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RUSSIA, SAUDI ARABIA, IRAN TENSIONS MAKE IT HARDER FOR GOP IN MIDTERMS: It’s getting more complicated for President Trump to defend his Middle East and energy policies and gain support for the GOP in next month’s elections.

Already, Trump faced the threat of his Iran sanctions raising energy prices in the run-up to the midterms. But now the politics surrounding Iran and oil markets are even more challenging:

First, the slaying of a slain Saudi journalist has upped the pressure on the administration to place sanctions on ally Saudi Arabia, even as Trump says it may be more important to secure a multi-billion dollar arms deal with the oil-rich nation.

Second, a new squabble that Trump started over the weekend with Russia is bound to create additional headaches. Trump on Saturday said he will pull the U.S. out a nuclear arms reduction agreement with Russia, stoking speculation over a new U.S.-Russia arms race.

Trump said Russia wasn’t fulfilling its part of the deal by violating the arms agreement when it came to weapons development. Russia responded by calling Trump’s actions a “dangerous step.”

The third complication involves a Russian plan to help Iran overcome U.S. oil sanctions, which the Financial Times report on Monday.

“Iran might be pushing the idea of Russia selling their oil on the world market to evade sanctions,” a senior administration official was quoted as saying in the article. “I would discourage Russia from even considering this. It would be in Russia’s best interests not to facilitate Iranian evasion of US sanctions.”

Welcome to Daily on Energy, compiled by Washington Examiner Energy and Environment Writers John Siciliano (@JohnDSiciliano) and Josh Siegel (@SiegelScribe). Email 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.  

US DIPLOMATS EXPECT CONGRESS, NOT TRUMP, TO LEAD ON PUNISHING SAUDI ARABIA OVER KHASHOGGI: Former U.S. diplomats expect the American response to the Saudi slaying of dissident Jamal Khashoggi to be muted, and delayed by the midterm elections.

“I think we may see some sanctions that may be initiated more by Congress than the executive branch," former U.S. Ambassador to Saudi Arabia Robert Jordan, who served under President George W. Bush in the wake of the Sept. 11 terror attacks, told John.

“It may well be that Congress either passes a separate bill or puts a rider on legislation once they reconvene, which of course won’t be until three weeks from now,” Jordan added.

What is already happening: He said the Senate has already moved in the direction of sanctions by sending a letter to Trump last week requesting an investigation, which is the first step in a process laid out by a 2016 law aimed specifically at extrajudicial killings and torture, the Global Magnitsky Human Rights Accountability Act.

The letters put the ball in Trump’s court to take actions within 120 days that could bar Saudi Crown Prince Mohammed bin Salman, implicated in Khashoggi’s death, from receiving travel visas to the U.S., while freezing his assets.

There also could be broader sanctions imposed by the United Nations, or by some Western allies, Jordan said.

But outside of Trump acting on the lawmakers’ request, there won’t likely be any effect on the U.S.-Saudi relationship until the Senate comes back into session.

Guy Caruso, a former head of the Energy Information Administration and CIA analyst now with the Center for Strategic and International Studies, told John he doesn't see Trump as willing to go after the crown prince. “I am guessing the Trump administration bends over backwards” not to “damage MBS’ position,” he said.

Instead, sanctions are more likely to come from direct Senate legislative action. That gives the Saudis at least three weeks.

Iran adds to the problem: Adding to the complication are Iran oil sanctions that are about to go into effect in the same early-November time frame as the midterm elections.

“Right now, the Saudis are the main line of defense in dealing with Iran sanctions,” Caruso said, providing the administration a reason to proceed cautiously with the Khashoggi case.

With very little spare oil supply, the oil market could easily worsen at any time if there were disruptions related to Saudi Arabia. The U.S. needs Saudi Arabia’s massive oil production spare capacity, with which it can inject millions of barrels into the market very quickly.

Supply cuts aren’t likely: On the other hand, the Saudis aren’t likely to hit back at U.S. sanctions by curtailing supply and raising the price of oil.

