Daily on Energy: What the House GOP has in store for Biden

Probes, bills, and blocking Biden: President Joe Biden’s energy and climate policy became one of Republicans’ main points of attack stretching back months before the war in Ukraine upended energy markets, the central message being that Biden’s regulatory policies have held the oil and gas industry back from helping to lower energy prices (Production has risen significantly from the pandemic lull on Biden’s watch.)

The House GOP intends to get moving on energy-related issues “out of the gate” and will put investigative powers to use, said Rep. Bruce Westerman, incoming chairman of the House Natural Resources Committee.

Westerman pledged “rigorous oversight” of the Biden administration via the Oversight and Investigations Subcommittee. He complained specifically about the fate of the Twin Metals mine, whose mineral leases the Biden administration pulled last year, saying the subcommittee would take up issues like NIMBYism.

“This not-in-my-backyard policy is the thing that I want to push back against the most,” he told reporters yesterday.

Republicans began setting their investigative sails before the midterms, with those on House Oversight launching an investigation last month into Biden’s use of the Strategic Petroleum Reserve to tame high fuel prices, as well as the foundations of the administration’s interest in limiting petroleum exports.

The new Congress will be a paradigm shift for both committees, which under Democratic leadership have focused investigations on things like oil industry’s climate change messaging and environmental justice-related issues.

Westerman said legislative priorities Republicans will look to move include passing bills to solve the West’s water supply crisis. Rep. Sam Graves’s BUILDER Act, which would reform NEPA, also got an honorable mention.

Speaking of which: Permitting reform looks to be one of the few areas where there’s some bipartisan momentum. Biden gave his full endorsement to Sen. Joe Manchin’s permitting bill, and Republicans have talked about reform forever, although there is going to be more insistence that House Republicans be given a seat at the table now that they have the leverage of controlling the chamber, according to one House GOP source.

“It’s really hard to take [Manchin’s] permitting reform effort seriously that didn’t include House Republicans who have been putting out robust, well-vetted, comprehensive permitting reform proposals for the last three years,” the person, a senior policy adviser, told Jeremy.

Beyond Biden, there is a clear appetite for reforms even among climate hawks like Sen. Brian Schatz and Ron Wyden, but there were fundamental disagreements among Democrats about the merits of Manchin’s bill for its attempt to put new constraints on environmental reviews and timelines.

Their environmental constituencies are also prepared to keep the pressure on to stop reforms as Manchin seeks to add his bill either to the impending defense or omnibus bills.

“We’re adamantly opposed to this effort because we believe it would expedite fossil fuel projects, silence community input and gut our bedrock enviro laws,” a source at a prominent green NGO told Jeremy.

Where consensus can’t be reached on legislation in the 118th Congress, Westerman said, the GOP will use their numbers to block Biden and the Democrats.

“The one thing we can do is stop bad policies,” Westerman said. “Sometimes it’s just as important as passing good policies.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). 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.

EXPLOSIVE RESIDUE FOUND AT NORD STREAM BLAST SITES: Swedish investigators have found traces of explosives at the site of the damaged Nord Stream gas pipelines, security officials said today, confirming that “gross sabotage” was behind for the string of unexplained blasts in late September that sent methane spewing into the Baltic Sea.

Swedish officials declined to give further details on which explosives may have been used in carrying out the blasts.

A reminder – the U.S. and European governments have so far declined to assign blame for the blasts.

Swedish and Danish investigators have been conducting preliminary investigations into the explosions, which were carried out in their economic zones.

YIKES – MUCH OF COUNTRY FACES ENERGY OUTAGES THIS WINTER: A large portion of North America is at risk of insufficient energy supplies during peak winter conditions this year, U.S. and Canadian regulators at the North American Electric Reliability Corporation, or NERC, said in a sobering new report yesterday.

In their 2022-2023 Winter Reliability Assessment, regulators cited reliability concerns driven by higher peak demand projections and inadequate generator weatherization, as well as low fuel supply risks and limitations to natural gas infrastructure.

