Daily on Energy: It’s looking pretty grim for the once-promising bipartisan Senate energy bill

Prospects for advancing the bill — which could be the most comprehensive update to energy law in a dozen years — are looking pretty grim after it failed two procedural votes Monday night. Even as the bill’s sponsors, Senate Energy Committee Chairwoman Lisa Murkowski and West Virginia Democrat Joe Manchin, vow to keep fighting, the path forward isn’t exactly clear, especially as senators are refusing to budge unless certain amendments get a vote.

“It is kind of a foul day,” Murkowski said during remarks at a committee hearing Tuesday. She said the bill is “stalled out” because of disputes wholly unrelated to the broader energy package.

“It makes me wonder why we work so hard around here if the purpose is going to be just to tank good committee work,” she added. “I am not in a particularly good mood.”

Murkowski isn’t the only one who’s angry: Senators arguing over whether to allow a vote on a bipartisan amendment to limit greenhouse gas refrigerants say they aren’t giving up the fight. Senator Chuck Schumer, the top Democrat in the chamber, said Monday before the vote that Republican leadership was blocking a vote on the amendment, which he said was vital to address climate change.

The amendment’s Republican co-sponsor, Louisiana Senator John Kennedy, was the one leading the charge to vote “no” Monday night, Schumer noted in remarks Tuesday morning.

The main objection to the coolant amendment has come from Senate Environment Committee Chairman John Barrasso, whose committee the refrigerant legislation would pass through in normal process. He’s accusing Kennedy and his co-sponsor Senator Tom Carper, the top Democrat on the environment panel, of trying to “airdrop” their bill into the broader energy package.

“The idea of having committees is to vet ideas,” Barrasso said in a statement. “They chose to bypass the committee process and ignore some of the suggestions or have not yet accepted some of the suggestions that I think would help improve it.”

The White House has also voiced its opposition to the coolant language, though Trump administration officials haven’t explicitly threatened to veto the broader energy bill if the amendment is ultimately included.

But is the coolant amendment really the main roadblock? As Schumer noted in his remarks Tuesday, 13 Democrats still voted to advance the bill, despite the fight over the refrigerant amendment. “So if he had had his Republican troops together, he might have been able to pass it anyway,” Schumer said of Majority Leader Mitch McConnell.

Nonetheless, out of the 16 Republicans who voted “no” in the first procedural vote, only one other co-sponsor of the coolant bill — Kansas Senator Jerry Moran — joined Kennedy. Even McConnell voted to halt the broader bill.

“I’m certainly not blocking any bipartisan amendments,” McConnell said Tuesday on the floor. “What is really happening is that the Democratic leader is moving the goalpost,” he added of Schumer demanding a vote on the coolant amendment.

But McConnell also appeared to give a warning shot to other senators, too, to resolve their differences.

“It hadn’t suddenly become controversial overnight,” he said. “Everyone knows there are plenty of outside issues that senators do not agree on. We should let ourselves agree on what we agree on.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

US OIL INDUSTRY URGES CALM AMID SIGNS OF ESCALATION IN OIL PRICE WAR: Saudi Arabia moved on Tuesday to fulfill its pledge to flood oil markets with low-priced crude, which could cause further turmoil to shale producers already unsettled by low prices and falling demand from coronavirus. But U.S. oil trade groups are urging calm, and resisting the prospect of receiving emergency aid from the Trump administration.

“We are not in discussions with anyone in the administration at this time on any type of program for the industry,” said Mike Sommers, the CEO of the American Petroleum Institute, in response to a question from Josh Monday on a press call. “We believe we shouldn’t be reacting to one day of a market downturn.”

Anne Bradbury, CEO of the American Exploration & Production Council, representing large independent oil and gas companies, said, “the long-term demand outlook remains strong” and companies have planned for “short term disruptions in the market.”

The state of the markets: U.S. stocks rallied at opening Tuesday, recouping some of Monday’s losses after President Trump floated a payroll tax cut to stimulate economic growth against the coronavirus.

Oil prices rebounded from losses Monday as well, with crude oil trading 7.87% higher as of Tuesday morning.

This comes as Saudi Arabia, the world’s biggest oil exporter, confirmed Tuesday it plans to supply a record 12.3 million barrels per day in April, well above current production levels of 9.7 million barrels per day.

Russia, according to Bloomberg, quickly pledged to retaliate, with Alexander Novak, the country’s energy minister, saying Moscow had the ability to boost production by 500,000 barrels a day, putting the country’s output at a record 11.8 million barrels a day.

