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EXTENDING THE LEASING DRAMA: Whatever Interior’s Bureau of Ocean Energy Management presents in its proposed five-year offshore program this summer, it’s unlikely to be a crowd pleaser.
Secretary Deb Haaland revealed to the Senate Energy and Natural Resources Committee yesterday that BOEM intends to publish its proposed program by June 30, the final day covered by the current program, and blamed the delay on the previous administration.
After that, comment periods will ensue, and the earliest a final program could be published is in the fall.
Haaland stressed that those in charge of developing the proposed program “are not prejudging an outcome,” but the administration is under immense pressure from green groups to determine the environmental impacts associated with new leasing are too grave and to publish a program without any lease sales.
“It’s time to end new offshore oil leasing and move toward a just clean energy transition,” Drew Caputo, VP of litigation for environmental law group Earthjustice, said yesterday in response to Haaland’s announcement. “There’s already more offshore oil under lease than the climate can stand.”
Where the administration has moved forward with new leasing, groups like Caputo’s have sued to stop it, and with success.
Oil and gas industry groups have been a counterweight. A number of them sued the Biden administration in August to compel adoption of a new five-year program and have insisted their members need the certainty that sales provide — and that demand for oil isn’t going anywhere.
The realm of possibilities: The administration has shown that it’s prepared to make less acreage available for leasing, as it did for the upcoming onshore lease sales to be held next month, and it has argued in court that it has “considerable discretion” under law to determine how and when to carry out lease sales.
Interior exercised that discretion in canceling the current offshore program’s final three lease sales last week.
Haaland was quiet about the details of prospective sales, or whether the program will lay out any at all.
The department did emphasize in its followup to her testimony that a proposed program is “not a decision to issue specific leases or to authorize any drilling or development.”
In sum: Neither green groups nor the oil and gas industry maintain a particularly good rapport with the administration for how it’s carried out its leasing responsibilities.
As to whether the proposed program is sale-heavy or sale-light, or sale-less, one industry source told Jeremy, “There will be litigation either way.”
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THE DEMOCRATS WHO BUCKED THEIR PARTY ON PRICE-GOUGING BILL: Four Democrats broke with their party yesterday to vote against the Consumer Fuel Price Gouging Prevention Act, a bill designed to stop alleged market manipulation and price gouging, which Democrats have blamed for this year’s record-high gas costs.
Reps. Stephanie Murphy of Florida, Lizzie Fletcher of Texas, Kathleen Rice of New York, and Jared Golden of Maine all voted against the measure, which cleared the House by a 217-207 vote.
In a statement released after the vote, Fletcher said that the high gas costs “are the result of a lack of upstream inventory and a loss of refining capacity—challenges arising, in part, from decreased demand during the COVID-19 pandemic.”
The bill, she added, would “not fix high gasoline prices at the pump, and has the potential to exacerbate the supply shortage our country is facing, leading to even worse outcomes.”
Murphy echoed this sentiment in her own statement, saying the bill “takes the wrong approach” to solving high gas prices, which she said should be addressed by increasing supply. “If this bill becomes law, it could further reduce supply,” she said.
PRESSURE ON FOR AN OIL PROFIT WINDFALL TAX: Democrats are under pressure from liberal interest groups to advance a tax on energy companies’ windfall profits in addition to their FTC-centered price gouging proposals.
Collin Rees, U.S. program manager for Oil Change International, said passage of the anti-gouging bill yesterday is “a great start.”
“But,” he said, “enhanced investigatory powers won't be enough to stem Big Oil's greed and stop its exploitation — the House must move rapidly to tax the fossil fuel industry's record windfall profits.”
Twin Democratic proposals introduced in the House and Senate back in March would do that and put the revenue toward rebates for consumers, but neither have moved through committee.
A windfall tax would be more appropriate in these high-price conditions than outlawing high prices themselves, said Tyson Slocum and Alan Zibel of watchdog group Public Citizen.
“We really don't know enough about what's going on behind the scenes,” Zibel, a research director for Public Citizen, told Jeremy. “Maybe there’s no manipulation going on.”
Either way, a windfall tax would be able to get at the problem and relieve consumers, he and Slocum agreed.
