump's meeting with his Chinese counterpart Xi Jinping as they await news on China-U.S. trade relations and discussions on reining in North Korea's arms program.

Doubts are rising about Trump's ability to deliver on pro-growth promises such as tax cuts. U.S. House of Representatives speaker Paul Ryan said Wednesday the tax reform bill could take longer than the stalled bill to overhaul healthcare legislation.

Eight of the 11 major S&P sectors were higher. The energy index .SPNY rose 0.8 percent as oil prices CLc1 LCOc1 rose to near one-month highs. [O/R] The S&P's Consumer Discretionary index was the S&P's biggest driver with Comcast Corp (CMCSA.O) its biggest contributor with a 2 percent gain to $38.11 after it announced a wireless service.

Ahead of the start of the corporate earnings season next week, some investors are also cautious given the lofty valuations. The S&P 500 index is trading at about 18 times forward earnings estimates, above its long-term average of 15.

"The market's still look strong but they are massively overbought and we do have bank earnings beginning to come in next week. That will tell the real tale for the sector," said Phil Davis, chief executive of PSW Investments.

L Brands (LB.N) jumped 10 percent after reporting a smaller-than-expected drop in March sales.

Advancing issues outnumbered declining ones on the NYSE by a 3.07-to-1 ratio; on Nasdaq, a 1.99-to-1 ratio favored advancers.

The S&P 500 posted 8 new 52-week highs and four new lows; the Nasdaq Composite recorded 28 new highs and 58 new lows.

Stocks jump as more Americans find jobs

The Dow surged nearly 200 points Wednesday after payroll processor ADP issued a strong jobs report about the private sector. That's raising hopes that the official government figures that will come out Friday morning will also show healthy job gains.

ADP said that 263,000 jobs were added in March, well ahead of forecasts for about 175,000.

Both ADP and the government reported solid jobs gains for February. So investors appear to be banking that the momentum in the labor market will continue.

The market appears to be back on solid footing after a recent dip following President Trump's failure to push forward on a deal to repeal and replace Obamacare.

But investors have expressed hope that Trump will be able to get a tax reform plan approved and possibly a big economic stimulus plan aimed at rebuilding road, bridges and other infrastructure.

Bank stocks rallied as well, one day after Trump reiterated plans to try to undo parts of the Dodd-Frank financial reform law.

JPMorgan Chase (JPM) CEO Jamie Dimon also said in his annual shareholder letter Tuesday that regulations are holding the economy back.

A rebound in oil prices is helping the market too. Crude prices have shot back up to just under $52 a barrel, thanks in part to hopes that OPEC production cuts will relieve some of the supply glut on the market.

Oil services firms Halliburton (HAL), Baker Hughes (BHI) and Transocean (RIG) were among the bigger gainers in the S&P 500 Wednesday, while oil giants Exxon Mobil (XOM) and Chevron (CVX) helped lift the Dow.

All 30 Dow stocks were in positive territory as of late morning -- and 448 companies in the S&P 500 were trading higher.

The recent stock rally has helped push tech stocks like Apple (AAPL, Tech30), Amazon (AMZN, Tech30) and Microsoft (MSFT, Tech30) to all-time highs. The Nasdaq, which is home to these three as well as Facebook (FB, Tech30) and Google parent Alphabet (GOOGL, Tech30), again hit a new record Wednesday.

The Nasdaq is now up 10% and is approaching the 6,000 milestone.

And CNNMoney's Fear & Greed Index, which measures seven indicators of market sentiment, has bounced back from the Fear levels that it hit just a week ago.

It's now in Neutral mode and has inched closer to Greed. A great jobs number Friday might push the index back to Greed -- and lift stocks even higher.

Energy Storage Markets Are Growing, But Not Everywhere

The market for grid-scale energy storage is growing as rapidly as many people had predicted but not necessarily in the places they predicted.

The global pipeline for utility-side-of-meter energy storage has doubled in size over the past year, according to a new analysis from IHS Markit’s Energy Storage Intelligence Service. In the first quarter of 2017, the global pipeline added about 390 megawatts in energy storage, bringing the total pipeline up to a whopping 3.4 gigawatts.

The geographic breakdown is somewhat surprising. New energy storage projects in Asia account for more than one third of global pipeline. China and Australia are especially hot spots in the battery market. By contrast, energy storage projects in Europe and North America appear to have actually slowed down – and in the latter instance actually fallen over the past year.

