TPT January 2013

Global Marketplace

› In California, voters handily approved Proposition 39, which will change the way corporations are taxed, raising an estimated $1bn annually. For the first five years, Mr Krauss reported, “More than half of the new revenue will be allocated to a fund aimed at promoting jobs by retrofitting schools and government buildings to increase energy efficiency and the use of renewable power sources.” Oil and gas › Pennsylvania has an estimated 200,000 abandoned oil and gas wells, but knows the location of only 8,257 of them. This illustrates a potential problem for drillers active in the Marcellus Shale that underlies 600 miles of the Appalachian Basin of eastern North America. As noted in the Ventura County Star (12 October), abandoned wells can in rare instances serve as conduits for natural gas displaced by new drilling. A subsidiary of Shell Oil Co was drilling in Pennsylvania last summer when a 30-foot geyser of methane gas and water erupted, requiring the evacuation of several homes. With attention directed to those abandoned wells posing the greatest threat, a division of the Department of Environmental Protection in the state has found and plugged 2,871 of them since the 1980s, but a lack of funding has slowed its pace. According to the division’s director, many other US states with large numbers of abandoned wells also spend little money on the effort. As reported by the Harrisburg, Pennsylvania, newspaper, drillers have an incentive to identify and plug abandoned wells because by law they are financially responsible for any damage that results when their drilling sites intersect with old wells. › Standard & Poor’s Ratings Services has said that foreign investors, notably Asian government-owned national oil companies (NOCs), are showing increasing interest in a number of North America’s oil and gas resources. Before 2008, investment in Canadian and US oil and gas companies by Asian government-owned NOCs was negligible. Since then, according to the S&P report released 19 October, concerns about the access and adequacy of energy supplies have been the primary motivation behind the Asian nations’ international investments. With a focus on securing access to long-term resource supplies, their NOCs have accelerated the pace of acquisitions and joint-venture activity in North America. Automotive Seeking to reduce its dependence on Europe, Peugeot tailors a no- frills sedan for emerging markets A stripped-down sedan from PSA Peugeot Citroën went on sale on 1 November in Turkey and was to be rolled out in

Eastern Europe, Africa, and South America within months. Aimed at middle-class buyers in emerging economies, the Peugeot 301 is meant to gain a foothold for the French auto maker in places with more growth potential than saturated Western Europe. “We have a vehicle of conquest, and have great faith and hope,” David Rio, director of the Peugeot brand’s international operations, said in a 8 November interview in Paris. Mr Rio told Mathieu Rosemain of Bloomberg News that the primary competition for the 301 is not considered to be the no-frills models from Renault’s Dacia nameplate. The Peugeot car is intended, instead, to go up against the Renault Symbol (or Thalia, in some markets), Hyundai’s Accent Era, and the Chevrolet Aveo. “The 301 is a stretched version of Peugeot’s 208 hatchback, which designers say will appeal to consumers in emerging markets,” wrote Mr Rosemain. The Paris-based manufacturer is aiming for sales of 150,000 of the units annually by 2014, equivalent to about 4 per cent of its deliveries in 2011. But Carol Thomas, an analyst with LMC Automotive in Oxford, England, told Bloomberg that in her view Peugeot’s volume targets were “quite optimistic.” Ms Thomas said that a car for emerging markets must be affordable, and Peugeot is pricing the 301 well above some others on its level. In Turkey it starts at $16,700: approximately $1,400 higher than the Renault Symbol and $4,830 above the Dacia Logan from Renault. Other automotive news . . . › The finance chief for BMW, Friedrich Eichiner, said on 19 October that the German auto maker will submit an investment plan to the government of Brazil for a new assembly plant in that country. Sources with knowledge of the project advised Reuters that the company contemplates a $395mn facility to build five models, including the Mini. As reported from São Paulo by Alonso Soto, BMW decided to go ahead with the project despite a tax hike on imported cars as well as uncertainty over new rules requiring car makers to use more local content. A fresh Brazilian investment would suggest that BMW is intent on reaping the benefits of the growing market for luxury cars in Latin America’s biggest economy. Steel Largest scrap dealer in China expects stepped-up use of the product, reducing Chinese steel makers’ demand for iron ore According to the chairman of China Metal Recycling Holdings Ltd, the nation will increase scrap use in steel production over the next three years. Reporting from Hong Kong in Bloomberg

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January 2013