Daily on Energy: Could Treasury be looking at getting into oil speculation?

If he was talking about filling the Strategic Petroleum Reserve, the math didn’t add up —that amount would purchase enough oil to fill up the reserve five times over at least.

Later Thursday, Energy Secretary Dan Brouillette said that he would ask Congress for $3 billion to fulfill President Trump’s order to buy low-priced oil to restock the SPR, which would be more than enough to cover the 77 million barrels open capacity.

Brouillette was clearly caught off guard by Mnuchin’s comment, telling reporters that he had not seen what the treasury secretary said and planned to call to ask what he meant (the press office for both officials did not respond to requests for follow-up comment from Josh).

While it’s certainly possible Mnuchin simply fudged the numbers, some analysts aren’t so sure.

“I don’t think anyone should discount when Mnuchin said,” said Kevin Book, managing director of the consulting group ClearView Energy. “Mnuchin is not a guy who misses details. Our interpretation was he was proposing something much bigger.”

Indeed, it’s possible Mnuchin was hinting at something else, like the possibility of the government buying $10-20 billion of crude outright, to be stored elsewhere in industry-run storage terminals for future sale, not just for SPR storage. So the U.S. could look to purchase large quantities of crude oil and make it a government investment, an idea that Book says has precedent in desperate times.

“We are on a war footing now,” Book told Josh. “When America has been on war footing the government has bought commodities for the purposes of making industries whole. When the country is on a war footing, the government gets into business.”

To buy the huge amount of oil Mnuchin floated would require the government taking over commercial storage facilities, considering it’d be impossible to immediately find willing buyers for it. The legal authority on doing that “is very vague,” Book said.

Oil and gas industry officials are unsurprisingly dismissing the concept.

Mike Sommers, the CEO of the American Petroleum Institute, told Josh in an interview Friday that the Trump administration has not mentioned this possibility in conversations they’ve had about managing the oil market challenge.

“We don’t think it’s an appropriate idea,” Sommers 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.

TRUMP FLOATS HIMSELF AS DEALMAKER IN OIL PRICE WAR: Trump suggested Thursday that his administration is considering mediating in the Saudi Arabia-Russia oil price war to strike a deal that would help reverse a price crash.

“I spoke with numerous people that have a lot to do with it,” Trump said at a White House briefing. “And we have a lot of power over the situation. We’re trying to find some kind of a medium ground. At the appropriate time I’ll get involved.”

Oil prices rose in reaction to Trump’s and the news that DOE is making progress on SPR purchases, with U.S. crude recording its largest one-day percentage gain on record, according to the Wall Street Journal (WTI is trading at $25.21 as of this writing, while Brent, the global marker, has climbed to $30.34). Prices had tumbled over recent weeks as the coronavirus pandemic has caused slowdowns in travel at the same time that Saudi Arabia is flooding the market with cheap crude in retaliation for Russia deciding to break from a multiyear pact to cut production to raise prices.

It’s unclear what Trump’s diplomatic tools would look like.

Here’s one crazy idea: But a commissioner of the Texas Railroad Commission, which regulates oil production in the biggest producer state, floated an interesting and nearly unprecedented option Thursday. The commissioner, Ryan Sitton, proposed in a Bloomberg op-ed that the railroad commission could use its authority to issue “pro-rationing” schedules — a power unused since 1973 — to force Texas producers to cut production. He said Texas could cut production 10%, in exchange for Saudi Arabia and Russia each doing the same, a delicate diplomatic dance that would require the handywork of Trump.

“While Texas controls its destiny, it doesn’t control that of others,” Sitton said. “We would need our federal government, and our president, to make a deal that stabilizes oil markets.”

RENEWABLES AREN’T ALONE SEEKING TAX CREDIT HELP: The Carbon Capture Coalition, in a statement Thursday, urged Congress to consider a “direct pay” option for the so-called 45Q tax credits for the technology, to help projects continue on amid frozen tax equity markets. The group is also seeking a five-year extension of the deadline by which projects must begin construction to qualify for the credit.

It could make sense to pair with any tax credit aid to renewables: Wind and solar developers are also seeking a “direct pay” option and an at least one-year extension of their deadlines. If Democrats fight to tack those elements onto a broader stimulus package, either the phase three bill or down the line, Republicans (and some Democrats who strongly support carbon capture) could work to ensure carbon capture gets the same treatment.

House Republicans have centered their budding climate strategy around boosting carbon capture, even proposing making the 45Q credits permanent, so this wouldn’t be outside their wheelhouse. And Brad Crabtree, the vice president of carbon management for the Great Plains Institute who co-convenes the Carbon Capture Coalition, told Abby the coalition has been in touch with Democratic and Republican congressional offices who want to see policy “parity” if Congress addresses the clean energy credits in a stimulus package.

More in Abby’s story from yesterday.

COAL MINING WANTS FEDERAL HELP, TOO: With all the attention on the oil markets and U.S. shale producers, the coal industry wants Trump and Congress to know it’s also suffering from the coronavirus pandemic.

