Hemp legalization included in new farm bill could ‘open the floodgates’ on nascent industry

Damian Farris, co-owner of Colorado Cultivars Hemp Farm, looks at the crop before it is harvested on September 5, 2017 in Eaton, Colorado. 

RJ Sangosti | Denver Post | Getty Images
Damian Farris, co-owner of Colorado Cultivars Hemp Farm, looks at the crop before it is harvested on September 5, 2017 in Eaton, Colorado.

The final 2018 Farm Bill is expected to be voted on as early as next week. The bill would legalize hemp cultivation and could be a catalyst for explosive growth in a nascent industry that some forecast could top $20 billion by 2022.

The long-awaited bill would remove industrial hemp from the federal government’s list of controlled substances, making it a lawful agricultural commodity. The hemp legislation introduced by Senate Majority Leader Mitch McConnell, R-Ky., earlier this year also allows states to become the primary regulators of hemp cultivation, enables researchers to apply for federal grants and makes the crop eligible for crop insurance.

“This open the floodgates for this industry to grow very rapidly and scale on a national level,” said Bethany Gomez, director of research for Brightfield Group, a cannabis market researcher based in Chicago.

The lion’s share of the roughly $800 million U.S. hemp market today is for products that include the non-psychoactive compound CBD, cannabidiol. Products infused with CBD are used for a wide range of medical conditions, ranging from epilepsy and multiple sclerosis to arthritis and chronic pain. Laws involving CBD products differ in each state.

Investor interest

Up to now, industrial hemp production in the U.S. has been restricted to mostly research and pilot programs although imports from Canada, China and Europe have helped fill domestic demand for everything from hemp seeds to fibers. The legalization of hemp cultivation could boost investor interest across the sector.

“In the long run, it’s all going to be managed and controlled by the U.S. Department of Agriculture, just like corn, soybeans and everything else,” said Chris Boucher, CEO of Farmtiva, a California-based hemp cultivation company. “It will also become an agricultural commodity, which in turn will allow crop insurance and Wall Street will be able to invest institutional funds into the hemp industry.”

Damian Farris, co-owner of Colorado Cultivars Hemp Farm, looks at the crop before it is harvested on September 5, 2017 in Eaton, Colorado. 

RJ Sangosti | Denver Post | Getty Images
Damian Farris, co-owner of Colorado Cultivars Hemp Farm, looks at the crop before it is harvested on September 5, 2017 in Eaton, Colorado.

House Agriculture Committee ranking member Collin Peterson, D-Minn., told reporters Tuesday the farm bill could be passed as early as next week.

“With any luck it’ll be passed by the end of next week, but knowing how things go around here it may drag into the week after,” said Peterson, who is expected to become chairman of the House agriculture panel in the new Congress.

A day earlier, Peterson told Minnesota Public Radio he was considering becoming a hemp producer.

“I may grow some hemp on my farm,” he said. “I’m looking at it. There’s a big market for this stuff that we’ve been ceding to Canada and other places.”

Hemp is a cannabis cousin of marijuana but it contains low levels of THC, the chemical that produces a “high” for pot users. Industrial hemp is used to make everything from apparel, foods and pharmaceuticals to personal care products, car dashboards and building materials.

“The vast majority of the market right now is going for CBD products,” said Brightfield Group’s Gomez. “You can find some hemp seed-based beauty products or hemp in some cereals and things like that, and there’s such usage on the fibers for like clothes and other industrial purposes, but that’s really minimal right now.”

Brightfield Group estimates the domestic hemp market could reach $22 billion in the next four years. The estimate factors in the hemp amendment in the farm bill becoming law.

Edible marijuana infused products by Dixie are displayed at the Cannabis World Congress Conference on June 16, 2017 in New York City. 

Spencer Platt | Getty Images
Edible marijuana infused products by Dixie are displayed at the Cannabis World Congress Conference on June 16, 2017 in New York City.

