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TECHNOLOGY: GOOGLE IS IN TALKS TO SELL ITS SATELLITE BUSINESS B

BUSINESS&FINANCE

HEDGE-FUND

INVESTOR GETS

EAROFTRUMP

FINANCE & MARKETS, B

Libya’s oil production has

more than tripled in the past

six months, imposing an obsta-

cle to the Organization of the

Petroleum Exporting Countries’

plans to raise crude prices by

collectively lowering output.

Oil prices have surged 19%

to more than $55 a barrel since

OPEC’s Nov. 30 deal to throttle

down its output by about 4%,

but the surge in Libyan pro-

duction poses a challenge to an

arrangement made with the

North African country.

OPEC exempted Libya from

any requirement to cut output

because the country has been

riven by violence among mili-

tias that have disrupted its oil

production since the 2011

ouster and death of leader

Moammar Gadhafi.

Now, the militias that once

kept oil fields and ports closed

have switched gears, striking

deals with Libya’s National Oil

Co., or NOC, as it is commonly

known, to reopen petroleum-

producing infrastructure. They

have left oil fields and equip-

ment untouched, even as they

fight in other areas.

The result: Libya’s produc-

tion rose to a three-year high

of 708,000 barrels a day this

week, a NOC spokesman said,

after having fallen to less than

200,000 barrels a day last

year. The country has Africa’s

largest oil reserves and has

produced as much as 1.6 mil-

lion barrels a day in the past.

Libya’s output is flowing so

freely that NOC believes it

could hit 900,000 barrels a

day this year, up from average

daily production of 575,

barrels a day in November.

That would cancel out the

entire reduction contributed

by non-OPEC member Russia

and could force Saudi Arabia

to cut more output than

planned to ensure the group

meets its output targets, some-

thing the kingdom’s officials

have suggested they would do.

On Tuesday, Brent crude,

the global benchmark, dropped

2.4%, to $53.64 a barrel, on

ICE Futures Europe, its lowest

settlement price since Dec. 7.

Ole Hansen, head of com-

modity strategy at Norway’s

Saxo Bank , said Libya’s pro-

duction posed a significant

challenge for oil prices hitting

$60 a barrel because hedge

funds are looking at any news

that could cause traders to sell

oil-futures contracts.

To be sure, Libya’s political

instability quickly could upend

its gains in oil production. A

U.N.-backed government in

Tripoli has struggled to im-

pose its authority on much of

the country and suffered a

new blow this week when its

deputy chief resigned.

Islamic State was routed

from its Libyan stronghold re-

cently, but its members still

roam the country’s southern

deserts, according to Western

counterterrorism officials. Mi-

litias still rule much of the

country, and violence has

ticked up in and around Trip-

oli in recent weeks.

Other countries’ output also

poses a threat to OPEC’s pro-

Please see LIBYA page B

BYBENOITFAUCON

ANDHASSANMORAJEA

Libya

Imperils

OPEC

Oil Deal

INSIDE

face-lift as town planners

map out new high-rise apart-

ments, airports, parks and

metro lines to serve a fast-

growing population.

Please see BUILD page B

cluding Middle Eastern sover-

eign-wealth funds, to raise

money for the projects, ac-

cording to Dealogic data.

At the same time, run-

down suburbs are receiving a

projects over the next decade,

slightly above the average

global rate of 4.7%.

State governments have

sold assets worth nearly

US$50 billion to groups, in-

SYDNEY—With more cranes

in the sky than the U.S. and

one of the developed world’s

highest rates of public-infra-

structure spending, Australia

has become a magnet for

global investors from Cana-

dian pension funds to Chinese

high-speed train operators.

But scrutiny is growing for

the public-funding model be-

hind the infrastructure

spending, which is highly

beneficial to developers rac-

ing to take advantage of ris-

ing property prices.

Australia’s public invest-

ment in roads, rail, water-

ways, marine ports and air-

ports, at 1.6% of gross

domestic product, is the high-

est among major countries in

the Organization for Economic

Cooperation and Development.