IHS Markit

According to IHS Markit, the negative pipeline growth reported for the Americas resulted from the completion of a large number of projects in California in early 2017 as part of Southern California Edison and San Diego Gas and Electric’s response to the Aliso Canyon gas leak.

While the dip may be temporary in North America, it suggests that the exponential growth widely predicted for grid-connected utility-scale battery storage may materialize later rather than sooner in some markets.

In 2015, Frost & Sullivan forecasted that the market for grid-connected utility-scale battery storage would reach $8.3 billion by 2024 up from $0.46 billion in 2014.

Meanwhile, the type of projects in the pipeline is becoming more diverse as grid operators and utilities are increasingly using batteries for longer duration applications.

“These market trends signal a divergence in grid-scale battery applications, which have previously been dominated by short-term ancillary services such as frequency regulation,” said IHS Markit in a press release.

As the economics of large-scale batteries improve, battery energy storage projects are becoming increasingly viable for providing longer-term energy applications.

William Pentland is a Partner at Brookside Strategies, LLC, a consulting firm in Portland, Maine that focuses on issues in utility regulation, market strategy and energy policy.

Anheuser-Busch commits to 100% renewable energy

With $46 billion in annual revenue, the beer giant may be the largest company to date to take a 100% renewable energy pledge.

While the U.S. federal government is moving energy policy in a distinctly 19th century direction, large corporations are taking a different stand. This was evidenced on Monday, when the world’s largest brewer committed to purchase electricity only from renewable energy sources by 2025.

AB InBev, better known as Anheuser-Busch, reported revenues of $46 billion in 2016 and has a huge presence through its brands, including Budweiser, Corona, Stella Artois and Beck’s. According to the RE100 campaign the move will make it largest corporate direct purchaser of renewable energy in the consumer goods sector.

“Climate change has profound implications for our company and for the communities where we live and work,” said AB InBev CEO Carlos Brito.

The company’s first purchase of renewable energy will be from a wind farm in Mexico, however the company is expected to purchase both wind and solar for its operations in Brazil, Mexico, South Africa and other nations. AB InBev’s commitment is expected to increase the wind and solar capacity in Mexico alone by 5%.

Currently AB InBev gets 10% of its electricity from on-site fossil fuel generation, so the commitment to only purchase renewable energy means that its facilities will be 90% powered by renewable energy in 2025. We at pv magazine will be raising a glass or two to the company anyway.

Energy, consumer shares lift S&P 500 to slight gain

The benchmark S&P 500 eked out a gain on Wednesday as strength in the energy and consumer sectors offset declines in financial shares and investors began looking ahead to first-quarter earnings season.

The Dow Jones Industrial Average ended slightly lower, falling for the ninth session out of the past 10, while the Nasdaq rose for a fourth straight day.

Investors have been assessing what the Republicans' failure to pass a healthcare bill means for tax reform and the rest of President Donald Trump's agenda, hopes for which have helped drive stocks to record highs.

They are looking to first-quarter earnings to support lofty valuations for stocks, with the S&P 500 trading at nearly 18 times earnings estimates for the next 12 months against its long-term average of 15 times.

First-quarter earnings for S&P 500 companies are expected to rise 10.1 percent, according to Thomson Reuters I/B/E/S.

"The policy risk has increased ... but economic data still remains solid and therefore earnings should be good," said Walter Todd, chief investment officer of Greenwood Capital in Greenwood, South Carolina. "Absent some revelation on the policy front, I think that’s the next catalyst for the market, is when we start seeing companies report."

The Dow Jones Industrial Average .DJI fell 42.18 points, or 0.2 percent, to 20,659.32, the S&P 500 .SPX gained 2.56 points, or 0.11 percent, to 2,361.13 and the Nasdaq Composite .IXIC added 22.41 points, or 0.38 percent, to 5,897.55.

The energy sector .SPNY gained 1.2 percent, leading all sectors, supported by stronger oil prices CLc1.

The consumer discretionary sector .SPLRCD rose 0.6 percent as retailers such as Nordstrom (JWN.N) and Kohl's (KSS.N) surged. Amazon.com (AMZN.O) rose 2.1 percent and hit an all-time high, giving the biggest boost to the S&P 500 and Nasdaq.

Financial shares .SPSY fell back 0.5 percent a day after leading a rally.

Investors also digested comments from Federal Reserve officials. Chicago Fed President Charles Evans said he favors further interest rate hikes this year, while Boston Fed President Eric Rosengren said the Fed should raise rates three more times in 2017.