Hemp Industry Daily projects the hemp-derived CBD retail market will reach between $2.5 billion and $3.1 billion by 2022, which assumes growth in retail penetration but a scenario of no major change in current federal policies concerning hemp.

Tobacco states push hemp

“There are three words why we have hemp now, and those words are tobacco state Republicans,” said Kristin Nichols, editor at Denver-based Hemp Industry Daily, a publication owned by MJBizDaily. “There’s been strong support from lawmakers and politicians up and down in former tobacco states looking for a replacement crop.”

The hemp provisions in the 2018 Farm Bill were in the Senate version of the legislation sponsored by Senate Majority Leader McConnell. The Kentucky Republican put himself on the joint Senate-House conference committee formed to hammer out the details of the final farm bill.

“I know there are farming communities all over the country who are interested in this,” McConnell said in June when discussing the hemp legalization legislation before the Senate Agriculture Committee. “Mine are particularly interested in it, and the reason for that is — as all of you know — our No. 1 cash crop used to be something that’s really not good for you: tobacco. And that has declined significantly, as it should, given the public health concerns.

According to Nichols, cannabis generally grows well in areas where tobacco production once thrived, such as Kentucky and North Carolina. In the case of Kentucky, the state received over $2 billion in Tobacco Master Settlement Agreement funds and is using some of money to invest in growing its hemp industry.

Both chambers of Congress passed the farm bill in June but major differences between the bills caused a delay in finalizing an agreement. An agreement in principle on the bill was reached in late November.

Hemp legalization is just one element of the wide-ranging farm bill. The legislation also covers farm subsidies and food stamps as well as trade and rural development policy.

The House’s version of the farm bill didn’t originally include hemp legalization amendment. But the final version expected to be filed Monday and be voted on as early as Wednesday or Thursday in the House includes McConnell’s amendment.

The farm bill is usually renewed every five years and the last one expired Sept. 30. The previous farm bill, from 2014, relaxed hemp laws and allowed farmers in a handful of states, including Kentucky, to grow the crop as part of research projects.

“This will open up a lot of new markets for retailers who have been cautious,” said Lex Pelger, science director for Bluebird Botanicals, a Colorado-based company producing hemp derived CBD products. “What we’re doing is already legal under the 2014 Farm Bill, but the power of the 2018 Farm Bill is that it clearly clears hemp for general commerce.”

Easy to grow crop

Pelger said hemp is growing in Colorado despite the state not having a reputation as a farming hub. “It grows really well in a large range of climates and a large range of soils,” he said.

More than 77,000 acres of hemp were planted in research and development programs this year, according to VoteHemp, an advocacy group. That is up sharply from 2017 when there were nearly 26,000 acres of hemp crops planted.

At least 40 states have legalized industrial hemp farming or done pilot programs, usually research through a university or state agriculture agency. The hemp legislation also allows states to become the primary regulators of hemp cultivation, allows researchers to apply for federal grants and makes the crop eligible for crop insurance.

California is the nation’s largest agricultural state but so far has lagged when it comes to hemp production. Hemp can be more profitable to grow than tobacco or even some other key crops.

“You can make $20,000, $40,000 or $50,000 an acre on hemp, depending on percentage of your CBD,” said Farmtiva’s Boucher. He said fiber and hemp seed crops will produce less on per-acre basis but still be “maybe twice as much as corn.”

In October, Gov. Jerry Brown signed state legislation allowing industrial hemp cultivation in the state starting in 2019. Given the favorable climate in parts of California, farmers can get up to two crops per year of hemp plants.

“California is the big agricultural monster and if these farmers really get into hemp, they could take a good chunk of the supply chain,” said Farmtiva’s Boucher. “Unfortunately, we’re three or four years behind Colorado, Kentucky and Oregon and so we have some catching up to do.”

