Report: Gas could hit $3
U.S. gasoline prices could hit $3 a gallon by the end of this year if the national economy makes a strong recovery from the coronavirus pandemic, according to a new report.
However, with a modest recovery more likely as cases continue to climb, GasBuddy predicts gasoline prices nationally will average $2.44 in 2021, up 27 cents from last year. In Houston, gasoline prices are expected to average between $2.40 and $2.70 a gallon, the fuel tracking website said.
Patrick DeHaan, GasBuddy’s head of petroleum analysis, said this year’s forecast comes with a caveat: a 20 percent margin of error, given the uncertainties around the pandemic and vaccine rollout.
“With the coronavirus in the driver’s seat, 2021 looks to be a very uncertain year for gas prices with a wide range of possibilities,” DeHaan said in the report. “Add in President-elect Biden and the potential for new policy adding into the equation, we could see gas prices coming into 2020 like a lamb and leaving like a lion.”
Whether gasoline prices rise 27 cents or 93 cents a gallon this year, it’s a vast improvement from 2020, which saw an unprecedented drop in fuel demand as people stayed home to slow the spread of the coronavirus. The average U.S. gasoline price plummeted by 45 cents per gallon, the largest decline since 2015 when gasoline prices cratered 94 cents during the last oil bust.
Gasoline demand and prices are expected to remain depressed at the start of this year, but could climb by the summer as demand recovers more quickly than crude production. U.S. oil production fell nearly 25 percent from pre-pandemic levels, and production is expected to ramp up gradually as demand recovers.
Refineries, in particular, have been under financial pressure as demand remains depressed for gasoline, diesel and jet fuel. U.S. refinery capacity has fallen to 18.4 million barrels per day, down from 19 million barrels per day at the start of 2020 and the lowest in nearly four years, according to the Energy Department. If fuel demard recovers sharply, refineries could be caught flat-footed, pushing gasoline prices up.
The average American family is expected to spend $1,670 on gasoline this year, up $53 from last year, but still down from the pre-pandemic average of around $2,000.
“Americans have been salivating for life to get back to normal, and 2021 may deliver on their wishes,” DeHaan said. “While that may be the best possible outcome, it’s likely to also lead to higher gas prices and more gridlock on roads as life gets back to some level of normalcy and we see Americans ditch their home offices for trips to get away from it all.”
H-E-B owners make rich list
The Butt family, owners of Texas grocery store chain H-E-B, is one of the wealthiest in the U.S., according to Forbes’ “America’s Richest Families 2020” list.
The Butts placed 15th out of 50 families, with a net worth of $17.8 billion. The last time Forbes published this list, in June 2016, they were worth $11 billion.
The San Antonio-based company was founded in 1905 by Florence Butt, who opened a small grocery store in Kerrville. Her son, Howard Butt, renamed it H.E. Butt Grocery Company and expanded it statewide in the 1920s. Current CEO and chairman Charles Butt, Howard’s son, took over in 1971. He owns a majority stake in H-E-B; his siblings and nephews also own stakes in the company.
H-E-B received praise in 2020 for how it handled its operations during the coronavirus pandemic. Texas Monthly named Charles Butt as one of its “Best Things in Texas, 2021.”
Other Texans on Forbes’ list include the Duncan, Marshall, Hunt, Bass and Chao families.
Walgreens to sell drug business
Walgreens Boots Alliance will sell its pharmaceutical wholesale business to AmerisourceBergen in a $6.5 billion cash and stock deal.
Pharmaceutical wholesalers essentially act as middlemen, purchasing drugs from manufacturers and then distributing them to customers like drugstore chains, hospitals and doctor’s offices.
Walgreens said Wednesday that the deal will allow it to focus more on expanding its core retail pharmacy business which, like others, has been rattled by the COVID-19 pandemic.
Drugstore chains and other retailers were hit hard, particularly last spring, when the pandemic forced shoppers to stay home and away from their stores.
Walgreens estimated in October that the pandemic shaved about $520 million from its operating income in its final fiscal quarter. But the drugstore chain also grew sales and prescriptions in the United States and saw some improvement through its Boots stores in the United Kingdom.
Deerfield, Illinois-based Walgreens Boots Alliance Inc. runs more than 21,000 stores mainly in the United States and United Kingdom. Drugstores are the main focus of its business, unlike main rival CVS Health Corp., which also operates large insurance and pharmacy benefit management businesses.
AmerisourceBergen will pay nearly $6.3 billion in cash and 2 million shares of its common stock for Walgreens’ Alliance Healthcare business in a deal the companies expect to close by September. Walgreens already owns a nearly 30% stake in AmerisourceBergen.