PwC and Oxford Economics

forecast Australia to invest

4.9% more taxpayer money

each year in transportation

BYVERASPROTHEN

Australia Spends, Criticism Builds

BRUSSELS—The European
Union has proposed new rules
that would curb how compa-
nies like Alphabet Inc.’s
Google and Facebook Inc.
track users to deliver targeted
ads, introducing legislation
that could reduce a key reve-
nue stream for online adver-
tisement companies and other
website publishers.
The rules proposed Tuesday
by the European Commission ,
the bloc’s executive arm,
would require users to actively
consent to the use of cookies—

BYNATALIADROZDIAK

Euro vs. Dollar 1.0568g0.05% FTSE 100 7275.47À0.52% Gold 1184.20À0.06% WTI crude 50.82g2.19% German Bund yield0.286% 10-Year Treasury yield2.379%

tiny pieces of code deployed on

web browsers that track indi-

viduals’ online activity.

The commission said the

draft rules are to protect user

privacy and provide more

transparency about how com-

panies use individual’s data.

Around 80% of Europeans say

it is important that tools like

browser cookies are only al-

lowed with the user’s permis-

sion, according to the EU.

“Transparency is important.

People must know whether in-

formation stored in their de-

vices is being accessed or

whether their online behavior

is tracked,” the European Com-

mission said in a press release.

When installing a browser

or any other software permit-

ting electronic communica-

tions, users would have to

choose whether to allow or re-

ject the tracking for advertise-

ment purposes before continu-

ing with the installation.

The settings, which could be

changed at any time, would

take precedence over any indi-

vidual consent granted to

Google or Facebook via a pri-

vacy-policy agreement.

If users reject the tracking,

they would still see ads on-

line—but they wouldn’t neces-

sarily be personalized to cater

to users’ potential interests.

Still, the measure could deal a

blow to tech-ad giants that

charge a premium for ads that

are targeted at individual users

based on the reams of user

data they hold.

The commission’s proposal

“would undeniably damage the

advertising business model—

without achieving any real ben-

efits for users from a privacy

and data-protection point of

view,” said Townsend Feehan,

chief executive of the Interactive

Advertising Bureau Europe.

Google and Facebook de-

clined to comment.

Currently, web users in Eu-

rope have to click through ban-

ners displayed on individual

websites asking for consent to

cookies the first time they visit

a site. The commission says the

new rules would offer “an easy

Please see EU page B

EU Aims to Limit Web Tracking

Proposed rules would

curb Facebook, Google

targeted ads, reducing

a key revenue stream

A building under construction in Sydney last year. Australia’s infrastructure-spending model is under scrutiny as developers benefit.

DAVID GRAY/REUTERS

The car of the future will
be electric, connected and,
eventually, self-driving. But
where does that leave the
car industry of the future?
This is the last in a series of
articles from Heard on the
Street that looks at how in-
vestors should approach the
biggest technological disrup-
tion the car industry has
faced in decades.
The auto industry is on
the cusp of two great
changes. Electric vehicles are
a technological and financial
challenge
that will roil
the indus-
try’s estab-
lished order.
Self-driving
cars may
blowitup.
If the
Paris motor
show in Oc-
tober was a
festival of electric cars, this
week’s industry set piece in
Detroit is shaping up to be a
festival of autonomous—and
by extension shared—ones.
Waymo , the self-driving car
unit of Google parent Alpha-
bet , unveiled a Chrysler min-
ivan Sunday fitted out with
its proprietary package of
sensors and software. On
Monday, Ford Motor an-
nounced the extension of
Chariot, the van-sharing ser-
vice it bought in September.
Electric cars are starting
to take off, while autono-
mous cars are just being
tested and face heavy regula-
tory hurdles. So the bigger
transformation won’t happen
for some time.
Still, understanding what
lurks around the corner is es-
sential to investing in tradi-
tional car companies and the
nontraditional businesses al-
ready challenging the indus-
try. Among the latter are
tech-enabled taxi companies
like Uber Technologies ,
which has been testing self-
driving cars in Pittsburgh, as
well as Waymo.
Dispensing with drivers
will radically reduce the cost
of taxi services, boosting de-
mand for what is increasingly
called “mobility as a service”
at the expense of individual
car ownership. More people
will use fewer cars, upsetting
the current relationship be-
tween drivers and their cars.
The most basic question
is: If individuals stop buy-
ing cars, who will? Soft-
ware specialists like Uber
don’t seem obvious candi-
dates. Neil Campling of bro-
kerage Northern Trust spec-
ulates that fleets will
eventually be floated on the
stock exchange.
The risk to the auto indus-
try, and to dealers in particu-
lar, is that the car buyers in a
world of self-driving fleets
will be more concentrated
and thus more powerful. It
Please see HEARD page B