[“source=cnbc”]

Microsoft’s CFO is keeping an eye on gaming now that it does $10 billion in annual revenue

Mark Zuckerberg, chief executive officer and founder of Facebook Inc., listens during the Viva Technology conference in Paris, France, on Thursday, May 24, 2018. 

Marlene Awaad | Bloomberg | Getty Images
Mark Zuckerberg, chief executive officer and founder of Facebook Inc., listens during the Viva Technology conference in Paris, France, on Thursday, May 24, 2018.

Stifel on Wednesday published a note saying it has lowered its rating for Facebook shares from “Buy” to “Hold,” saying political and regulatory blowback could restrict how the company operates in the long term.

“Facebook’s management team has created too many adversaries — politicians/ regulators, tech leaders, consumers, and employees — to not experience long-term negative ramifications on its business,” the firm said in a note.

The lower rating comes after a rough year in which Facebook has experienced numerous scandals, a 30-million user data breach, declining and stalling growth in key markets, an executive exodus and its worst stock performance since going public in 2012.

Stifel also published the latest results from an on-going survey of Facebook users.

The results showed 79 percent of those surveyed now believe Facebook’s impact on society is neutral or negative, compared to 73 percent in survey results published by the firm in January. The survey also found that 60 percent of respondents said they rarely or never used Facebook Stories, Marketplace or video, which are some of the company’s key new products.

Stifel said there is no downside to holding Facebook shares, but the firm no longer believes the company’s upside is what it once was.

“We believe Facebook will struggle to return to the company that it once was or that investors expected it to be in the long run,” the note reads. “We prefer Amazon, Alphabet, and Netflix, as U.S.-based mega caps with similar thematic trends and more stable operating environments.”

Facebook board: Sandberg's request to probe Soros 'entirely appropriate'
[“source=cnbc”]

Microsoft’s CFO is keeping an eye on gaming now that it does $10 billion in annual revenue

Microsoft Chief Financial Officer Amy Hood speaks at the annual Microsoft shareholder meeting in Bellevue, Wash., on Nov. 29, 2017.

Jason Redmond | AFP | Getty Images
Microsoft Chief Financial Officer Amy Hood speaks at the annual Microsoft shareholder meeting in Bellevue, Wash., on Nov. 29, 2017.

Microsoft has been in the gaming business since the turn of the century. Finally it matters to the company from a financial standpoint.

“Amy Hood, our CFO, she likes to tell me I’ve made the spreadsheet now, and she says that can be a good thing, and I’m on the spreadsheet. So she’s going to pay attention,” Microsoft’s executive vice president for gaming, Phil Spencer, said on stage at the Barclays Global Technology, Media and Telecommunications Conference in San Francisco on Wednesday.

Today Microsoft is one of the top public companies by market capitalization, alongside Amazon and Apple. Sales of Xbox consoles and online services means Microsoft is less dependent on revenue from other products, like Windows, Office and enterprise software. In its 2018 fiscal year, which ended on June 30, Microsoft surpassed $10 billion in gaming revenue for the first time.

Spencer, who joined Microsoft’s senior leadership team alongside Hood and CEO Satya Nadella last year, pointed to several investments the company has made in gaming recently, building on earlier moves like the $2.5 billion Mojang acquisition. and its purchase of game-streaming company Beam, which has since been rebranded to Mixer.

“We’ve acquired and started seven new first-party studios in the last year. We obviously don’t do that without tremendous support from Satya and Amy,” Spencer said. “We understand content is a critical component of what we’re trying to go build and the support from the company has been tremendous.”

One of Microsoft’s stated growth opportunities in the future is cloud-based gaming, which could make the technical limitations of consumers’ devices less important and expose Microsoft’s gaming content for wider consumption. Spencer talked loosely about its cloud gaming initiative, called, Project xCloud, on Wednesday.

“We focus first on an Android phone because there’s over a billion Android phones on the planet and it’s a place that the content that we’ve natively built up over the past decades on our platform hasn’t been able to reach,” Spencer said.

