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WARNING FROM THE EIA: The International Energy Agency this morning published a 10-point plan for governments to quickly cut oil amid Russia’s ongoing war in Ukraine — warning of a possible “looming emergency” for global energy security, and urging governments around the world to take “immediate actions” to offset the strain.
The plan calls for lowering speed limits on highways by at least 6 miles per hour, working from home for upwards of three days a week, if possible, and pushing for the adoption of “car-free Sundays.”
Also on the list are proposals to lower public transit prices and encourage residents to rely on bikes, car-sharing services, and carpool. It also calls to eliminate air travel for business trips when possible, and encourages consumers to travel by high-speed or night trains instead. (Read the full list of recommendations here.)
“We estimate that the full implementation of these measures in advanced economies alone can cut oil demand by 2.7 million barrels a day within the next four months, relative to current levels,” the IEA said.
Speaking to reporters in a virtual press briefing this morning, IEA executive director Fatih Birol stressed that oil markets are currently in an “emergency situation,” and warned that things “may get worse” over the next few months.
“As a result of Russia’s appalling aggression against Ukraine, the world may well be facing its biggest oil supply shock in decades, with huge implications for our economies and societies,” Birol added.
To be sure, the report comes at a time of deep volatility for the oil industry, which has been rattled by Russia’s ongoing war in Ukraine and subsequent supply constraints. (Russia is the world’s third-largest oil producer, and the world’s largest oil exporter.)
Last week, the U.S. and Canada announced bans on all Russian oil imports, while the U.K. said it will phase out its entire supply by the end of the year.
In a separate report published earlier this week, the IEA projected that Russian exports could fall by around 2.5 million barrels per day beginning next month, or even further “should restrictions or public condemnation escalate.”
Crude prices have also whipsawed in recent days amid conflicting reports about possible negotiations, with benchmarks for both Brent crude and West Texas Intermediate poised for their first back-to-back loss since December.
“Even if the price of oil on international markets has not so far risen as high as the all-time record reached in 2008, currency exchange rates mean that the price at the pump is at the highest level ever in some countries,” the report says.
On average, monthly spending on oil products for transport and heating in January and February spiked by nearly 35% per household in advanced economies, and by more than 55% per household in emerging and developing economies compared to the same period last year, the report found.
The wish list may be a bit removed from reality: The pandemic-weary public seems eager for a return to “normalcy” after two years of isolation and restrictions on travel and entertainment.
Travel demand appears strong. Speaking in a recent interview with Bloomberg, Expedia CEO Peter Kern forecasted that summer 2022 “will be the busiest travel season ever.”
“We’ve been talking about pent-up demand for a long time, but until now there have been too many restrictions in place for people to do too much with it,” he said, adding that airlines “are expecting to be back to historic levels by August.”
The World Travel & Tourism Council is also forecasting a strong rebound: In its latest economic modeling report, the group said it expects U.S. travel and tourism to grow to nearly $2 trillion this summer; surpassing pre-pandemic levels by more than 6%.
Looking ahead: IEA also stressed that the strategies it outlined should be part of a broader, long-term effort to slash oil demand and pivot to cleaner energy alternatives. The reduction of oil use “must not remain a temporary measure,” the report said, adding that sustained reductions are important “not only to improve countries’ energy security but also to tackle climate change and reduce air pollution.”
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.
DEMOCRATS STRUGGLING TO DISTANCE THEMSELVES FROM HIGH GAS COSTS: Congressional Democrats are scrambling to roll out a flurry of new initiatives to help protect consumers from record-high gas prices — and insulate themselves as much as possible ahead of the 2022 midterm elections.
Democrats are “tired of being put on the defensive on this issue,” House Natural Resources Chairman Raúl Grijalva told E&E News yesterday.
To that end, House Speaker Nancy Pelosi unveiled a new “use it or lose it” plan yesterday that would punish companies who aren’t actively using their federal leases to drill.
“We want to say there are 6,000 permits out there where people could drill — where industry could drill — so they don’t need to be upending our initiatives to save the planet from the climate crisis,” Pelosi told reporters at her weekly press briefing. “If they want to drill, they have places to drill. Use it or lose it, let somebody else drill there.”
Grijalva said the House Natural Resources Committee will be holding a hearing “soon” “on the whole issue of corporate responsibility, both on the price and the supply.” “Use it or lose it” would be part of that discussion, Grijalva added.
Senate Democrats have proposed legislation that would cut into large oil firm revenues to help reduce costs, and House lawmakers have floated the idea of providing a monthly rebate to consumers. Their efforts come as national gas averages reached $4.27 a gallon Friday, according to AAA.
As Politico reported and Daily on Energy alum Josh Siegel notes, Democrats are in an unenviable position heading into the November midterms. Their message on gas prices is that the cost increases are due to forces largely outside their control. But that won’t inoculate them from taking the fall for it politically.
