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THE DEMOCRATIC ONSLAUGHT: Democrats are going hard against the oil and gas industry, accusing companies of exploiting the hike in oil prices associated with the war in Ukraine to boost their own profits unethically while the administration entreats them separately to increase output.
Majority Leader Chuck Schumer on the Senate floor this morning criticized companies for using extra cash in recent months to buy back stock rather than to “give Americans a break at the pump.”
“It is nothing short of repugnant for oil companies to be touting what are truly dizzying profit margins, while soaking American families with these exorbitant prices,” Schumer said.
Sen. Ed Markey of Massachusetts called big oil companies “liars” and said they “do nothing to make the United States energy independent or stabilize gas prices.”
In the House, Energy and Commerce Chairman Frank Pallone called on executives of major oil companies to testify before the committee next month.
Pallone told the executives of BP, Chevron, Devon Energy Corporation, Exxon, Pioneer Natural Resources, and Shell he thinks they are “exploiting the humanitarian and international security crisis to promote its domestic exploration and extraction agenda” and keeping prices for refined products “artificially high” in not producing more oil.
Other lawmakers have been making similar characterizations and proposed legislation to cut into large oil firms’ revenues during this high-price period, and the White House has been going on offense, too.
Press Secretary Jen Psaki said yesterday, “If gas retailers’ costs are going down, they need to immediately pass those savings on to consumers.”
The numbers: Oil prices have seen immense volatility since late February, when they began shooting up precipitously. Brent crude closed above or near $120 per barrel over the course of multiple days earlier this month, and intraday trading has seen prices above $130.
National average gasoline prices shot up to records in concert with oil, but crude has since fallen back down, with Brent having closed at $98 per barrel yesterday (prices are back up well over $100 as of this writing, illustrating the volatility).
Meanwhile, average gasoline prices have fallen more slowly than oil, the inspiration for Democrats’ criticisms. AAA calculates the national average per-gallon price to be about $4.29 as of today.
The industry rebuttal: Industry leaders have rebutted Democrats’ characterizations, stressing that the link between high oil costs and gas prices does not necessarily work in reverse.
“Crude oil is the biggest contributor to the price of finished gasoline and there’s always a bit of a lag for gasoline prices to catch up when crude oil prices fall,” said the American Fuel and Petrochemical Manufacturers, which represents refining companies. “It takes time for gasoline to move from refineries to terminals and retail outlets.”
Frank Macchiarola, vice president of policy at the American Petroleum Institute, said retail prices across industries “go down slower than they go up.”
“As we’ve seen in the past, it takes time for changing market conditions to work through the supply chain and for the price of crude oil to be widely reflected in the price we pay at local gas stations, more than 95 percent of which are independently owned small businesses and not operated by oil companies,” he said in a statement.
In the alternate universe: Minority Leader Mitch McConnell accused the Democrats of deflecting blame away from Biden’s policies favoring restrictions on fossil fuels in implicating Vladimir Putin and others for cost increases.
“For 14 months now, energy policy has followed a disturbing pattern,” McConnell said. “First, the Biden Administration rolls out a direct attack on American energy. Then working families feel the pinch. And then Democrats try to deflect the blame.”
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.
APPELLATE COURT LIFTS BAN ON BIDEN’S ‘SOCIAL COST’ CLIMATE METRIC: A federal appeals court lifted a ban yesterday that prevented the Biden administration from factoring the cost of climate change into its policymaking decisions, reversing a ruling handed down by a federal judge in Louisiana last month.
In a unanimous decision, members of the three-judge panel of the 5th Circuit said that suing states could not prove that the so-called “social cost of carbon” metric would cause them real, measurable harm — and thus lacked proper standing to bring the case.
The decision offers a temporary reprieve for the Biden administration, allowing it to resume using the social cost of carbon metric as it crafts new policies and assesses existing projects.
ENERGY APPROVES NEW LNG LICENSES: The Energy Department announced yesterday that it has authorized liquefied natural gas facilities on the Gulf Coast to export additional volumes in the midst of the strain on global energy markets and pressure from Republicans to encourage more fossil fuel production.
The department’s orders allow Texas-based Cheniere Energy Inc.’s Sabine Pass and Corpus Christi facilities to ship 0.72 billion cubic feet of LNG per day more than previously authorized.
The orders enable all LNG exporters to ship gas to any country in the world, including those with which the United States does not have a free trade agreement. That includes all of Europe.
Industry groups and some Republican lawmakers praised the moves. Sen. Bill Cassidy of Louisiana, who has been advocating for more of this type of thing, called the orders “long overdue.”
A change of tides? The Biden administration has kept on with its green energy promotion but at the same time is more explicitly calling for oil and gas companies to grow their production, as we have noted.