This strategy builds on Microsoft’s past efforts to bring richer capabilities to Android. But Google, the company behind Android, has started working on cloud gaming with its Project Stream initiative, Spencer said. And meanwhile Amazon, which is the leader of the cloud infrastructure market, has its own gaming division, he said.

“We’ll have multiple business models that will work with streaming, but the connection of streaming with the subscription model makes a ton of sense,” Spencer said. “You see it in music. You see it in video. So you can look at Project xCloud and you can look at something like Game Pass, and you can see there’s natural synergies.”

On stage, Barclays asked Spencer how Microsoft differentiates from gaming subscription offerings from EA and Sony.

“For us, it’s all about how we reach 2 billion gamers,” Spencer said.

“If you build the market around a couple hundred million people that are going to own a game console or a high-end gaming PC, then your business model diversity can actually narrow because your customers are narrow. But when you think about reaching a customer with this content where their only compute device could be an Android phone, you think about, well, what are all the ways that that person pays for content if they do at all today?”

Microsoft will bring its Game Pass subscription service to PCs, and eventually it will be available on every device, Spencer said.

[“source=cnbc”]

Cloud stocks Okta and Cloudera surge on better-than-expected quarterly results

Todd McKinnon

Anjali Sundaram | CNBC
Todd McKinnon

Cloud stocks continue to be a bright spot on the Nasdaq as two more surged on earnings beats.

Okta shares spiked 10.4 percent on Thursday after the cloud software company reported a narrower loss than analysts’ expected and raised its revenue guidance for the year. Cloudera, a machine learning and analytics platform for the cloud, finished the day up 12.3 percent after reporting a 25 percent revenue increase compared to last year, at $118.2 million.

Okta’s stock ended the day at $66.95, bringing its gains for the year to 161 percent. Since going public in April 2017, Okta has been one of the best performers among a growing number of cloud-based software providers that are almost all outperforming the broader market. Cloudera, on the other hand, is still down more than 21 percent for the year.

Okta’s earnings report follows better-than-expected results last week from cloud companies Salesforce and Workday. Okta, which sells identity management software, also said it was cash flow positive for the first time.

Okta lost 4 cents per share in the quarter, excluding some items, compared to the 11-cent average analyst estimate, according to Refinitiv. Revenue climbed 58 percent to $105.6 million, also topping estimates and the company’s own guidance.

For the full year of fiscal 2019, Okta said it now expects revenue of $391 million to $392 million, an increase over its prior expectation for sales for $372 million to $375 million.

[“source=cnbc”]

Cloud stocks Okta and Cloudera surge on better-than-expected quarterly results

Todd McKinnon

Anjali Sundaram | CNBC
Todd McKinnon

Cloud stocks continue to be a bright spot on the Nasdaq as two more surged on earnings beats.

Okta shares spiked 10.4 percent on Thursday after the cloud software company reported a narrower loss than analysts’ expected and raised its revenue guidance for the year. Cloudera, a machine learning and analytics platform for the cloud, finished the day up 12.3 percent after reporting a 25 percent revenue increase compared to last year, at $118.2 million.

Okta’s stock ended the day at $66.95, bringing its gains for the year to 161 percent. Since going public in April 2017, Okta has been one of the best performers among a growing number of cloud-based software providers that are almost all outperforming the broader market. Cloudera, on the other hand, is still down more than 21 percent for the year.

Okta’s earnings report follows better-than-expected results last week from cloud companies Salesforce and Workday. Okta, which sells identity management software, also said it was cash flow positive for the first time.

Okta lost 4 cents per share in the quarter, excluding some items, compared to the 11-cent average analyst estimate, according to Refinitiv. Revenue climbed 58 percent to $105.6 million, also topping estimates and the company’s own guidance.

For the full year of fiscal 2019, Okta said it now expects revenue of $391 million to $392 million, an increase over its prior expectation for sales for $372 million to $375 million.