“We should be fighting for consumers, but frankly we need to remind consumers who is to blame,” Sen. Brian Schatz told Siegel. “And it ain’t federal policymakers.”
Bigger picture: Oil prices, which shot up earlier this week, are back down. And Democrats are hoping to get ahead of the message that they aren’t doing more to lower gas prices by claiming the companies themselves are keeping prices artificually high. But, as we pointed out yesterday, there’s always a bit of a “lag period” before crude oil actually translates to lower prices at the pump. One industry official told Breanne that the process is akin to “seeing that the price of wheat has gone down, and then being outraged that there’s not immediately more bread.”
More of this line of attack from the White House: Press secretary Jen Psaki took aim at U.S. oil companies yesterday for failing to do more to lower gas prices for consumers. Asked about their decisions not to expand drilling earlier, Psaki said, “I think it’s hard for them to make the argument it’s anything other than business decisions on their part.”
“The oil and gas industry right now is receiving profit, windfall profits,” she added. “We’ve seen that they publicly report their profits … and instead of keeping up with current demand, too many of these companies, in our view, are making the calculated decision of returning money to investors and shareholders … instead of expanding production enough in the short term.”
GREEN INVESTOR BACKING FRACKING: The man behind a green investment firm that helped put three new climate change-focused nominees on ExxonMobil’s board of directors is out in front endorsing fracking as a practical and relatively green-ish response to the Russia-Ukraine war.
Christopher James, founder and executive chairman of Engine No. 1, wrote in the Wall Street Journal yesterday that shale oil and gas are “the key to a renewable future” and emphasized that oil and gas from the Texas-New Mexico Permian Basin in particular is the cleanest in the world.
The essence of his argument is, fracking shale deposits for oil and gas allows for quick turnaround in output to respond to supply shocks. For that, exploiting shale via fracking “represents arguably the most transition-aligned oil and gas production today” because it doesn’t require the same large amounts of capital up front as conventional drilling projects, James argues.
Making no bones: James stressed that relying on oil and gas long-term is “unsustainable, both environmentally and geopolitically,” but he acknowledged that demand for hydrocarbons remains and said they might as well be sourced domestically.
This line of argument has gained some traction among more environmentally- and liberal-aligned groups in recent months, especially since the Russia-Ukraine conflict began escalating quickly.
Paul Bledose, a strategic adviser for the Progressive Policy Institute and an alum of the Clinton White House’s Climate Change Task Force, has been advocating that the U.S. push harder to expand its share of the global oil and gas market to hedge Russian fuels out.
“I really feel like the Democratic Party needs to embrace the strategic opportunities of natural gas to meet our climate, security, and economic goals,” Bledsoe told reporters during a media briefing in January.
SENATORS PROPOSE BANNING RUSSIAN URANIUM: Several energy-state Republicans are behind a new bill that would ban the import of uranium from Russia, a measure they are framing as a means of serving another blow to its energy economy.
Energy and Natural Resources Ranking Member John Barrasso, who led the effort, said instituting a ban would “further defund Russia’s war machine” beyond President Joe Biden’s new ban on Russian hydrocarbons and help enable domestic production of the nuclear fuel.
Russia has been a top source of uranium for the U.S. nuclear fleet, and in 2020 accounted for more than 16% of total uranium deliveries, per EIA numbers.
The bill is an extension of Barrasso’s recent uranium politicking. Before the U.S. Geological Survey’s updated list of critical minerals was finalized last month, he and fellow ENR Republican Mike Lee of Utah had pressed Interior Secretary Deb Haaland not to remove uranium, arguing it would show the Biden administration welcomes the U.S.’ reliance on foreign sources like Russia.
“We think such a signal would be a grave and costly mistake for our country, especially at a time when political tensions between the U.S. and Russia are at their highest level in generations,” they wrote on Feb. 1.
USGS said in announcing its draft list of minerals that uranium was not considered due to a change in the statutory definition of what kinds of minerals can be included in the critical mineral list. The lawmakers quibbled with USGS’s interpretation.
OCCIDENTAL MUST HOLD VOTE ON EMISSIONS PLAN: SEC: The Securities and Exchange Commission is requiring Texas-based Occidental Petroleum to hold a shareholder vote on whether to impose stricter emissions targets after an activist Dutch firm with stakes in the company filed a motion to force the vote, the Financial Times reports.
Occidental argued it was already largely implementing emissions targets as they were proposed in the motion and asked the SEC to reject the motion. But the commission demurred and reportedly told the company in a letter earlier this week, “Based on the information you have presented, it appears that the company’s public disclosures do not substantially implement the proposal.”
The Rundown
AP Czech Republic opens tender for new nuclear reactor
E&E News How US crackdown on China’s human rights record hits solar
AP Hot spring forecast: Drought deepens in West, flooding ebbs
Calendar
MONDAY | MARCH 21
11:00 a.m. The Securities and Exchange Commission will hold a meeting and vote on whether to propose amendments that would enhance and standardize registrants’ climate-related disclosures for investors.