“The last thing they want is oil at $150 per barrel,” Jordan said. “That provides enormous incentives for alternative sources of energy they don’t want.”

DEMOCRATIC SENATOR CALLS FOR BAN OF OIL IMPORTS FROM SAUDI ARABIA: Democratic Sen. Martin Heinrich, D-N.M., on Saturday called for the U.S. to stop importing oil from Saudi Arabia in response to Khashoggi’s death.

“The Saudis clearly believe they can evade real consequences under President Trump’s leadership and we as a country must stand up and prove them wrong,” he said in a statement.

US has become less dependent on the Saudis: The U.S. imports about 800,000 barrels of oil per day from Saudi Arabia, 600,000 fewer per day than a decade ago. It makes up only about 5 percent of U.S. supply. But Trump likely is eager to maintain his alliance with Saudi Arabia on producing more oil to offset his sanctions on Iranian crude.

BOSTON GAS EXPLOSIONS REQUIRE NEW FEDERAL OVERSIGHT OF INDUSTRY: Rice University is calling for increased government oversight in the wake of the natural gas explosions that rocked neighborhoods last month outside of Boston, Massachusetts.

“The explosions and fires apparently triggered by overpressurized natural gas utility lines north of Boston last month should prompt federal regulators to review and reform how they maintain oversight of the nation’s pipelines,” the Center for Energy Studies at Rice University’s Baker Institute for Public Policy said in a new brief focused on improvements on oversight by the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration.

A matter of diverging priorities: Rachel Meidl, energy and environment fellow at the Baker Institute and author of the brief, points out that the pipeline safety agency needs to focus on minimum safety standards to avoid future incidents.

Neglecting safety in favor of other priorities “trigger gaps in communication, distinct and conflicting initiatives and uncoordinated and separate policies and processes for rulemaking,” according to Meidl.

She would like to see PHMSA Administrator Howard "Skip" Elliott reconfigure the agencywide accident investigation process, which Elliott has said he has been working toward.  

OECD WARNS WORLD GROWTH WILL WORSEN CLIMATE AND ENVIRONMENT BY 2060: A new report from the Organisation for Economic Co-operation and Development says that consumption of minerals and metals will heat up the atmosphere, despite efforts to decrease energy use in manufacturing.

Fossil fuels are just one part of the puzzle: “Without concrete actions to address these challenges, the projected increase in the extraction and processing of raw materials such as biomass, fossil fuels, metals and non-metallic minerals is likely to worsen pollution of air, water and soils, and contribute significantly to climate change,” the OECD said in a preview of the report on Monday at The World Circular Economy Forum in Yokohama, Japan.

OECD Deputy Secretary General Masamichi Kono predicted that the “biggest rises” in consumption will come from mineral use, including from construction materials and metals, particularly in fast-growing developing economies.

Global warming gets worse in service economy: The increase in pollution and global warming will occur despite the shift from a manufacturing-based economy, to one based on service industries.

Good, but not good enough: It is also occurring despite “continual improvements in manufacturing efficiency,” which has shrunk the amount of resources consumed.

“Without this, environmental pressures would be worse,” the report reads. The report’s 2060 projection also takes account flattening demand in China and other emerging economies as their infrastructure booms end.

WASHINGTON STATE VOTERS COULD BE THE FIRST TO APPROVE A CARBON TAX: Washington state could be the first in the nation to enact a voter-approved carbon tax if a ballot initiative succeeds there in November, an outcome that supporters say would prove the political tenability of a major policy to combat climate change.

“Even being in a competitive position is a significant achievement,” Washington Gov. Jay Inslee, a Democrat and rumored 2020 presidential candidate, told Josh in an interview. “If it doesn’t happen this year, we are not done."

However, if voters in this progressive western state reject a carbon tax for the second time, after voting down a similar plan two years ago, it may slow what modest momentum there is for pricing pollution at the national level.

“If a blue state fails again to pass a carbon tax, it certainly doesn't look good for efforts in states elsewhere, and at the federal level,” Noah Kaufman, a Columbia University economist who studies energy and climate change policy, told Josh.

