With help from Josh Siegel, Alex Guillén and Catherine Morehouse
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— Gas prices reached yet another record high Monday, and the White House is scrambling for more options to offer immediate relief.
— Sen. Joe Manchin said a party-line climate and social spending bill is still in play, focusing on domestic energy production, drug costs and corporate taxes.
— Over 70 environmental and racial justice groups are urging CEQ to include race in its calculus on what communities count as disadvantaged under the Justice40 initiative.
WELCOME TO TUESDAY! I’m your host, Matthew Choi. Congrats to Heather Stegner of the American Wood Council for knowing Cambodia’s King Sihamoni is the only reigning monarch who is fluent in Czech. For today’s trivia: Pu’erh tea comes from which province of China? Send your tips and trivia answers to [email protected]. Find me on Twitter @matthewchoi2018.
Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today’s episode: Checking in on Biden’s environmental justice goals.
GAS PRICES ARE STILL HOT: Average gasoline prices reached yet another record high Monday, and the White House continues its scavenger hunt for ways to bring them down. Regular gas averaged $4.596 after a trail of record highs this month, including when the average in all 50 states reached over $4 a gallon last week for the first time ever.
The White House could be digging deeper on its past moves to relieve fuel prices, including tapping into a rarely used stockpile of diesel and waiving summertime smog rules. The Energy Department already coordinated its largest ever release from the Strategic Petroleum Reserve and EPA announced a waiver to allow higher blends of ethanol in gasoline.
But bringing more crude onto the market via the SPR release doesn’t address the obstacles posed by the country’s limited refining capacity. CNN reported Monday that the White House was considering tapping into the Northeast Home Heating Oil Reserve, and White House spokesperson Emilie Simons appeared to confirm the report, tweeting the story with: “An emergency declaration has been prepared for @POTUS to authorize a release from reserves if necessary. This would bridge short term supply shortfalls.”
While most American cars don’t run on diesel, bringing more diesel into the market could help with supply chain issues by alleviating commercial transportation costs. Average diesel prices hit a record last week at $5.577 a gallon.
Reuters also reported that the White House is considering waiving rules requiring refiners to avoid cost-cutting components such as butane in the summer months to prevent smog. That probably won’t go over well with environmentalists already upset about the summer ethanol blending waiver, which critics say increases air pollution without materially impacting gasoline prices (most of the gas stations using higher-blend fuels are concentrated in Midwestern ag states).
“These pollutants have severe impacts on public health and would likely exacerbate the inequity in air quality that BIPOC communities already bear,” green groups including Friends of the Earth, National Wildlife Federation and Sierra Club, wrote to EPA Administrator Michael Regan on Monday. The “potential savings from this measure are limited, while the climate impacts are irreversible. Solutions to oil price hikes lie elsewhere.”
MANCHIN WATCH AT DAVOS: Energy Committee Chair Joe Manchin projected optimism on Monday that he can reach a deal with fellow Democrats on a party-line energy and climate spending bill, telling the World Economic Forum at Davos: “I believe there’s an opportunity, a responsibility, an opportunity that we can do something.”
Manchin suggested once again that he is open to a deal with his party on raising taxes on the rich and corporations, investing in domestic energy production, fighting climate change and lowering prescription drug prices — as long as it also reduces the debt. On climate and energy in particular, Manchin reiterated he envisions a grand bargain of sorts merging combating climate change with strengthening U.S. energy security.
“We have so much more that we can do” to invest “in some of the technologies that [are] going to be needed for the transition that will happen,” he said. “But you can’t do it by abandoning the fossil industry that gives us the ability to have reliability and security not just for our nation but what the world is needing today.” Manchin also said any legislation must prioritize boosting domestic critical minerals production and reforming permitting, to go along with a package of clean energy incentives.
Some of Manchin’s fellow Democrats appear on the same page. Sen. Tina Smith (D-Minn.), speaking Monday at an event hosted by Evergreen Action, said her colleagues should be prepared to swallow policies they might not like to reach a deal with Manchin, as Democrats enter a crucial work week before Memorial Day.
“We need to agree to what we can agree to,” said Smith, who led development of the clean electricity performance program that Manchin killed. “We need to accept that and get what we can get. Time is not our friend here.”
CASH IN YOUR POCKET: Reps. Sean Casten (D-Ill.) and Don McEachin (D-Va.) are introducing a bill today to eliminate 11 tax breaks for oil and gas companies, including for marginal wells and enhanced oil recovery, to fund a $500 direct cash rebate for consumers reeling from high prices.
This bill comes after the House passed a bill last week that would give the Federal Trade Commission sharper teeth in preventing gas price gouging by oil companies. The price gouging bill is a contentious piece of legislation with hardly any chance of success in the Senate, and industry backers and fossil-friendly lawmakers retort that high fuel prices are largely due to global markets and refinery capacity. The Senate Commerce Committee has a mark up on its own version of the price gouging bill Wednesday.
Casten told ME that his bill would help alleviate immediate pain at the pump by putting cash in people’s pockets rather than attempting to relieve consumer prices through spurring greater investment in domestic production. Despite calls from the administration to expand domestic production to bring down prices, investors have signaled for months they are skittish on investing in new oil and gas production, citing losses from the pandemic and the administration’s messaging pushing for a clean energy transition.