OPEC is in chaos: Still, Novak said that Moscow had not ruled out working with OPEC again to stabilize oil markets.

Oil prices had tumbled Sunday night by over 30% to below $30 per barrel as Saudi Arabia previewed a plan to gain market share from Russia after a three-year production-cut agreement organized by the two powers fell apart on Friday.

Russia decided not to join Saudi Arabia’s call for greater production cuts in response to the coronavirus amid frustration over years of losing market share to U.S. shale producers, sparking criticism from the Trump administration.

“These attempts by state actors to manipulate and shock oil markets reinforce the importance of the role of the United States as a reliable energy supplier to partners and allies around the world,” Energy Department spokeswoman Shaylyn Hynes said Monday.

Signs of diplomacy: While U.S. producers don’t want government handouts, the industry certainly would welcome Trump using diplomacy to calm a possible price war.

The White House confirmed Tuesday that Trump spoke Monday with Saudi Arabia’s Crown Prince Mohammad Bin Salman about “global energy market issues.”

Treasury Secretary Steven Mnuchin met Monday with the Russian ambassador to Washington and “emphasized the importance of orderly energy markets,” according to a statement.

U.S. producers aren’t out of the woods yet: API’s Sommers acknowledged, “I don’t think anyone is making money at $30 a barrel.”

But, he said, “We are focused on long-term fundamentals” that show continued strong demand for oil and gas in future decades.

Sarah Ladislaw, director of the Energy Security and Climate Change Program at the Center for Strategic and International Studies, said in a report Monday that bigger oil producers have hedged against low prices and can “weather the storm awhile,” but smaller producers don’t have the same access to cheap capital anymore and could be “driven out of business” by lower prices.

“The U.S. oil industry will be fine, but individual companies and even communities will be hard hit and are not adequately prepared to deal with an oil bust, especially alongside a burgeoning public health crisis,” Ladislaw said.

DOE SUSPENDS OIL SALE FROM EMERGENCY SPR: The Energy Department is suspending a planned sale of oil from its emergency stockpile, in a real sign of fallout from the price dive.

“Given current oil markets, this is not the optimal time for the sale,” said Energy Department spokeswoman Jess Szymanski.

The postponed sale of 12 million barrels of oil, which had been scheduled for this month, was intended to be part of a regular series of drawdowns required by Congress in a bipartisan budget bill from 2015 as a way to raise revenue for the federal government. But it made no sense given oil markets are already oversaturated.

BERNIE SANDERS’S PLEDGE TO BAN OIL EXPORTS COULD BACKFIRE: As the oil industry grapples with a price war, it could face a major policy threat: Bernie Sanders’s pledge to ban oil exports.

Still, it’s not clear whether doing so would significantly reduce global carbon emissions, Josh reports in his latest Washington Examiner magazine story.

“To prevent U.S. producers from exporting oil would not solve the global emissions problem,” said Antoine Halff, a senior research scholar with the Center on Global Energy Policy at Columbia University. “It would make the economics of U.S. production much more difficult, but it would not reduce the global need for oil. It would just export emissions to other countries.”

Experts say the potential emissions-cutting benefit of preventing U.S. crude oil exports is among the least effective policies proposed by Democratic candidates, as compared to those targeting reductions in fossil fuel demand, such as a carbon tax or a zero-carbon electricity mandate.

Paasha Mahdavi, an energy and environmental politics professor at the University of California, Santa Barbara, said that cutting off oil exports would reduce U.S. emissions in the short term. Doing so would lower prices for thousands of independent oil producers that would be forced to curtail production.

But it would not decrease emissions over time, he said, because international oil companies would move to produce oil in other countries with less cumbersome regulations to serve continued global demand.

A symbolic declaration of war on fossil fuels: Liberal environmental groups that fought against lifting the crude oil export ban in 2015 have been lobbying Democratic hopefuls to reinstate it, viewing it as a signal to energy investors that the fossil fuel era is ending.

These groups acknowledge that some portion of the lost U.S. production from banning exports would be filled by increased production elsewhere, but say the replacement is not “one to one,” meaning there would be a net carbon benefit to the policy.

“The economics are such that U.S. producers would have less incentive to do the massive extraction they are doing right now,” said David Turnbull of Oil Change U.S.

INTERIOR NOT RUSHING ON OFFSHORE DRILLING PLAN: Interior Secretary David Bernhardt reiterated Tuesday that his agency has no immediate plans to issue a proposal to expand offshore oil and gas drilling.

