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MEMORIAL DAY GAS PRICE PRESSURE: Gasoline prices could rise around Memorial Day as EPA’s waiver exempting oil refiners from summer-grade fuel requirements is set to expire.
Historically, the transition to summer blends leads to a slight bump in prices around Memorial Day, May 25. But given the pandemic and its damage to fuel demand and travel, the bump may be amplified for drivers released from stay-at-home orders once the waiver is lifted as scheduled May 20.
EPA’s temporary waiver for companies to switch from summer-grade gasoline, issued March 27, has put “further downward pressure on gasoline prices,” the Energy Information Administration noted in its weekly petroleum analysis Wednesday.
EPA’s waiver was intended to help companies “ensure a steady supply of gasoline” during the pandemic, to the chagrin of environmental groups who cautioned the exemption would lead to increased emissions of greenhouse gases and smog-forming pollutants.
Prices are ticking up: Patrick De Haan, head of petroleum analysis at GasBuddy, said gasoline prices are already starting to rise as some companies have switched to summer blends regardless of the waiver. National gasoline prices are averaging $1.81 today, compared to $1.77 a week ago and $2.89 from a year ago.
De Haan told Josh he expects prices to continue to rise as reduced supply — as refiners have slashed output due to the coronavirus — “leaves gasoline inventories vulnerable to a quick rebound in demand.”
GasBuddy data shows gasoline demand was up 8.41% Wednesday from the week prior. It’s the highest Wednesday demand since March 18 and up 15.67% from the lowest Wednesday that month, when most shut-downs started being implemented. According to S&P Global, the 23 states that have lifted stay-at-home orders as of this week represent 41% of U.S. gasoline demand.
Will people even travel on Memorial Day? We know you’re thinking a slight uptick in pump prices may not matter if people are resistant to flock away for vacation despite the lifting of stay-home orders. But De Haan expects traffic to increase on Memorial Day weekend (while still down 20-25% from previous years), unless there is a second wave of coronavirus infections between now and then.
“There’s somewhat cabin fever developing across the country,” De Haan said.
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 SHUT-INS PICK UP PACE : At least 616,000 barrels of oil per day will be shut in during May and 655,000 barrels per day during June due to low prices and a fall in demand, according to an analysis Thursday of company plans by research group Rystad Energy.
That compares to the around 187,000 barrels per day that were shut in the U.S. during April.
Rystad analyzed public announcements from 19 producers, and the numbers likely understate the true amount of U.S. production cuts.
“Given the severity of the current market situation and significant production curtailments announced already since April, shale producers are not relying on natural decline but are rather choosing more drastic methods to reduce their output substantially and fast, said Veronika Akulinitseva, Rystad’s vice president of North American shale and upstream.
HESS CUTS PRODUCTION…AND STORES IT FOR LATER: U.S. oil and gas producer Hess reported Thursday a net loss of $2.43 billion in the first quarter, the latest company whacked by the coronavirus. The New York-based independent producer posted a profit of $32 million a year earlier.
Hess, a leading producer in North Dakota’s Bakken shale formation, is reducing its capital spending for 2020 by 37% to to $1.9 billion. The company is cutting its number of rigs in the Bakken from six to one.
Interesting nugget: Hess says it has hired three large crude carriers to store excess Bakken oil production from May to July, with the expectation it will sell the oil in the fourth quarter of 2020.
CRES SEEKS TO KEEP CLEAN ENERGY ON GOP’S RADAR: Citizens for Responsible Energy Solutions, the conservative climate and clean energy group, launched a new “Clean Energy Forward” campaign Wednesday, with an initial $250,000 national digital ad buy.
The goal is to make sure clean energy is “top of mind” for lawmakers, especially Republicans with clean energy in their districts, when Congress starts discussing ways to put people back to work and stimulate the economy, said Heather Reams, CRES’ executive director. The campaign broadly sings the praises of clean energy, but they do want to talk in particular to Republicans “who have engaged in clean energy [and] climate in the past, to remind those leaders about the value” of clean energy, Reams told Abby.
Reams acknowledged politics can be difficult in an election year, but she said the best way for clean energy groups to talk to lawmakers is to point directly to projects in their districts or their states that are suffering from the pandemic without additional support.
“Clean energy is a high growth area for every skill set, in every state, and in every congressional district in America,” she added.
PANDEMIC SHOULD PROVOKE PIVOT TO ELECTRIC VEHICLES: Securing America’s Future Energy, a group that advocates for lessening U.S. dependence on oil, released a report Wednesday saying lawmakers should promote electric vehicles as part of recovery and stimulus efforts.
Among other provisions, SAFE calls on Congress to provide trade-in incentives for consumers to swap older, less fuel-efficient cars with electric vehicles. This will help EVs compete in a period of low oil prices, and prepare the U.S. to keep pace with China, the world’s largest market for EVs.
DUKE ENERGY GETS A WATCHDOG: Environmental groups are ramping up pressure on the North Carolina-based utility to make stronger climate and clean energy commitments, forming a commission to “fact check” the company’s federal and state filings and scrutinize its environmental record through public hearings.
The Duke Energy Accountability Coalition was announced the same day as Duke Energy’s annual shareholder meeting, and it includes national organizations like the Environmental Working Group and Friends of the Earth, as well as local environmental groups. They say Duke Energy’s plans to go net-zero by 2050 fall far short of what is necessary, as the company “plans to rely on fossil gas, offsets and unproven carbon capture technology, while discounting the feasibility of energy storage and renewable energy on flawed grounds.”
SUSTAINABLE INVESTMENT MERGER TO TARGET DISTRIBUTED CLEAN ENERGY: “One of the ways I often describe what we do is we’re trying to build the foundations of a clean economy,” said Everett Smith, who will lead the new firm, Greenwood Sustainable Infrastructure, as its managing partner.
The new firm merges investment managers GoldenSet Capital Partners and Greenwood Energy. Their previous projects include installing solar at Six Flags Great Adventure, making it the world’s first amusement park to be fully powered by renewable energy, and New Jersey’s largest behind-the-meter solar project.
Smith said the combined firm will focus on small and mid-market clean energy, water, and waste projects, investing in proven technology (i.e. no pilot projects) to help get projects over the finish line. The firm can then aggregate several smaller projects and sell them to larger investors that have a higher floor for what they must spend.
“We’re going at it in a much more granular fashion,” Smith told Abby in an interview. Smaller projects are also able to create economic activity much more quickly than large-scale infrastructure, he said, a benefit as the country looks for ways to recover from the pandemic.
HYDROPOWER’S RECOVERY WISH LIST: The National Hydropower Association is seeking several tweaks to clean energy tax credits to ensure the industry has “long-term certainty” to pursue projects, including long-term extensions of credits for hydropower, allowing energy storage to qualify for the investment tax credit, and extending tax credit deadlines for projects that have already begun development but have been delayed by the pandemic. The group, in a letter sent to congressional leadership Wednesday, is also calling for as much as $1.5 billion in funding for hydropower infrastructure that it says would support clean energy and create jobs.
The Rundown
Bloomberg Exxon says Boulder climate case aims to reshape energy policy
New York Times Coronavirus makes cooling centers risky just as scorching weather hits
Reuters States ask Trump administration to pay laid off oil workers to plug abandoned wells
Financial Times Renewables sector shrugs off devastating effects of coronavirus
Roll Call Uranium firm takes virus aid, says crisis hasn’t affected business
Calendar
THURSDAY | MAY 7
The Senate is in session. The House hopes to return soon.