[“source=cnbc”]

Americans shelled out $10,739 per person on health care last year, but growth in spending slows

A doctor examines a patient at the UCSF Women's Health Center in San Francisco, California. 

Justin Sullivan | Getty Images
A doctor examines a patient at the UCSF Women’s Health Center in San Francisco, California.

Americans shelled out $3.5 trillion on health care last year, or $10,739 per person, but the increase in spending slowed to a pace not seen since 2013 — before Congress expanded the Affordable Care Act.

Spending in 2017 grew at a rate of 3.9 percent, a marked slowdown after rising 4.8 percent in 2016 and 5.8 percent in 2015, federal officials said, citing new data released Thursday from the Centers for Medicare and Medicaid Services.

“Prior to the coverage expansions and temporary high growth in prescription drug spending during that same period, health spending was growing at historically low rates,” the CMS said in a release. “In 2017, health care spending growth returned to these lower rates and the health spending share of GDP stabilized for the first time since 2013.”

The slowdown was seen in hospitals, medical services, private and public insurance and prescription drugs, federal health officials said. The exception was spending on Medicare, the government-run health insurance program for the elderly and Americans with disabilities, which remained flat for the year.

Private health insurance saw the highest total spending, increasing 4.2 percent to $1.2 trillion, in 2017. The lowest spending was on retail prescription drugs, which reached $333.4 billion in 2017, an increase of 0.4 percent.

The new data comes at a time when health-care groups are being pressured by federal health officials to alter the way they deliver care, which includes facilitating more cooperation between health-care providers, in an effort to reduce sky-high costs and improve overall health outcomes for Americans.

The Trump administration currently has several proposals that would offer lower out-of-pocket costs for American consumers, which include changes to Medicare Part D and Part B.

When compared with the gross domestic product, total heath-care spending in the U.S. was flat last year, representing 17.9 percent of GDP. That’s the same as the prior year and the first year that number didn’t rise since 2013, according to Medicare.

The number of people with health insurance rose sharply in 2013, which coincided with the expansion of eligibility for Medicaid in many states as part of the Affordable Care Act. The expansion resulted in two years of higher spending. But by 2015, spending began to slow, officials said.

The health-care spending rate in 2017, which will appear in the January 2019 issue of “Health Affairs,” was similar to the average annual rate of 3.9 percent during most of Barack Obama’s term, from 2008 through 2013.

[“source=cnbc”]

Lululemon earnings beat, but shares drop 3% on weak fourth-quarter outlook

A customer looks at sports bras inside a Lululemon Athletica store.

Xaume Olleros | Bloomberg | Getty Images
A customer looks at sports bras inside a Lululemon Athletica store.

Lululemon on Thursday reported quarterly earnings and revenue that beat analysts’ estimates, but its outlook for the fourth quarter was slightly weaker than expected.

Shares of the company dropped 3 percent in after-hours trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 75 cents, adjusted, vs. 70 cents expected
  • Revenue: $748 million vs. $737.5 million expected
  • Same-store sales: 18 percent increase vs. 13.8 percent expected

For its fourth and current quarter, the retailer expects to see revenue of as much as $1.13 billion and to earn $1.64 cents per share, numbers that disappointed investors who were expecting a busier holiday season.

The company said it experienced its biggest day ever for e-commerce on Thanksgiving, which was then surpassed on Black Friday. Less successful for web sales was Cyber Monday.

“Our guests shopped earlier and wanted to get a jump-start on the holiday season,” Lululemon’s COO Stuart Haselden told analysts on a conference call.

Lululemon fiscal third-quarter net income rose to $94.4 million, or 71 cents per share, from $58.9 million, or 43 cents per share, a year earlier.

Excluding items, the company earned 75 cents per share, higher than the 70 cents per share expected by analysts surveyed by Refinitiv.