“On my watch, the department has not proposed a draft proposed plan,” Bernhardt said at a hearing on his agency’s budget before the Senate Energy and Natural Resources Committee.
“Our plan at this time has no vision of going one way or another. I don’t know what the plan will be.”

Bernhardt said he would wait for the result of a court ruling that cast doubt over the legality of opening new areas to drilling. He was reiterating comments he made last April when he first indicated the agency plans to wait out a potentially lengthy appeals process over a decision by a federal judge blocking drilling in the Arctic before deciding which parts of federal waters to allow for oil and gas development.

The Trump administration, before the court ruling, had prepared to dramatically expand offshore oil and gas drilling, releasing a five-year plan in January 2018 to open nearly all federal waters on every coast.

HONOLULU VS. BIG OIL: The Hawaii capital is joining the ranks of cities suing major oil companies to get them to pay for damages caused by climate change.

The lawsuit, filed Monday, accuses several major oil companies — including ExxonMobil, BP, Chevron, and Royal Dutch Shell — of being “directly responsible for a substantial portion of the climate crisis-related impacts” the city is experiencing. The city also accuses the oil majors of deliberately working to “misinform and confuse the public” about their contribution to climate change.

“But for such campaigns, climate crisis impacts in the City would have been substantially mitigated or eliminated altogether,” the lawsuit reads.

More than a dozen other cities are suing Big Oil: Those lawsuits are pending in state courts across the country. Oil companies have attempted to move those cases to federal court, but judges for the most part have rejected those requests, including denying such a request just last week for a similar climate change case in Baltimore.

Industry groups are calling the city-led lawsuits a “fringe litigation movement,” arguing cities like Honolulu are more interested in picking political fights than curbing climate change.

“The truth is that the best way to fight climate change is to engage with the manufacturing community on the major innovations that will allow us to source and use energy more efficiently, not scapegoat the companies that manufacture the energy we all need and use every day,” said Phil Goldberg, special counsel for the Manufacturers’ Accountability Project, a project of the National Association of Manufacturers.

BUSINESS GROUP TAPS UTILITY EXEC AS NEW CHAIR: Emily Duncan, director of federal government relations at National Grid, will serve as the Business Council for Sustainable Energy’s new chairman, the group announced Tuesday. She replaces Mark Wagner, vice president of government relations for Johnson Controls.

The trade group — which comprises individual company members including utilities and manufacturers and energy trade groups — also added the American Public Gas Association as an associate member. In addition, Jon Sohn, director of U.S. government relations for Capital Power, joined the Council’s board, the group said.

The Rundown

Bloomberg Green energy’s $10 trillion revolution faces oil crash test

Wall Street Journal As Saudis pump up oil output, lessons from past price wars loom

Reuters US sanctions have idled a quarter of Iranian oil rigs

Washington Post Virginia general assembly approves higher gas tax

Calendar

TUESDAY | MARCH 10

2 p.m. 1324 Longworth. The House Natural Resources Committee’s Energy and Mineral Resources Subcommittee holds a hearing entitled “Examining the Policies and Priorities of the Bureau of Ocean Energy Management, the Bureau of Safety and Environmental Enforcement, the U.S. Geological Survey, the Bureau of Land Management, and the Office of Surface Mining Reclamation and Enforcement.”

WEDNESDAY | MARCH 11

9:30 a.m. 2362-B Rayburn. The House Committee on Appropriations Interior, Environment, and Related Agencies subcommittee holds a hearing on the Interior Department’s FY21 budget request with Bernhardt.

10 a.m. 406 Dirksen. The Senate Environment and Public Works Committee holds a nominations hearing for Douglas Benevento to be the EPA’s deputy administrator and David Wright and Christopher Hanson to be members of the Nuclear Regulatory Commission.

1:30 p.m. 2359 Rayburn. The House Committee on Appropriations Military Construction, Veterans Affairs, and Related Agencies subcommittee holds a hearing entitled “Impact of PFAS Exposure on Servicemembers.”

2 p.m. 2362-B Rayburn. The House Committee on Appropriations Energy and Water Development, and Related Agencies subcommittee holds a hearing on several pieces of the Energy Department’s FY21 budget request, including the Advanced Research Projects Agency—Energy, or ARPA-E.

THURSDAY | MARCH 12

10 a.m. 2154 Rayburn. The House Committee on Oversight and Government Reform’s Environment subcommittee holds a hearing entitled “Climate Change, Part IV: Future Impacts of Continued Federal Inaction.”