Energy

Trump's options limited in Saudi push


With help from Alex Guillén

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Oil-state Republicans want the Trump administration to ratchet up pressure on Saudi Arabia amid the price war its waging with Russia, but even an aggressive diplomatic push would leave the U.S. with only limited leverage.

The House is expected to pass the “phase three” emergency relief package today, sending the measure to the president’s desk.

EPA eased regulatory compliance requirements on Thursday for oil, gas and chemical makers because of the coronavirus.

HAPPY FRIDAY! I’m your host, Kelsey Tamborrino. 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.

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TRUMP’S LIMITED OPTIONS: President Donald Trump last night said the U.S. oil and gas industry is “under seige,” and he looked forward to brighter days ahead once the economy is back up and running. But the current strain on the industry is only partly due to declining oil consumption tied to the coronavirus pandemic that has crippled the U.S. economy. The other factor largely is at the whim of a worsening global petroleum glut that the Saudis and Russia have stirred up after Moscow declined to extend oil production restrictions put in place by OPEC.

Earlier this week, several Republican lawmakers from oil-heavy states called for the Trump administration to increase pressure on Riyadh to end the “economic warfare” it was waging on American companies, and they threatened to look into tariffs, sanctions or pulling support for the Saudi war in Yemen if the kingdom didn’t back off. But as, Pro’s Ben Lefebvre reports this morning, even an aggressive diplomatic push would leave the U.S. with only so many leverage options.

So far, the administration has done little. Trump has acknowledged that although the U.S. industry was suffering, the drop in fuel prices was like “a big tax cut” for consumers. Administration officials such as Energy Secretary Dan Brouillette have floated the notion of trying to convince Saudi Arabia to drop out of OPEC, the cartel it helped found in 1965, and instead forming an oil alliance with the U.S. Others have suggested Congress could revive its “NOPEC” bill that would allow the U.S. to prosecute the cartel in court under antitrust laws.

In the end, those measures would have little impact, said Randy Bell, director of the Atlantic Council’s Global Energy Center. “We’re hearing lots of different ideas about what might bring the Saudis to the table, but frankly none of them seem realistic,” Bell said. “It points to the weakness that the U.S. has in this circumstance.”

HOUSE TO PASS RELIEF PACKAGE: The House is expected to pass the “phase three” emergency relief package, H.R. 748 (116), today. The package omits any mandated emissions reductions for airlines, as well as money for the Energy Department to top off the Strategic Petroleum Reserve. House Speaker Nancy Pelosi predicted on Thursday a “strong bipartisan vote” when the House takes up the $2 trillion rescue package, though she’s also preparing contingency plans.

Attention turns to the next relief package: During her weekly press conference Thursday, Pelosi began pivoting to the next relief measure and what Democrats would like to see in it, POLITICO’s Heather Caygle and Melanie Zanona report. “There’s so many things we didn’t get in any of these bills yet in the way that we need to,” Pelosi told reporters.

Renewable energy groups are expected to push for green energy tax credits in the next package. Particularly, some Democrats and environmental groups concerned about climate change have pressed for tax credits for wind and solar industries, and as Pro’s Anthony Adragna, Zack Colman and Gavin Bade reported, those clean energy provisions will likely be pushed to a later corporate rescue package.

And, House Natural Resources Chairman Raúl Grijalva (D-Ariz.) and Rep. Donald McEachin (D-Va.) led a letter with 41 Democrats on Thursday that calls for environmental justice to be included in virus response efforts. “The effects of COVID-19 are being felt across the country, but they are particularly acute in communities with underlying health conditions,” they write. “We are concerned that environmental justice communities — low-income communities, communities of color, and Tribal and indigenous communities — across the U.S. and in the U.S. territories are especially vulnerable and live in areas that lack the necessary resources to fully recover from the pandemic.” The letter calls for investments in drinking water services, energy efficiency and weatherization programs, pollution reduction and workforce development.

Still, a fourth bill could be some time away. Senate Majority Leader Mitch McConnell adjourned the Senate until April 20.

MARK YOUR CALENDARS: The Trump administration will release its final plan to weaken vehicle fuel economy targets on Tuesday, an administration official told Pro’s Zack Colman. The joint National Highway Traffic Safety Administration and EPA proposal will replace the Obama administration safety and tailpipe emissions standards for vehicles through 2026.

The final proposal will call for annual fuel efficiency increases of 1.5 percent across companies’ fleets instead of flatlining the targets, which was an option in the April 2018 draft proposal, according to a person close to the administration. The person also said NHTSA and EPA estimated the proposal would save drivers $1,000 on car purchases and that it would save 3,000 lives over the rule’s lifetime.

EPA RELAXES ENFORCEMENT AMID VIRUS: EPA issued a temporary policy Thursday that will allow for industries like oil, gas and chemical companies to delay some regulatory compliance amid the coronavirus pandemic, Pro’s Alex Guillén reports. The policy shift follows requests from industry groups who say workers can’t perform all of the tasks required to comply with environmental laws while many of them are social distancing. There are a number of reporting, training and monitoring requirements that should be eased to promote social distancing and keep workers from having to gather, oil industry executives told POLITICO.