Net sales rose 21 percent from fiscal year 2017 to $748 million, beating expectations of $737.5 million. Improvements to the retailer’s website have increased both online traffic as well as actual digital sales, one of the contributing factors for the strong sales overall. Haselden said web traffic has increased by more than 35 percent in the quarter.

The Vancouver-based company’s expansion into men’s apparel helped revenue growth, seeing the highest category increases overall. Lululemon said it is ahead of schedule to reach $1 billion in sales in 2020.

The retailer also credited its growth into outerwear for both men and women for the increase in sales.

Despite a weaker-than-expected outlook for the fourth quarter, Lululemon increased its revenue forecast for the fiscal year to a range of $3.24 billion to $3.25 billion, compared with a previous range of $3.19 billion to $3.24 billion. Earnings, excluding a tax reform-related expense, are expected to fall between $3.65 and $3.68 per share for the fiscal year, also up from a prior range of $3.45 to $3.53 per share.

The company’s same-store sales increased 18 percent, outpacing Wall Street estimates of 13.8 percent.

The athleisure retailer moved its quarterly release date from Wednesday to Thursday because U.S. financial markets were closed to observe a day of mourning for Pr[“source=cnbc”]esident George Herbert Walker Bush.

[“source=cnbc”]

Lululemon earnings beat, but shares drop 3% on weak fourth-quarter outlook

A customer looks at sports bras inside a Lululemon Athletica store.

Xaume Olleros | Bloomberg | Getty Images
A customer looks at sports bras inside a Lululemon Athletica store.

Lululemon on Thursday reported quarterly earnings and revenue that beat analysts’ estimates, but its outlook for the fourth quarter was slightly weaker than expected.

Shares of the company dropped 3 percent in after-hours trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 75 cents, adjusted, vs. 70 cents expected
  • Revenue: $748 million vs. $737.5 million expected
  • Same-store sales: 18 percent increase vs. 13.8 percent expected

For its fourth and current quarter, the retailer expects to see revenue of as much as $1.13 billion and to earn $1.64 cents per share, numbers that disappointed investors who were expecting a busier holiday season.

The company said it experienced its biggest day ever for e-commerce on Thanksgiving, which was then surpassed on Black Friday. Less successful for web sales was Cyber Monday.

“Our guests shopped earlier and wanted to get a jump-start on the holiday season,” Lululemon’s COO Stuart Haselden told analysts on a conference call.

Lululemon fiscal third-quarter net income rose to $94.4 million, or 71 cents per share, from $58.9 million, or 43 cents per share, a year earlier.

Excluding items, the company earned 75 cents per share, higher than the 70 cents per share expected by analysts surveyed by Refinitiv.

Net sales rose 21 percent from fiscal year 2017 to $748 million, beating expectations of $737.5 million. Improvements to the retailer’s website have increased both online traffic as well as actual digital sales, one of the contributing factors for the strong sales overall. Haselden said web traffic has increased by more than 35 percent in the quarter.

The Vancouver-based company’s expansion into men’s apparel helped revenue growth, seeing the highest category increases overall. Lululemon said it is ahead of schedule to reach $1 billion in sales in 2020.

The retailer also credited its growth into outerwear for both men and women for the increase in sales.

Despite a weaker-than-expected outlook for the fourth quarter, Lululemon increased its revenue forecast for the fiscal year to a range of $3.24 billion to $3.25 billion, compared with a previous range of $3.19 billion to $3.24 billion. Earnings, excluding a tax reform-related expense, are expected to fall between $3.65 and $3.68 per share for the fiscal year, also up from a prior range of $3.45 to $3.53 per share.

The company’s same-store sales increased 18 percent, outpacing Wall Street estimates of 13.8 percent.

[“source=cnbc”]

US is well on its way to Trump’s goal of ‘energy dominance,’ says Marathon Petroleum CEO

US on its way to Trump's goal of 'energy dominance,' says Marathon CEO

US on its way to Trump’s goal of ‘energy dominance,’ says Marathon CEO   13 Hours Ago | 01:26

President Donald Trump’s goal of making the United States a global superpower in energy is starting to come true, Marathon Petroleum Corp. Chairman and CEO Gary Heminger told CNBC on Tuesday.