“We really view the rhetoric as having changed substantially in the last week by a number of the DOE and other Biden administration officials,” Fred Hutchison, president and CEO of LNG Allies, told Jeremy. “And for that to be followed up right away this week by a couple of concrete actions, it’s very positive.”
Hutchison said, too, that the market dynamics, response in Washington, and overall effects of the war have substantially changed the state of play for project developers.
“I can’t even begin to tell you how much the momentum has changed for companies in the U.S. that have wanted to bring their projects forward and just haven’t been able to get long term contracts,” he said, noting a conversation with a company that had been trying to contract gas produced by a single train at one of its facilities for several years and which now expects to sell out of that gas by early next month.
ABBOTT TALKS TEXAS LNG: Ahead of the Energy Department’s announcement, Republican Gov. Greg Abbott criticized the Biden administration for moving too slowly to approve gas infrastructure, which he said would help Texas meet the energy needs of allies in Europe.
“The only things that they have done that hinders the ability for Texas to get energy out to whether it be the country or the world is slowing the permitting process on things like [liquefied natural gas],” Abbott told the Washington Examiner’s Anna Giaritelli.
Total interstate gas pipeline capacity additions decreased in 2021, and added capacity fell to its lowest since 2016, according to the Energy Information Administration. However, over two-thirds of the new interstate natural gas pipeline capacity was built in and around Texas.
Abbott also said Texas officials are actively speaking with EU leaders about providing them with gas produced in the state.
“We need to wean the EU off of Russian energy; that energy should be from Texas,” he said.
LIBERAL DEMOCRATS WANT PEN AND PHONE APPROACH TO CLIMATE: Members of the Congressional Progressive Caucus called on Biden to invoke his emergency powers to advance key energy and climate policies, after his roughly $2 trillion Build Back Better legislation remains stalled in the Senate.
The nearly 100-member group listed a slate of policy recommendations it said Biden should pursue through executive action, Jeremy reports, including the development of more green energy technologies and placement of restrictions on new fossil fuel production.
It also calls for Biden to declare a “national climate emergency,” and to employ the Defense Production Act to build more renewable energy technologies, such as solar panels and wind turbines.
“The caucus’s agenda outline reflects the sense of urgency and impatience that many Democrats are feeling now that the party’s flagship social spending and green energy plan lacks movement because of [Manchin’s] opposition to broader Democratic legislation,” Jeremy writes.
News of the caucus’s push comes after 90 congressional Democrats,––including some members of the Progressive Caucus, wrote Biden earlier this week asking him to restart talks with Congress about passing their climate agenda. Read more here.
TEXAS FIRES LATEST SALVO IN BATTLE AGAINST FOSSIL FUEL ‘BOYCOTTS’: Texas contacted 19 financial instiutions this week to inquire about their stance on fossil fuels, a move that comes as Republicans in some red states have pushed to stop doing business with firms seen as discriminatory toward the industry.
The inquiries, sent by Texas Comptroller Glenn Hegar, come six months after Texas passed legislation that bars it from doing business with financial institutions that have divested from energy companies, or have otherwise distanced themselves from fossil fuels to prioritize clean energy.
Hegar also requested the companies provide his office with a list of any mutual funds or ETFs that “prohibit or limit” investment in fossil fuels. Any company that fails to respond or to provide clarification within 60 days “will be presumed to be boycotting energy companies,” his office said in a statement.
Hegar is also planning to send another round of queries to some 100 additional companies that appear to have “at least one fund” divesting from fossil fuels.
WAR-TIME SPR OIL SALES AWARDED: Contracts for all 30 million barrels of Strategic Petroleum Reserve crude oil made available in response to the Russia-Ukraine war have been awarded, the Energy Department announced yesterday.
The International Energy Agency led the coordinated effort among its 30 member nations, which together agreed to release 60 million reserve barrels in response to market volatility associated with the conflict.
Thirteen companies responded to DOE’s March 2 notice of sale and contracts were awarded to seven companies, including Valero, Phillips 66, and Chevron. Marathon Petroleum Supply and Trading, LLC was awarded the largest share of barrels in 16 million.
The Rundown
Politico Biden’s latest supply chain hurdle: A looming Canadian rail strike
AP Lake Powell hits historic low, raising hydropower concerns
NPR A Russian oligarch’s superyacht is stuck in Norway because no one will sell it fuel’
Calendar
THURSDAY | MARCH 17
11 a.m. The House Natural Resources Subcommittee on Oversight and Investigations holds a hearing on ongoing oversight efforts of the Runit Dome, as well as U.S nuclear legacy in the Marshall Islands.
1:00 p.m. The House Subcommittee on Water, Oceans, and Wildlife will convene to discuss five pending bills on fishing and wildlife.
