Diesel Goes Green While Stocks See Red

In California, biofuel accounts for over half of the diesel consumed. “California has been a huge success story through its low-carbon fuel standard,” says Tudor Pickering Holt’s Matthew Blair. Oregon and Washington also have standards that mandate carbon-emitters to buy credits to offset emissions.

Renewable diesel supply has been soaring. At the start of 2023, U.S. plants could make three billion gallons annually, up from 1.75 billion in 2022 and 791 million in 2021. Italian energy company
ENI
and U.S. refiner
PBF Energy
opened a new Louisiana plant this year that will pump out 300 million gallons annually once it hits full capacity.
Marathon Petroleum
is completing a 730-million-gallon facility in California with Finland’s
Neste.

Supply is growing so fast that it’s outpacing demand and hurting margins and share prices of biofuel producers like
Darling Ingredients
and Neste. The hope is that California speeds up carbon reduction and a new market develops: renewable jet fuel.

Write to Avi Salzman at avi.salzman@barrons.com

Last Week

Markets

Gold hit a high, and
Bitcoin
topped $44,000, up over 166% for the year. Moody’s cut China’s credit rating from stable to negative. Stocks sank, then rallied, with oil and Treasury prices rising. Mortgage rates fell again, and November jobs, at 199,000, rose, aided by strike settlements. On a quiet week, the
Dow Jones Industrial Average
ticked up 0.01%, the
S&P 500
rose 0.21%, and the
Nasdaq Composite
gained 0.69%.

Companies

A Hong Kong court gave China Evergrande more time to work out its debt restructuring. Spotify cut some 17%, or 1,500, of its global workforce. S&P Global said Uber Technologies will join the S&P 500 index, along with manufacturers Jabil and Builders FirstSource. Elon Musk’s artificial intelligence company, xAI, is looking to raise a billon dollars. AT&T tapped Ericsson to build a new, $14 billion U.S. wireless network. Meta Platforms and IBM are forming a network to build an open model of AI.

Deals

Alaska Air said it would buy Hawaiian Holdings for $1.9 billion…Shareholders of Australia’s Origin Energy blocked a $13 billion takeover bid by a Brookfield Asset Management group…Two other Aussie energy giants, Woodside Energy and Santos, said they were in merger talks…Roche announced it was acquiring weight-loss drugmaker Carmot for $3.1 billion, including milestone payments…AbbVie said it had signed a $8.7 billion deal for neuroscience drugmaker Cerevel, hard on the heels of its $10 billion ImmunoGen purchase, announced on Nov. 30.

Write to Robert Teitelman at bob.teitelman@dowjones.com

Next Week

Monday 12/11

Three megacap companies announce quarterly results, including two software providers trying to ride the AI wave. Oracle reports after the close on Monday, and Adobe does the same on Wednesday. Costco Wholesale rounds out the week on Thursday. The companies’ shares are up 39%, 81%, and 34%, respectively, this year.

Tuesday 12/12

The Bureau of Labor Statistics releases the consumer price index for November. Consensus estimate is for a 3.1% year-over-year increase, one-tenth of a percentage less than in October. The core CPI, which excludes volatile food and energy prices, is expected to rise 4%, matching the October figure. The annual percentage change in the core CPI is at its lowest level in more than two years.

Wednesday 12/13

The Federal Open Market Committee announces its monetary-policy decision. The FOMC is widely expected to leave the federal-funds rate unchanged at 5.25%-5.50%. The debate on Wall Street has shifted to how many times the Fed will cut interest rates next year, as there is near-unanimous agreement that there will be no more rate hikes for this cycle. Traders are currently pricing in at least one percentage point worth of rate cuts by the end of 2024.

Email: editors@barrons.com