What’s different in 2018: Supporters of this year’s version of the carbon pricing plan say they’ve learned from the failures of the 2016 campaign, which had the rare distinction of repelling most environmental groups in addition to Republican voters.

The lightly-funded 2016 effort was designed it to be revenue-neutral, meaning it cut other taxes by an equal amount of what would be raised. But the Sierra Club and other environmental groups, opposed that initiative, arguing the state government could achieve more meaningful emissions reductions if it used the revenue from the carbon tax to invest in renewable energy projects.

The 2018 version of the plan, supported by a broader coalition, would spend money earned from the carbon fee — roughly $1 billion annually by 2023 — on clean-energy and climate change resilience projects, such as wind and solar plants, mass transit, and energy-efficiency improvements to buildings.

The changes have helped earn the measure the support of environmental, labor, tribal, and social justice groups.

Oil and gas majors try to straddle a line: Oil and gas companies oppose the new proposal, just like they did the first one, even if some are not so vocal about it — and are even backing a revenue-neutral carbon tax plan proposed by free-market groups at the federal level.

A political action committee formed by the Western States Petroleum Association, which represents companies such as BP, Chevron, Shell and Exxon, is spending millions to oppose the Washington state carbon fee, vastly outraising supporters. Exxon and Shell, however, say they aren’t actively lobbying against the carbon fee, even if their trade group is. The opponents say the tax would raise the cost of gasoline and electricity without meaningfully lowering emissions.

Followers of the campaign say polling for the initiative is tight, and can’t predict the result.

Read more of Josh’s report here.

CLIMATE CHANGE GETS TOP COVERAGE IN FLORIDA GOVERNOR DEBATE: Moderator Jake Tapper gave the subject of climate change some rare love in Sunday night’s debate among Florida’s governor candidates.

CNN’s Tapper kicked off the debate by asking Democrat Andrew Gillum and Republican Ron DeSantis how they would respond to climate change, as Florida has been a victim of powerful storms such as this month’s Hurricane Michael, which scientists say are made worse because of sea level rise.

DeSantis treads carefully: The Republican nominee focused his response on climate “resiliency,” code for protecting Florida’s infrastructure from flooding and rising seas, while saying he did not want to be an “alarmist” about global warming.

“I don't want to be an alarmist,” DeSantis said. “I want to look at this and do what makes sense for Florida. “If you look at south Florida, you need to do resiliency. You have more water. You have more flooding. So as governor, that is something that I will take on full throttle. What I don’t want to do is do a California-style energy policy that will cause our electricity rates to skyrocket.”

Gillum focuses on jobs: Gillum said he would focus on bringing clean energy jobs to Florida, and building on the state’s recent gains in solar power, an area in which the Sunshine State has been lagging for years. He also chided Trump, and Florida Gov. Rick Scott, who is running for Senate, for not taking climate change seriously.

“What Florida voters need to know is that when they elect me governor they are going to have a governor who believes in science, which we haven't had for quite some time in this state,” Gillum said. “I am not sure what is so California about believing that Florida ought to lead in solar energy.”

SUPREME COURT PAUSES KIDS’ CLIMATE CHANGE SUIT BEFORE TRIAL: The Supreme Court on Friday night temporarily halted an upcoming trial on a climate change lawsuit brought by children against the U.S. government, after the Trump administration had sought to dismiss the case.

Chief Justice John Robert’s one-page order halted discovery and the upcoming district court trial in the case, scheduled for Oct. 29. He asked for a response from the plaintiffs in the case by Wednesday. The case involves 21 children who allege that government policy has exacerbated global warming and climate change.

What comes next is uncertain: Michael Gerrard, an environmental law professor at Columbia University, said the Supreme Court’s stay of the cause is unusual, and it’s unclear if the lower court trial will ultimately happen. He said Roberts’ decision reminded him of the Supreme Court’s decision to halt President Barack Obama’s Clean Power Plan before courts had heard oral arguments in the case.