The EPA memo issued Thursday is written broadly and avoids making specific enforcement promises, but does outline some steps for companies to document how the virus affects compliance. “We have not provided specific criteria, but the memo does state as the lead-in that the reason we’re doing it is because we’re aware of the travel restrictions, the social distancing restrictions and in fact even the stay-at-home restrictions,” EPA enforcement chief Susan Bodine told reporters.

Critics like Cynthia Giles, the Obama-era enforcement chief now at Harvard’s Environmental and Energy Law Program, said EPA shouldn’t be granting breaks so broadly. “These rules are there to protect health and they can only be put to one side in the most extreme extraordinary circumstances, and even then only when very narrowly tailored to address a specific problem,” she said.

EPA is also weighing letting oil refiners sell winter-blend gasoline later in the year to account for reduced demand in the midst of the coronavirus crisis, Administrator Andrew Wheeler said Thursday, Alex also reports. “We are looking at the fuels issues on a separate basis and that would be a case-specific issue,” Wheeler told reporters on a conference call, adding the agency hopes to have “some sort of announcement on the fuels” as soon as today.

SPR OF THE MOMENT: The Energy Department has withdrawn its tender for 30 million barrels of oil to put into the Strategic Petroleum Reserve, the department said Thursday. The announcement followed the Senate’s passage of the coronavirus relief package that did not include the $3 billion DOE had requested to buy oil for the SPR, as Ben reports.

IG TO PROBE EPA-CALIFORNIA AIR FLAP: EPA’s Office of Inspector General will probe the agency’s system to review and approve state air cleanup plans following the agency’s fight last fall with California. Sen. Dianne Feinstein (D-Calif.) requested a probe last year after EPA issued a letter threatening to block highway funding over the state’s backlog of pending State Implementation Plans, or SIPs, that implement Clean Air Act regulations. In January, EPA announced California had withdrawn 43 of its 130 pending submissions, though the state said it did so because they had been waiting for approval for so long that they had become outdated.

The OIG will review factors causing SIP approval delays, whether delays in processing submissions affect states’ ability to achieve key air quality standards, and what EPA is doing to speed up the process, Alex reports.

FIRED EPA OFFICIAL LANDS NEW TRUMP APPOINTMENT: An EPA official who was fired in February after agency leaders blamed him for excessive travel has landed a new presidential appointment. Trump on Thursday named Mike Stoker as the federal representative to the Western Interstate Energy Board. EPA had dismissed Stoker, who ran EPA’s Region 9 office covering the Pacific Southwest, because he was “interested in travel for the sake of travel and ignored necessary decision making.” Stoker, however, alleged he was fired for working too well with Pelosi and other Democrats. The White House declined to discuss Stoker’s new appointment.

Stoker will be an ex officio representative to the WIEB, a position that does not require Senate confirmation. The WIEB, which is made up of 11 Western states, was created by a 1970 compact to coordinate nuclear power and waste issues and has since expanded its mission to include broader energy concerns in the West.

MINERS UNION CALLS FOR EMERGENCY SAFEGUARD: United Mine Workers of America President Cecil Roberts called on the Mine Safety and Health Administration to “immediately” issue an emergency standard to protect miners amid the coronavirus crisis. “While these are certainly difficult times for all workers, it is especially challenging for workers who are unable to work from home and have valid concerns about their health and safety and that of their loved ones,” Roberts wrote in a letter this week to Assistant Secretary of Labor for Mine Safety and Health David Zatezalo. Roberts also pointed to underlying health issues that some miners suffer from that would make them especially vulnerable to Covid-19, like black lung disease. “This makes miners one of the most vulnerable populations for the virus,” he writes.

GAS DEMAND COULD DROP MORE THAN HALF: U.S. gasoline demand could fall by more than 50 percent during the Covid-19 response period, according to IHS Markit analysis, since fewer drivers will hit the road during social distancing. “The magnitude of gasoline demand decline will be much greater than the impact of the 2008 recession — and could be further protracted, depending on how effective social distancing measures are at controlling the spread of the COVID-19 virus,” according to Jim Burkhard, vice president of IHS Markit.

IHS also forecasts electric vehicle sales will stagnate this year and likely into 2021, due largely in part to a “faltering” global auto market. “EVs also face another headwind with low oil prices, making them less competitive in terms of fuel cost savings vis-à-vis their internal combustion engine counterparts,” according to the analysis.

— “Appeals grow to close U.S. national parks during pandemic,” via Associated Press.

— “What it’s like to not have running water during a pandemic,” via Huffington Post.

— “The Great Barrier Reef likely just experienced its most widespread bleaching event on record,” via CNN.

— “Another [EPA] employee presumed positive for COVID-19,” via E&E News.

— “California approves climate change target that critics say is far too weak,” via Los Angeles Times.

THAT’S ALL FOR ME!





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