“It is imperative to keep these plants online,” National Mining Association president Rich Nolan wrote Trump, Majority Leader Mitch McConnell, and Speaker Nancy Pelosi earlier in the week. He suggested Trump could use authorities under the Defense Production Act to help keep coal plants operating and able to provide power during the outbreak.

The industry is also asking Congress to suspend or ease up on a number of payments coal companies must make, including the Black Lung excise tax, abandoned mine fees, and federal royalty payments. In addition, Nolan asks that policies to increase credit availability be expanded to include all businesses “without prejudice or discrimination,” citing financial institutions have divested from coal in recent years “under pressure from environment groups.”

Coal mining as “essential industry”: In a separate letter, West Virginia Congressman David McKinley, a Republican who chairs the Coal Caucus, reiterated many of the same requests and urged Trump to designate coal mining as an “essential industry.” That would mean the industry would be exempt from being shuttered if states order businesses to close during the outbreak.

McKinley has good reason to worry: Pennsylvania Governor Tom Wolf, a Democrat, ordered all “non-life-sustaining” businesses in the state to close by 8 p.m. Thursday. Coal mining didn’t qualify as life-sustaining. Oil and gas extraction did.

House Democrats say no way: In their own letter Friday, House Natural Resources Chairman Raul Grijalva and Pennsylvania Democrat Matt Cartwright urge House and Senate leaders to reject the mining group’s “wish list.” They accused the industry of trying to take advantage of the pandemic to score policy aid “completely unrelated.”

UTILITIES WON’T CUT YOUR POWER DURING THE PANDEMIC: The Edison Electric Institute, which represents all investor-owned utilities in the U.S., announced Thursday its members wouldn’t disconnect customers’ power during the coronavirus outbreak, even if they can’t pay their bills.

The announcement comes as the power industry is putting in place contingency plans if the outbreak gets worse that could involve housing workers on site at power plants and control centers to keep the lights on, Reuters reports.

Some companies have already begun “either sequestering a healthy group of their essential employees or are considering doing that and are identifying appropriate protocols to do that,” Scott Aaronson, EEI’s vice president of security and preparedness, told Reuters.

FERC APPROVES JORDAN COVE LNG PROJECT: FERC on Thursday approved construction of the $10 billion Jordan Cove liquified natural gas export project in Oregon, the first terminal for LNG on the West Coast permitted by the commission.

The commission had put the brakes on the project’s review last month, when Republican Commissioner Bernard McNamee asked for more time to consider the project after Oregon sent a letter to FERC regarding permitting issues. But he determined the facility would be in the national interest, overriding state concerns.

FERC’s two voting Republicans OK’d the project despite opposition from the commission’s sole Democrat, Richard Glick. Glick faulted the Republicans for ignoring the effect of constructing and operating Jordan Cove on climate change, and questioned whether the project serves the public interest given slowing global LNG demand.

“Claiming that a project’s environmental impacts are acceptable while at the same time refusing to assess the significance of the project’s impact on the most important environmental issue of our time is not reasoned decisionmaking,” Glick said in his dissent.

TRANSMISSION GETS A BOOST TOO: FERC also proposed a rule Thursday to reform its transmission incentives policy to encourage companies to build them.

Republican Chairman Neil Chatterjee in an interview with Josh this week cited the importance of building more transmission to deliver wind and solar from rural producing areas to population centers.

FERC does not have authority to directly site transmission projects, which typically encounter opposition at the local level from people living near the planned power lines — a problem known as not-in-my-backyard-ism, or NIMBYism. But Chatterjee said the proposed reforms are designed to shift the focus in granting transmission incentives to companies from an approach based on the risks and challenges faced by a project to one based on the economic and reliability benefits to consumers.

Glick voted against the proposed reforms, arguing the commission is looking to provide incentives only for economic and reliability reasons, but ignores evaluating transmission for its ability to help states meet carbon reduction targets.

COULD COVID-19 DELAY GLOBAL CLIMATE TALKS? Officials in the United Kingdom, which is hosting the United Nations climate talks this year in Glasgow, aren’t ready to make any promises they’ll go on as planned in November.

“I can’t give you a cast-iron guarantee,” UK Foreign Secretary Dominic Raab told British lawmakers Thursday, according to the Belfast Telegraph. He added they want to “avoid delay if we possibly can,” but it will be a “challenge” given the coronavirus pandemic.

Postponing this year’s talks could be a huge setback, especially after countries left the last round of talks in Madrid last year without much to show for it. This year is a critical test for the Paris climate agreement, as countries are supposed to strengthen their national commitments to slash emissions for the first time since the deal was inked in 2015.

The Rundown

Wall Street Journal Texas weighs curtailing oil production for first time in decades

New York Times Climate voters still want more from Biden

Los Angeles Times How power companies are keeping your lights on during the pandemic

Bloomberg Putin won’t submit to what is seen as Saudi oil-price blackmail

Calendar

FRIDAY | MARCH 20

House is out. Senate is considering coronavirus legislation.