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FROM GAS TO GASOLINE: The Biden administration has turned from warning about what a Russia-Ukraine escalation would do to Europe’s energy prices to worrying about what it would do to our own.
President Joe Biden assessed yesterday that an invasion into Ukraine by leading oil producer Russia remains a real possibility and said any associated disruption “will not be painless” for American drivers.
“There could be impact on our energy prices, so we are taking active steps to alleviate the pressure on our own energy markets and offset rising prices,” Biden said, adding the administration is “prepared to deploy all the tools and authority at our disposal to provide relief at the gas pump.”
But tools are few: As oil has crept back up from its omicron-driven, post-Thanksgiving low point, the administration has maintained on multiple occasions that it has options to help alleviate prices.
Press Secretary Jen Psaki said much the same yesterday and entertained returning to the Strategic Petroleum Reserve to release more stocked barrels into the market.
She also declined to write off support for a proposal by Democratic lawmakers to suspend the federal gas tax as a means of relief.
The administration, despite its executive actions designed to restrict fossil fuels and pressure from environmentalists to more aggressively target the sector, has encouraged domestic producers to drill for more oil but has declined to exercise any other of the stated options so far, even though Brent crude has risen more than 35% since Dec. 1 and today is flirting with $96 per barrel.
Ryan Mackler, energy policy analyst with Rapidan Energy Group, said the administration is simply out of road.
“So when you’ve gone to OPEC, when you’ve gone to the domestic producers, when you’ve done your SPR release, what’s left?” Mackler told Jeremy. “Our view here is there’s just nothing there.”
On Russian oil: Russia is a top-three oil producer and exporter, meaning its barrels have a major impact on the global price of oil, and that price in turn governs the price of gasoline.
Beyond that, the number of Russian barrels of crude and other petroleum products imported by U.S. refiners in recent years has varied widely month to month, but total imports from Russia were third only to Canada and Mexico in November, per data from the Energy Information Administration.
That eminence means the global oil market “cannot afford to lose Russian supplies,” as CSIS energy analyst Ben Cahill wrote last month.
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WHERE DOMESTIC PRODUCTION IS HEADED: The U.S. produced 11.6 million barrels of oil per day for the week ending Feb. 11, which is up more than 6% over a year ago, per the EIA’s newest Weekly Petroleum Status Report.
EIA is reminding the world today that it projects U.S. crude oil production to reach a record next year at 12.6 million barrels per day.
Operators in the lower 48 added 220 oil-directed rigs between Jan 8. 2021 and Feb. 7 of this year, and more than half of those additions are in the Permian Basin.
BANKING GOP STALLS VOTES ON RASKIN AND OTHER FED PICKS: Republicans on the Senate Banking Committee boycotted a business meeting yesterday, denying the committee a quorum and preventing it from moving forward with votes on top Federal Reserve picks, including vice chairwoman for supervision nominee Sarah Bloom Raskin.
Ranking Member Pat Toomey said Republicans didn’t show up because Raskin has been “evasive” and avoided answering their questions about her work with a financial technology company which obtained one of the Fed’s master accounts, the implication being that Raskin used connections as a former Fed governor and deputy treasury secretary to secure the contract. Raskin has denied allegations of impropriety.
The lawmakers’ absence was about “seeking answers,” not to delay the votes, Toomey said.
Republicans on the committee and Toomey especially have objected stridently to Raskin’s regulatory philosophy, which envisions central bank policy as a means to insulate the financial sector from climate change.
Committee Chairman Sherrod Brown criticized the lawmakers’s absence yesterday, as did Psaki.
“Senator Toomey has continued to promote false allegations that have already been shot down by ethics experts, the Kansas City Fed, the founder of Reserve Trust, and Sarah Bloom Raskin herself,” she said during her briefing yesterday.
MINING INDUSTRY SEES CAUSE IN DEFENSE COMPETITION REPORT: National Mining Association head Rich Nolan called for a more aggressive critical minerals strategy yesterday in response to a Defense Department report on the poor state of competition between U.S. mineral suppliers and foreign counterparts.
“There’s no meeting the nation’s energy transition needs, winning the electric vehicle race, or building a secure domestic manufacturing and defense industrial base without prioritizing mining right here at home,” Nolan said.
As we covered yesterday, the department’s report discussed battery manufacturing capacity in particular, saying it “is limited and requires major capital expenditures and time to compete” and is simply unable to meet the military’s current needs.
SELECT COMMITTEE TAKES UP GRID RELIABILITY: The House’s climate change committee probed witnesses yesterday on how the U.S. can strengthen electricity grids and better protect them against climate change.
A point of emphasis by lawmakers of both parties and witnesses was a need to grow transmission capabilities, but well-established differences over the displacement of fossil fuels with renewable energy were on full display.
Katherine Hamilton, chair of Global Future Council on Clean Electrification for the World Economic Forum, told lawmakers that regional grid systems need more interconnection so they can import electricity when generation within a particular region is strained but also in order to enable municipalities to achieve their decarbonization goals.
“A lot of our systems are very isolated from other systems. Right now, there is no connection, a seam, between MISO in the Midwest and PJM, which has an enormous amount of load,” Hamilton said. “So, let’s build a transmission tie there to move all that great wind out of Iowa into Chicago.”