Though the problems vary by region—with Texas, the Midwest, and the Northeast considered to be at particularly elevated risk of a supply shortage—energy emergencies as a whole are considered more likely this winter due to lower generator capacity and shrinking reserve margins, regulators said.

Another common theme is a lack of energy sources that will be reliable when the sun isn’t shining and the wind is not blowing.

“We don’t have large-scale storage solutions [yet] — so as we transition our system from predominantly coal, nuclear, and gas generation to more renewable and weather-dependent resources, we need to ensure reliability, even on the days when the weather isn’t quite cooperating,” said John Moura, NERC’s director of reliability assessment and performance analysis. Read more on the report—and takeaways for each region— here.

OIL PRICES FALL ON WEAK GLOBAL DEMAND: Oil prices fell by more than $3 a barrel Friday, weakening for the second week in a row amid lower-than-expected demand from both China and Europe at the start of the winter season.

Futures for international benchmark Brent crude fell by 3.59% Friday to $86.56 per barrel. Meanwhile, futures for U.S.-based West Texas Intermediate dropped to $78.39 per barrel—down $3.25 from the previous day of trading.

Lower-than-expected demand from China is one driver of the low prices. China had hoped to reopen its economy this winter after more than two years of extensive lockdowns due to the COVID-19 pandemic, but a resurgence of cases appears to have slowed that effort.

Meanwhile, European refiners have found themselves in a period of potential oversupply.

Buyers had raced to secure oil ahead of the EU’s embargo on Russian seaborne crude imports next month and fears of a global supply shortage. But buyers say that shortage has yet to materialize, due in large part to more supplies from the U.S., Middle East, and Latin America, as well as lower demand from Asia.

European imports of Latin American crude soared following Russia’s invasion of Ukraine, averaging around 313,000 barrels per day (bpd) in 2022 compared to just 132,000 bpd the previous year, according to data from Refinitiv Eikon.

U.S. crude exports to Europe have climbed to 1.1 million bpd as of November, compared with 800,000 bpd for all of 2021.

“[European] refiners seem to have overbought in November and December, probably because of fears around Urals,” one European crude trader told Reuters. “There’s too much oil around,” he added.

Combined, these factors have lessened demand concerns and sent oil futures trading at their lowest level since September.

…Still, reasons to worry about supply: The G-7 price cap on Russian oil takes effect next month alongside the EU ban on Russian crude, prompting fears that Moscow could curtail its production. OPEC+ will also gather for its monthly policy meeting. Another production cut could also significantly change the supply-demand situation in the month ahead.

U.S. SAYS OIL PRICE CAP GUIDANCE FORTHCOMING: The U.S. is expected to issue guidance in the coming days on the Russian oil price cap endorsed by G-7 nations, and is prepared for some “hiccups” in its implementation.

Jim Mullinax, the State Department’s Director of Sanctions Policy and Implementation, said yesterday during a panel hosted by Thomson Reuters that the U.S. is approaching the cap with a “spirit of flexibility.” “We’ve taken a lot of feedback from industry about how to implement this… There’s probably going to be some hiccups in the early frame,” he said.

Mullinax did not say whether the coming guidance would include any information about the fixed price that leaders agreed to set earlier this month, according to Reuters.

Under the plan, all participants will deny oil transport services, such as navigation, finance, and insurance to any cargoes priced above the cap.

“I’m hoping that it’s been telegraphed well, that we’ve been relatively transparent,” Mullinax said of U.S. efforts to build out support for the plan. The price cap is a first-of-its-kind effort that seeks to cut into Russia’s excess oil profits and reduce its war funding, while still incentivizing Moscow to produce.

The Rundown

Politico EU The tiny town where Germany’s Russian pipedream became a nightmare

Bloomberg Law GOP’s House Majority Complicates Podesta’s Climate Spending Role

Financial Times COP27: Geopolitical battle lines drawn on final day of climate talks

Bloomberg A nation in the crosshairs of climate change is ready to get rich on oil

Politico GOP plans to punish ‘woke’ Wall Street

Calendar

FRIDAY | NOVEMBER 18

The COP27 climate change conference concludes in Sharm el-Sheik, Egypt.