PLAINTIFFS SAY DELAY OF KIDS’ CLIMATE TRIAL WOULD HARM ‘INTEGRITY OF THE COURTS: Plaintiffs in the case, organized as a group called Our Children’s Trust, filed response comments Monday morning with the Supreme Court, arguing that delaying the trial would “disrupt the integrity” of the judicial system.

“A stay of trial in the district court will disrupt the integrity of the judiciary’s role as a check on the political branches and will irreparably harm these children,” the plaintiffs said.

The plaintiffs said the case must go to trial so the courts can answer the question of whether governments can be held accountable for policies that may have worsened climate change.

POLITICAL APPOINTEE CONSIDERED TO BE INTERIOR’S WATCHDOG RESIGNS AMID CONTROVERSY: A political appointee considered to lead the Interior Department’s acting inspector general resigned Friday from the federal government amid controversy, the Washington Post first reported.

The resignation of Suzanne Israel Tufts, a Department of Housing and Urban Development political appointee, ends a chaotic episode.

HUD was at the center of the mix-up: After Interior spokesperson Heather Swift accused Ben Carson, secretary of Housing and Urban Development, of sharing “false information” when he told his employees in an internal email obtained by various media outlets that the Tufts would become Interior Department inspector general, HUD said Friday that a miscommunication among staff there led to the mistake.

Swift said that the White House referred Tufts, who has no experience in government investigations, to the Interior Department as a potential candidate for a position in the inspector general’s office. The White House, however, denied knowing about the plan.

Where we are now: Swift said, “at the end of the day, she was not offered a job at Interior.” Mary Kendall remains acting administrator of the inspector general’s office, a position she has held for nine years, as she continues overseeing probes of Zinke.

Democrats say they plan to investigate how this mess happened.

TRUMP ORDERS FASTER DELIVERY OF WESTERN WATER, IN GIFT TO CALIFORNIA REPUBLICANS: Trump signed an order Friday requiring faster delivery of water in California and other Western states, in a move that could help endangered Republicans who represent agricultural districts.

The order calls on the Interior and Commerce Departments to streamline regulatory reviews for federal water delivery projects In California, Oregon, and Washington state.

Some Republicans in Congress have called for a larger water allocation for farmers in California’s Central Valley, which has suffered from drought. Farmers complain that environmental policies divert water away from people in Northern California in order to provide a habitat to preserve endangered fish species.

If you remember: Trump tried to connect his concern over water access to California’s wildfires, this summer, arguing that the state did not have enough water to douse the fires. California’s fire agency refuted this theory, which had no basis in fact.


The administration claimed Friday that the new order is not meant to help endangered rural Republicans, though the timing raised eyebrows.

“Today's action might be the most significant action taken by a president on western water issues in my lifetime,” David Bernhardt, deputy interior secretary, said in a briefing with reporters. “His directive is consistent with the promise to take a more collaborative approach to manage water resources, and provide a more reliable water delivery.”


Wall Street Journal In win for Trump, Merkel changes course on US gas imports

Washington Post A 14-year-long oil spill in the Gulf of Mexico verges on becoming one of the worst in U.S. history

New York Times A push for safer fertilizer in Europe carries a whiff of Russian intrigue

Reuters Mnuchin says it will be harder for Iran oil importers to get waivers

Bloomberg The world’s fourth-biggest oil producer can’t keep the lights on


9:40 a.m., 1200 17th Street NW. The Global America Business Institute (GABI) and Pillsbury Winthrop Shaw Pittman LLP hold a workshop on "Nuclear Innovation: Clean Energy Future (NICE Future) initiative."

2 p.m., 2500 Calvert Street NW. The Environmental Law Institute holds its 2018 Corporate Forum on "Corporate Governance in an Age of Increased Environmental Accountability, Liability and Risk."

3 p.m., 562 Dirksen. The Environmental and Energy Study Institute holds a briefing on "Wood: The Building Material of the Future?" focusing on mass timber.