"The market seems to be unfazed by the fact that the Fed is looking to be somewhat aggressive in raising rates," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

The stock rally fueled by optimism President Donald Trump will boost the economy may be near its peak, according to a Reuters poll of strategists, who forecast U.S. shares will gain less than 3 percent between now and year-end.

In corporate news, Vertex Pharmaceuticals (VRTX.O) soared 20.5 percent after the company's cystic fibrosis treatment succeeded in a late-stage study. The stock boosted the S&P and helped drive the Nasdaq Biotechnology index .NBI up 0.9 percent.

About 5.8 billion shares changed hands in U.S. exchanges, well below the 6.9 billion daily average over the last 20 sessions and among the lightest volume days in 2017.

Advancing issues outnumbered declining ones on the NYSE by a 1.88-to-1 ratio; on Nasdaq, a 1.59-to-1 ratio favored advancers.

The S&P 500 posted 14 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 86 new highs and 24 new lows.

Wall Street posts sharp gains, fueled by strong consumer data

U.S. stocks ended sharply higher on Tuesday, with financial and energy shares surging as data showed U.S. consumer confidence soaring to a more than 16-year high.

The S&P 500's best day in nearly two weeks came after a record-setting rally for stocks in the wake of President Donald Trump's election in November had stalled this month. The Dow Jones Industrial Average snapped an eight-day losing streak, which had been its longest run of losses since 2011.

U.S. consumer confidence surged to a more than 16-year high in March amid growing labor market optimism, while the trade deficit in goods narrowed sharply in February. The economy's strengthening fundamentals were bolstered by other data showing further increases in house prices in January.

The data "underscore what has been going on really in this whole rally, and that is that confidence is pretty high and optimism is high and that has kind of been underpinning the resiliency of the equity markets," said Jim Davis, regional investment manager at U.S. Bank Wealth Management in Springfield, Illinois.

The Dow Jones Industrial Average DJI rose 150.52 points, or 0.73 percent, to 20,701.5, the S&P 500 SPX gained 16.98 points, or 0.73 percent, to 2,358.57 and the Nasdaq Composite IXIC added 34.77 points, or 0.6 percent, to 5,875.14.

Tuesday's gains follow declines last week as investors fretted over Trump's ability to enact his agenda after his fellow Republicans failed to pass their healthcare bill.

However, investors appear to have shrugged off the setback, choosing instead to focus on Trump's promise of reforming the U.S. tax code, which has been a key driver in the post-election record rally.

"You have got maybe some rethinking of the political calculus related to the demise of healthcare, but what that may mean for a quicker focus on tax reform," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

The financial and energy sectors, which have lagged the broader market this year, fueled the S&P 500 on Tuesday.

The financial sector SPSY jumped 1.4 percent, with JPMorgan (JPM.N) and Bank of America (BAC.N) giving big boosts to the S&P 500. Energy shares .SPNY gained 1.3 percent, supported by stronger oil prices CLc1.

The Dow Jones Transport Average DJT, seen by some as a barometer of the economy, gained 1.8 percent for its second-best day of the year.

Apple (AAPL.O) rose 2.1 percent and gave the biggest boost to the S&P and the Nasdaq, as the shares hit an all-time high.

In corporate news, General Motors (GM.N) rose 2.4 percent after activist investor David Einhorn's Greenlight Capital urged the carmaker to split its stock into two classes.

Tesla (TSLA.O) rose 2.7 percent after disclosing that Chinese technology giant Tencent Holdings (0700.HK) had taken a 5 percent stake in the electric car maker for $1.78 billion.

Darden Restaurants (DRI.N) jumped 9.3 percent, making it the best performer on the S&P 500, after the Olive Garden owner announced quarterly results and said it would buy Cheddar's Scratch Kitchen for $780 million.

Advancing issues outnumbered declining ones on the NYSE by a 2.91-to-1 ratio; on Nasdaq, a 1.63-to-1 ratio favored advancers.

The S&P 500 posted 18 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 82 new highs and 33 new lows.

How Captured CO2 Could Provide The Energy-Storage Solution Everyone Is Looking For

Scientists in China and the United States are working on a novel way to kill two birds with one stone: capturing carbon-dioxide pollution to use in an energy-storage system that can back up clean sources like solar and wind.