“We give our domestic oil and gas producers $6 billion a year in tax subsidies and yet they’re saying they’re going to pay out $12 billion a year in subsidies to their shareholders. So why should we subsidize their profits?” Casten said. “I’m all for private businesses having a profit incentive. But why should we distort the market when the market is saying loud and clear that I don’t actually trust you as a place to invest capital?” Read the bill text here.
SETTING BOUNDARIES: The House Natural Resources Energy and Mineral Resources Subcommittee has a hearing today on Rep. Betty McCollum’s Boundary Waters Wilderness Protection and Pollution Prevention Act (H.R. 2794 (117)), which would ban sulfide-ore copper mining in federal lands and waters in Minnesota’s Superior National Forest.
“Some places are simply too special to mine. It is our obligation to ensure these unique and valuable lands and waters remain intact for generations to come,” her office said in a statement.
CAN’T IGNORE RACE: Over 70 environmental and activist groups wrote to the White House Council on Environmental Quality urging the inclusion of race in determining what communities should count as marginalized and eligible for environmental justice resources. The groups, which include Evergreen Action and the NAACP, made their case as CEQ takes feedback on its draft screening tool for its Justice40 initiative, which takes into account factors such as income, access to traffic and linguistic isolation. While CEQ Chair Brenda Mallory acknowledged the role of racism in environmental justice issues, the White House is concerned including race into the calculus could invite legal challenges.
The White House said Monday that the administration has so far put $29 billion into programs focusing on environmental burdens that have disproportionately harmed disadvantaged areas, POLITICO’s Zack Colman reports.
SOCIAL COST DWARFS OIL, GAS REVENUES — GREEN ANALYSIS: Oil and gas production likely will be front and center at tomorrow’s budget hearing with Interior Secretary Deb Haaland. But Friends of the Earth argues in a new analysis today that it’s not worth it — literally. The green group crunched some numbers from DOI and found the social cost of carbon related to oil and gas extracted from federal lands far outstrips the revenue collected. “There is a hidden price when Big Oil profits, and society picks up the tab,” FOE said.
The government raised $9.6 billion in revenue from oil and gas production in 2021, but the social cost of burning those fossil fuels totaled $23.4 billion under the current $51 figure, according to FOE’s calculations based on Interior figures. That’s likely a conservative valuation given the Biden administration’s expected plan to overhaul the social cost of carbon and increase the dollar figure, perhaps into the $200 range. Bumping the social cost up to just $100 per ton would increase that cost to $46 billion.
WHERE IN THE WORLD IS JENNIFER GRANHOLM? The Energy Secretary is in Louisiana today to visit a Strategic Petroleum Reserve site, tour a GE wind turbine blade test center and discuss environmental justice issues with New Orleans community representatives. She’ll join Gov. John Bel Edwards and Reps. Garret Graves (R-La.) and Troy Carter (D-La.).
SAVE THE DATE: FERC’s fourth state-federal transmission task force meeting is scheduled for July 20 in San Diego, the commission announced Monday, though the agenda has not yet been posted. Its most recent meeting took place earlier this month and focused on resolving the interconnection queue that has prevented more than 1,300 gigawatts of clean energy resources from connecting to the power grid.
IN THE STATES: Yet another federal appeals court ruled that a climate lawsuit against the oil and gas industry should be heard in state court, dealing another win for local governments who feel the state courts offer a friendlier venue. Rhode Island filed the case in 2018 alleging that several energy companies, including some of the world’s largest oil firms, had downplayed the threat of climate change and violated state laws, including public nuisance, negligent failure to warn and the state’s Environmental Rights Act.
It’s the fourth appellate court to rule that the cases belong in state court, though the decisions are expected to be appealed to the Supreme Court. Read more from Alex Guillén.
A spokesperson for Chevron, one of the defendants in the litigation, said the company disagrees with the court’s decision and cited the 2nd Circuit’s dismissal of a similar lawsuit.
“Plaintiffs’ claims are based on allegations about worldwide carbon emissions and address global climate change—national and international issues that can be governed only by federal, not state, law,” the spokesperson said. “Chevron looks forward to additional challenges that should put an early end to this meritless lawsuit.”
GAMBLING ON HYDROGEN: French industrial gas services company Air Liquide is investing $250 million to open its largest liquid hydrogen production and logistics infrastructure facility in North Las Vegas, Nevada, aiming to produce 30 tons of liquid hydrogen per day at the site. The facility will serve the growing market for zero-emission transportation in the West, especially under California’s Low Carbon Fuel Standard.
CRACKED SHELL: A Shell consultant lambasted the company for “failing on a massive planetary scale” to prevent climate change in a spicy resignation email where she cites the company’s plans to expand fossil fuel extraction, POLITICO’s Zia Weise reports. Caroline Dennett sent her resignation email to the company’s executive committee and more than 1,000 employees and said the company’s future production plans go against its own pledge to cause “no harm” with its operations.
A Shell spokesperson told Zia that the company was “determined to deliver on our global strategy to be a net-zero company by 2050” and that it had “every intention of hitting” its targets. Read more from Zia.
— “The Lithium War Next Door,” via The Huffington Post.
— “After revamping Venezuela’s smallest oil refinery, Iran to fix the largest,” via Reuters.
— “EU plans first joint gas buying before winter,” via Reuters.
— “New Study Says World Must Cut Short-Lived Climate Pollutants as Well as Carbon Dioxide to Meet Paris Agreement Goals,” via Inside Climate News.
THAT’S ALL FOR ME!