Car Makers

In the Era

Without

Drivers

HEARD ON
THE STREET
STEPHEN
WILMOT

In the U.S., financial shares

rose, while energy and divi-

dend-paying shares fell, leav-

ing the S&P 500 up slightly.

The Dow Jones Industrial

Average slipped 31.85 points,

or 0.2%, to 19855.53, after ris-

ing within 50 points of the

never-before-reached 20000

level earlier in the session.

The S&P 500 was steady and

the Nasdaq Composite rose

0.4% to a fourth consecutive

record close. the longest such

streak since a stretch of

seven records ended in De-

cember 1999.

The Dow industrials have

risen more than 8% since Elec-

tion Day, as investors betting

on fiscal stimulus and tax cuts

under President-elect Donald

Trump scooped up shares of

financial and industrial com-

panies while largely selling

government bonds. Many ana-

lysts and investors believe

stocks will continue climbing

throughout the year, bolstered

by a strengthening economy.

“Sentiment has clearly im-

proved with the pro-growth

Washington agenda,” said

Terry Sandven, chief equity

strategist at U.S. Bank Wealth

Management, who expects the

S&P 500 to rise to 2400 by the

end of the year.

Still, with many of the po-

tential policies “still very

much a work in progress,” cor-

porate earnings will be a key

driver of stocks in the coming

weeks, Mr. Sandven added.

On Tuesday, energy stocks

lagged behind other sectors,

as U.S. crude oil fell 2.2% to

settle at $50.82 a barrel.

Exxon Mobil and Chevron fell

0.8% and 0.4%, respectively.

Dividend-heavy sectors—

which have been among the

biggest laggards in the post-

election rally—pulled back,

too. Shares of real-estate com-

panies lost 1.2% in the S&P

500 and utilities slipped 0.1%

by late afternoon.

Meanwhile, financials and

industrials led gains. The S&P

500 financials sector rose

0.7%, and the industrials sec-

tor added 0.4%, lifted by a

surge in airline stocks.

European shares rose Tues-

day, with the U.K.’s FTSE 100

notching its ninth consecutive

record close.

The FTSE 100 added 0.5%

to 7275.47, finishing higher

foran11th

consecutive

session. The

index tends

to rise as

sterling falls, since the com-

panies listed on the index

make most of their revenue

abroad. The Stoxx Europe 600

index rose 0.1%.

Sterling fell to $1.2137 in

European trading from $1.

late Monday in New York as

fears of a so-called hard Brexit

continued to spook investors.

Late in New York, the pound

was at $1.2167.

BYMIKEBIRD ANDAKANEOTANI

FTSE 100 Closes at Ninth Record High

Australia's population is

growing rapidly...

Population growth rates in OECD

countries, 2014

...causing public infrastructure

spending to soar...

Investment in definite transport and

storage projects† in Australia

...to some of the highest levels

in the developed world.

Transport infrastructure investment

in major OECD countries, 2014

Building Boom

*Latest available data as of 2013. †Projects that are under construction or will start soon. Note: A$100 billion = US$73.54 billion

Sources: Organization for Economic Cooperation and Development (population, infrastructure spending);

Deloitte Access Economics (investment) THE WALL STREET JOURNAL.

A$

0

20

40

60

80

100

billion

2007 ’10 ’

Luxembourg

Israel*

Australia

New Zealand

Canada

2.4%

1.

1.

1.

1.

Greece

Norway

Canada

U.S.

1.4% of GDP

1.

1.

1.

0.

Australia

The use of cookies by Google and others would be more limited.

NEIL HALL/REUTERS

TUESDAY’S

MARKETS

11

Number of consecutive sessions

U.K. shares have advanced

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