Compressed air is already employed in one of the cheapest forms of energy storage. When windmills are spinning and the sun is shining, excess energy is used to compress air that later, when the air is still and the sky dark, is blasted through turbines mixed with natural gas. But that method produces a lot of waste heat and its own carbon footprint.

Using CO2 in a different way could avoid those problems.

"Now, we have been thinking about how to use CO2 for energy storage," Curtis M. Oldenberg, a senior scientist at Lawrence Berkeley National Laboratory, told me via email, "and came up with the idea of using it as the working fluid in a closed loop and having the gas spin a turbine without combustion."

Working with colleagues at LBL and the North China Electric Power University in Beijing, Oldenburg proposed a system in which captured CO2 is compressed—when the wind is blowing or the sun is shining—to a supercritical fluid state and pumped into a reservoir in a deep saline aquifer. When there's no wind or the sky is dark, the CO2 can be released to a more shallow, low-pressure reservoir. As it rushes from the high-pressure reservoir to the low-pressure reservoir, it spins a turbine, producing electricity.

Their model achieved higher energy-storage density than conventional compressed-air systems, the scientists contend in a paper they published last July in the journal Energy Conversion and Management.

Chinese scientists had already considered using CO2 to smooth the intermittency of Chinese wind farms. In 2015, scientists from Xi'an Jiaotong University published a performance analysis of a system using liquid carbon dioxide.

The idea came up last week at a seminar hosted by the Chicago Council on Science and Technology. Stanford geologist Sally Benson briefed a gathering at the Illinois Institute of Technology on the current state of carbon capture, utilization and storage technology. During Q&A, IIT instructor Don Tijunelis asked her whether CO2 storage is feasible.

"When you do carbon sequestration and storage, you store carbon but you also store energy underground," Tijunelis said."Could somehow that storage be reversible under controlled conditions to provide compressed-gas storage?"

“Absolutely," Benson said. "One of the main energy storage technologies is compressed-air storage. Actually CO2 has advantages in that you go from supercritical to gas form, so you actually can get a lot more energy when you drop the pressure."

Benson said she had only seen one paper on the topic, which turned out to be Oldenburg's. His LBL colleagues have also looked at using CO2 in a closed-loop system to harness geothermal energy:

"The choice of working fluid plays an important role, with water showing better heat extraction than CO2 for certain flow rates, while the CO2 has higher pressure at the production wellhead, which can aid in surface energy recovery," they write in a paper published last year.

Oldenburg cautions that all of these systems are predicated on a future in which there is a price on carbon, which would create an incentive for more creative uses for the carbon dioxide that now gets dumped into the atmosphere.

The Oil Price Rally Is Stumbling at the Worst Possible Time

The rally in global oil prices has stalled at the worst possible time for explorers, just as banks reassess credit lines crucial to their growth.

This year’s reviews, due to start next month, will arrive with the industry nursing a nasty case of whiplash. Prices surged on OPEC’s pledge to cut output late last year, hitting $55.24 a barrel in New York in January. Since then, they’ve fallen by about 14 percent, undercut by rising U.S. rig counts.

A drop below $45 would likely spur credit-line reductions, raising the specter of cuts that crippled drillers a year ago, said Kraig Grahmann, a partner in Houston for law firm Haynes & Boone LLP. Between the end of 2015 and October, when credit lines were last reassessed, the average borrowing base for U.S. explorers fell 16 percent, according to data compiled by Bloomberg.

“The next month is going to be absolutely critical from an oil-price standpoint," said Paul Grigel, a Denver-based analyst at Macquarie Capital USA, by telephone. “If you see prices retrench further, clearly the banks are going to have to re-evaluate. They are going to say, ‘Should we be pulling back?’"

West Texas Intermediate futures for May delivery fell 1.4 percent to $47.59 a barrel on the New York Mercantile Exchange at 12:15 a.m. Brent, the global benchmark, slipped below $50 for the first time Wednesday since November, after the U.S. reported crude stockpiles climbed to a record.

Credit reviews are “a combination of art and science," Grigel said, with banks taking into account a company’s reserves, production trends and the future outlook for the market as well as current prices. Lenders can also be reluctant to cut credit lines if it would mean mortally wounding a borrower and raising the risk of default.

In late 2015, even with crude plunging, banks made relatively  modest changes as they waited to see how the market would shake out.

Now it’s once again a precarious time for the industry. After a 2 1/2-year price rout was cut short by the OPEC deal, U.S. companies are exploiting new cost-saving drilling techniques to spark a level of growth that some fear could pave the way for yet another long-running slump in prices. 