Alliance Healthcare supplies more than 115,000 pharmacies, physicians and health centers in Europe and Egypt.
The companies also said Wednesday that they will extend their U.S. distribution agreement by three years, until 2029.
Walgreens said in November that it was combining its wholesale business in Germany with McKesson Corp., and it would control 70% of that venture. A Walgreens spokesman said Wednesday that the McKesson joint venture was not part of the Amerisource deal.
Shares of AmerisourceBergen Corp., based in Chesterbrook, Pennsylvania, jumped more than 8% to $105.78 Wednesday afternoon. Walgreens shares rose more than 4% to $43.10. Both eclipsed the more than 1% increase from the Dow Jones industrial average, of which Walgreens is a component.
Walgreens will report results from its fiscal first quarter on Thursday.
Judge drops plastics suit
NEW ORLEANS — A federal judge has dismissed a challenge to a Taiwan-based conglomerate’s plans for a $9.4 billion plastics complex in Louisiana because the Army Corps of Engineers is reconsidering its permit.
Formosa Plastics Group plans to build 10 chemical plants and four other major facilities in Welcome, where the Census Bureau estimates that nearly 97% of the 880 residents are Black. The Corps said in November that it will study five possible sites in a predominantly white area that were omitted from earlier analysis because of incorrect predictions that they wouldn’t meet air quality standards.
“This is a big win for opponents of Formosa Plastics. Our lawsuit forced the Corps to suspend and reevaluate its permit decision for this massive super-polluting petrochemical complex,” Julie Teel Simmonds, attorney for the Center for Biological Diversity, wrote Wednesday.
U.S. District Judge Randolph Moss wrote Friday that, “although a close question, the Court agrees with the Corps” and FG LA LLC, the Louisiana member of Taiwan-based Formosa Plastics Group, that it makes more sense to dismiss the case rather than keep it in court while the Corps reconsiders.
FG LA is pleased that the suit is over “in light of the Corps’ decision to perform further limited analysis,” said the company’s community and government relations director, Janile Parks.
“FG continues to cooperate with the Corps throughout this process and sincerely hopes the permit reevaluation will be handled in a thorough and expeditious manner so the permit analysis will be even stronger once the reevaluation is complete,” she wrote in an email Wednesday.
In a separate lawsuit challenging 14 air quality permits approved by Louisiana’s Department of Environmental Quality, a state district judge ordered the department on Dec. 14 to take public comment and redo its environmental justice analysis. The permits remain in effect, she noted.
“Conclusions without analysis is not enough. Show me the data on review. Show me the science,” District Judge Trudy White told attorneys during a Nov. 18 hearing, according to a transcript provided by Earthjustice. The group filed that suit for Rise St. James, the Louisiana Bucket Brigade and other groups including the Sierra Club.
She also said that she trusts that the department will “exercise its institutional power and balance the competing interest of the people of Louisiana. The people of Louisiana in this case, primarily being the citizens of Welcome.”
Teel said the Center for Biological Diversity, Healthy Gulf, the Louisiana Bucket Brigade and Rise St. James are ready to go back to court “to block this monstrous project” if the Corps again approves Clean Water Act permits, whether at the current site in St. James Parish or in predominantly white Ascension Parish.
The week after the Corps suspended the water permits, Teel wrote to the Corps, saying it “should meaningfully consider the role that systemic racism and racial bias may have played in its decision to approve a project of this size and scope in an environmental justice community.“
Ascension Parish is 72.6% white; St. James Parish is nearly 48.8% Black, according to the U.S. Census Bureau.
The Center also called for a full environmental impact statement, which was not done earlier.
NRG buys Direct Energy
NRG Energy, one of the biggest electricity sellers in Texas, said Tuesday that it completed its $3.6 billion deal to buy British-owned Direct Energy, a move that further consolidates the Texas retail electricity market under the banner of NRG.
Direct Energy, which is owned by U.K.-based Centrica, was the third-largest seller of electricity in Texas and controlled about 10 percent of the market. The deal adds 3 million retail customers to NRG in the United States and Canada, nearly doubling its footprint, and would open a new market for retail natural gas sales in the East.
Terms of the deal were announced in July.
NRG, headquartered in Houston and Princeton, N.J., sells electricity under brand names like Reliant Energy, Green Mountain Energy and Discount Power. It has been aggressively buying competitors in Texas, including low-cost provider Texans Energy in May and the retail power and natural gas business of Dallas-based Stream Energy in 2019.
“The acquisition of Direct Energy further perfects our integrated model by enhancing the way we serve customers with additional products and services,” Mauricio Gutierrez, NRG President and Chief Executive Officer, said in a written statement.