Republicans argued contrarily that expanding reliance on renewable generation would make grids harder or more expensive to manage.
PUTIN DOWNPLAYS CRITICISM OF NORD STREAM 2: Russian President Vladimir Putin sought to downplay criticism of Nord Stream 2 yesterday, seeking to characterize the gas pipeline, which directly connects Russia to Germany, as a “purely commercial project” that has “no political overtones” –– and renewing pressure on German authorities to sign off on the controversial project.
Putin’s comments came during a joint press conference with German Chancellor Olaf Scholz, who traveled to Moscow yesterday in an eleventh-hour bid to ease tensions over the Russian military buildup near Ukraine.
“This is one of the largest infrastructure projects in Europe, designed to significantly strengthen energy security on the continent, contribute to the solution of pan-European economic and environmental problems,” Putin told reporters following his sit-down with Scholz. “I have said more than once that this project is purely commercial, and that there are no politics, nor any political tinge, here.”
Construction of Nord Stream 2 was completed in September, but is awaiting certification from German regulators, who have yet to sign off on the controversial pipeline.
“Nord Stream 2 has been ready to become fully operational since last November,” Putin told reporters. “Now it’s up to German regulators. They need to make this decision about using this pipeline to deliver gas. That’s it.”
The bigger picture: Meanwhile, EU Foreign Policy Chief Josep Borrell warned Russia that Nord Stream 2 will not become operational if Russia invades Ukraine, echoing a similar pledge made by Biden earlier this month.
In an interview with BBC Radio yesterday, Borrell said the U.S. and other EU nations have made it “quite clear” that the pipeline will be blocked in the event Russia moves to invade its neighbor.
“It doesn’t mean that Nord Stream 2 will stop working forever,” Borrell said. “But if there is a war between Russia and Ukraine, certainly, I’m sorry to say that not only Nord Stream 2 will be affected, the whole supply of gas to Europe from Russia will be affected.”
Borrell added that this would “certainly” have consequences for gas prices in Europe, which gets some 40% of its natural gas from Russia and has already been hit by widespread energy shortages and high costs this winter.
ETHANOL WORSE FOR CLIMATE THAN GASOLINE, NEW STUDY FINDS: A new study found that U.S. production of corn-based ethanol is worse for the climate than gasoline, potentially contradicting years of findings from the U.S. Department of Agriculture, which researchers said underestimates the emissions impact of land conversion.
The new study, published by the Proceedings of the National Academy of Sciences, found that ethanol is at least 24% more carbon-intensive than gasoline due to emissions resulting from the land required to grow corn, as well as the production and combustion of ethanol.
Since 2005, U.S. oil refiners have been required by law to mix corn-based ethanol with gasoline supplies. That policy was intended to help reduce emissions and curb U.S. dependency on energy imports.
But as a result, the study found, corn cultivation spiked 8.7% in the U.S., and expanded nearly 7 million additional acres of land between 2008 and 2016. It also prompted widespread changes in land use, including the tilling of cropland that would otherwise have been retired or handed over to conservation programs.
The findings come as the Biden administration is reviewing the use of biofuels as part of its broader commitment to clean energy and reaching net-zero carbon emissions by the year 2050.
EPA is currently weighing changes to the existing Renewable Fuel Standard program (or RFS), which it oversees, and could present any new proposals to Congress as early as May.
The findings have reignited a long-running debate over ethanol: In a statement, Geoff Cooper, president of the Renewable Fuels Association, blasted the study as “a completely fictional and erroneous account” that relied on “worst-case assumptions [and] cherry-picked data.”
This morning, the Senate Environment and Public Works Committee held a hearing on the challenges and opportunities posed by RFS, during which members heard testimony from both backers and opponents of current ethanol blending requirements.
There’s already lots of daylight between existing committee members: Sens. Tammy Duckworth, an Illinois Democrat, and Joni Ernst, an Iowa Republican, have introduced legislation seeking to block the EPA from retroactively reducing any biofuel blending requirements.
Meanwhile, several Senate Republicans, led by EPW Ranking Member Shelley Moore Capito of West Virginia, have urged the agency to reconsider its proposed blanket denial of small refinery exemptions under RFS.
MORE FIRMS LOBBY FOR CLIMATE AGENDA’S PASSAGE: Executives representing a range of companies, including General Motors and craft beer giant New Belgium Brewing, are on the Hill this week to press lawmakers to pass Democrats’ energy and climate change agenda.
The meetings, marketed by finance-focused green group Ceres, are an extension of advocacy which a number of companies favoring the Democrats’ energy proposals have undertaken since the Build Back Better Act stalled.
The Rundown
Euractiv EU says it is prepared for partial disruption of Russian gas flows
Associated Press Saved pollution credits may hinder California climate goals
Calendar
THURSDAY | FEB. 17
10:00 a.m. The Federal Energy Regulatory Commission will hold its February open meeting.
1:00 p.m. The House Subcommittee on Energy and Mineral Resources will host a remote hearing on climate adaptation science at the U.S. Geological Survey.