Industry budgets this year call for spending about $25 billion more collectively than in 2016, an 11 percent increase, according to a report last week from Wood Mackenzie Ltd. EOG Resources Inc. said it will increase capital spending 44 percent in 2017 to about $3.9 billion, while Continental Resources Inc. will elevate spending 68 percent to $1.95 billion.

For many companies, credit lines remain a major determiner of how much growth they can achieve, said Spencer Cutter, a Bloomberg Intelligence analyst. The reassessments are traditionally done in April and October, when bankers will review both commodity prices and reserves, which are put up as collateral.

“This is their working capital,” Cutter said. “It’s how a lot of them fund their capital spending budgets for the year. It’s the blood that flows through the financial veins of the company on a day-to-day basis."

For some companies, it’s not about growth, but survival.

Natural-gas driller Exco Resources Inc. said on March 15 that its borrowing base had been cut to $150 million, down from $285 million last year. The move was part of a financial rescue package in which the struggling company agreed to issue or swap $1 billion in new debt. The proceeds will help pay off money that Dallas-based Exco had already drawn on its credit line.

Last year, with crude prices tumbling below $30 a barrel, producers including W&T Offshore Inc. and Denbury Resources Inc. were hit with cuts of 30 percent or more.

That’s less likely this year, Cutter said. The surviving producers have emerged stronger after more than a year of cost-cutting and asset sales. And the run-up in prices after OPEC announced its supply cuts allowed oil and gas companies to lock in higher revenues through hedging contracts.

Still, companies that focus on natural gas, where prices have fallen faster, could be more vulnerable to credit cuts, Cutter said. The same goes for drillers without a major presence in the Permian shale basin, the lucrative drilling region in west Texas and New Mexico, said Macquarie’s Grigel.

If prices stay steady, there may be no change from the banks, according to Haynes & Boone’s Grahmann. It’s also possible oil could move back over $50 before the reassessments end. Even so, bankers would need "some kind of sign" that there’s long-term support for the increase, according to Grahmann. His firm tracks energy financing.

The start of the year “was definitely not a good time for a price drop," Grahmann said. “The pause that the market has taken recently has caused some bankers to be a little bit more cautious about assuming that every run-up will last."

Why The Pentagon Should Worry About Lack Of Innovation In Electric Utility Sector

The electricity sector in the United States spends at most a few tenths of one percent of net sales revenue on R&D. To put this in perspective, the electronics and pharmaceutical sectors typically invest between 8% and 12% of net sales in R&D.

“In fact, investment rates for the electricity sector are the lowest of any major industrial sector, with the exception of the pulp and paper industry,” wrote Massoud Amin, a professor of engineering at the University of Minnesota, in 2008.

The lack of innovation in the electric utility sector has curtailed the commercialization of new defense-related energy technologies. In particular, the limitations of electric generating technologies has derailed deployment of “directed energy” technologies.

The Pentagon has prioritized deployment of directed energy technologies for fiscal reasons. Depending on the power source, laser weapons are dramatically cheaper than conventional weapons. Missiles and mortars are expensive. Depending on the power generating technology, power is cheap and abundant. Lasers also have speed-of-light reaction times and far greater precision than conventional weapons.

“Directed energy weapons could become hugely disruptive from a cost standpoint, because they could kill targets for a lot less than traditional missiles and guns,” wrote Ariel Robinson in National Defense Magazine. “Supporters believe they are among the innovative technologies that will allow the U.S. military to retain its advantage.”

The problem is less with the weapons themselves than it is with the lack of adequate power generating technologies to support them. There are no power generating technologies capable of supporting directed energy weapons in battlefield conditions.

The Pentagon has prioritized deployment of directed energy technologies for fiscal reasons. Depending on the power source, laser weapons are dramatically cheaper than conventional weapons. Missiles and mortars are expensive. Depending on the power generating technology, power is cheap and abundant. Lasers also have speed-of-light reaction times and far greater precision than conventional weapons.

“Directed energy weapons could become hugely disruptive from a cost standpoint, because they could kill targets for a lot less than traditional missiles and guns,” wrote Ariel Robinson in National Defense Magazine. “Supporters believe they are among the innovative technologies that will allow the U.S. military to retain its advantage.”

The problem is less with the weapons themselves than it is with the lack of adequate power generating technologies to support them. There are no power generating technologies capable of supporting directed energy weapons in battlefield conditions.