“When I look at the president’s theme to begin with and the beginning of his administration, he wanted to have energy dominance in the U.S. and I believe that we are well on our way,” Heminger told Jim Cramer in an exclusive “Mad Money” interview. “We’re the largest producer in the world today.”

Recent declines in oil prices haven’t stopped U.S. producers from pumping more oil ahead of OPEC’s meetings later this week, at which the group of oil-exporting countries are expected to cut production.

That puts the United States in a league above its competitors, said the Marathon chief, whose Ohio-based company specializes in petroleum refining, marketing and transportation.

“The U.S. refining system [is] second to none of anyone in the industry, so I believe we’re well on our way now” to global energy dominance, Heminger said.

The CEO added that he expected OPEC’s meetings in Vienna, Austria this Thursday and Friday to result in “a pullback in OPEC production,” in which case “we’ll see crude prices inch up” from their current levels.

And although oil’s recent pummeling has benefited business at Marathon — where oil is part of Marathon’s cost of goods sold, so price declines translate into higher margins — Heminger said the company sees prices for the benchmark West Texas Intermediate crude rising significantly in 2019.

“We really believe the price is probably going to end up being … $65 to [$]70 in 2019, on an average,” he said. “I believe we’ve averaged almost $65 — about [$]64.50 — year to date in 2018, so we think we’re being conservative looking at that number for next year.”

WTI crude futures fell 0.64 percent on Tuesday to $52.61. Year to date, the commodity has lost 8.77 percent.

Shares of Marathon Petroleum shed 2 percent amid Tuesday’s marketwide meltdown, settling at $63.34.

[“source=cnbc”]

US is well on its way to Trump’s goal of ‘energy dominance,’ says Marathon Petroleum CEO

US on its way to Trump's goal of 'energy dominance,' says Marathon CEO

US on its way to Trump’s goal of ‘energy dominance,’ says Marathon CEO   13 Hours Ago | 01:26

President Donald Trump’s goal of making the United States a global superpower in energy is starting to come true, Marathon Petroleum Corp. Chairman and CEO Gary Heminger told CNBC on Tuesday.

“When I look at the president’s theme to begin with and the beginning of his administration, he wanted to have energy dominance in the U.S. and I believe that we are well on our way,” Heminger told Jim Cramer in an exclusive “Mad Money” interview. “We’re the largest producer in the world today.”

Recent declines in oil prices haven’t stopped U.S. producers from pumping more oil ahead of OPEC’s meetings later this week, at which the group of oil-exporting countries are expected to cut production.

That puts the United States in a league above its competitors, said the Marathon chief, whose Ohio-based company specializes in petroleum refining, marketing and transportation.

“The U.S. refining system [is] second to none of anyone in the industry, so I believe we’re well on our way now” to global energy dominance, Heminger said.

The CEO added that he expected OPEC’s meetings in Vienna, Austria this Thursday and Friday to result in “a pullback in OPEC production,” in which case “we’ll see crude prices inch up” from their current levels.

And although oil’s recent pummeling has benefited business at Marathon — where oil is part of Marathon’s cost of goods sold, so price declines translate into higher margins — Heminger said the company sees prices for the benchmark West Texas Intermediate crude rising significantly in 2019.

“We really believe the price is probably going to end up being … $65 to [$]70 in 2019, on an average,” he said. “I believe we’ve averaged almost $65 — about [$]64.50 — year to date in 2018, so we think we’re being conservative looking at that number for next year.”

WTI crude futures fell 0.64 percent on Tuesday to $52.61. Year to date, the commodity has lost 8.77 percent.

Shares of Marathon Petroleum shed 2 percent amid Tuesday’s marketwide meltdown, settling at $63.34.

[“source=cnbc”]