“If you're not going to be reinvesting your capital gains into things that are going to help the economy deal with this inflationary problem,” Slocum said of oil companies, “then we can extract some of that record profit and invest it in things that will address some of these problems, or provide relief to consumers."
RUSSIA TO SUSPEND GAS FLOW TO FINLAND: Russia is suspending natural gas flow to Finland beginning at 7 a.m. tomorrow, Finnish state energy provider, Gasum said, due to what Russia cited as Finland’s failure to pay for its gas supply in rubles.
Reading between the lines: The shutoff comes amid escalating tensions between Russia and Finland, which reached a new high this week after Finland officially applied to join NATO. The move prompted outrage from the Kremlin, which has vowed “retaliation” if Finland ever reneged on its position of military neutrality and moved to join the alliance. It also comes just weeks after Moscow halted gas delivery to two other NATO countries, Poland and Bulgaria, last month.
Gasum officials told the New York Times they will be able to secure adequate supplies during the summer months from Estonia, which will be delivered via the Balticconnector pipeline. In the meantime, they said, they will work to secure adequate supplies for the fall and winter, when demand for gas is higher.
“It is very unfortunate that the supply of natural gas under our supply contract will now run out,” Gasum CEO Mika Wiljanen said in a statement. “However, we have prepared carefully for this situation and if there are no disruptions in the gas transmission network, we will be able to supply gas to all our customers in the coming months.”
ITALY IMPORTS OF RUSSIAN CRUDE SOAR: Meanwhile, Italy has massively increased its imports of Russian crude—an unintended consequence of the EU’s sanctions packages as it seeks to feed a Russian-owned refinery in Sicily. Exports from Moscow spiked to roughly 450,000 barrels per day this month—more than four times as much as Italy imported in February, and the highest amount since 2013, the Financial Times reports. Industry officials described the imports as a “paradoxical” consequence of the EU’s sanctions on Russian energy imports.
The refinery is owned by Moscow-based company Lukoil. Though Lukoil is not under sanctions, other lenders have cut off its financing, forcing it to rely solely on Russian oil supplies. “Only 30 percent of ISAB’s crude was Russian before the sanctions, now it’s 100 percent because Italian banks blocked the refinery’s credit lines so Lukoil has become its only supplier,” Alessandro Tripoli, secretary-general of the FEMCA CISL union for the Syracuse and Ragusa provinces in Sicily, told the Financial Times.
EXTREME HEAT LINKED TO MORE ADULT DEATHS: Each additional day of extreme heat per month in the contiguous U.S. is linked to roughly 0.07 additional deaths in every 100,000 adults—or seven in 10 million, according to a new study published in the Journal of American Medical Association based on weather data from 2008 to 2017.
(Researchers defined an extreme heat event if the maximum heat index was at to 90 °F or above, and in the 99th percentile of the maximum heat index of researchers’ baseline period, from 1979-2007.)
That is a quantification of the toll of climate change as it drives up the frequency and severity of extreme heat events across the globe. Read the full study here.
SPEAKING OF EXTREME HEAT… The study also comes as temperatures are slated to soar into the 90s across large swaths of the Northeast this weekend. Heat advisories are in effect for millions of people, including Boston, Philadelphia, and parts of New York, with some areas expected to see temperatures as high as 20 degrees above normal for this time of year.
FINANCERS HIGHLIGHT OIL AND GAS INVESTMENTS TO SKEPTICAL TEXAS: Financial firms looking to stay on good terms with Texas are telling Comptroller Glenn Hegar they are not “boycotting” fossil fuels in response to his enforcement of a new law restricting state investments in firms that cut off funding to traditional energy ventures.
Hegar’s office sent letters out to 19 firms in March asking them about their investment policies. Twenty responded, including JPMorgan Chase and HSBC, stressing their continued involvement with fossil fuel industries, Bloomberg reported, based on a review of the responses.
Stacey Friedman, executive vice president and general counsel for JPMorgan, said in a letter the firm “provide[s] financial products and services to many companies that engage in the exploration, production, utilization, transportation, sale, or manufacturing of fossil fuel-based energy” and that it intends to continue doing so.
JPMorgan had $42.6 billion worth of credit exposure to oil and gas ventures as of December, the letter said.
Investment giant BlackRock got out in front of Hegar and reached out to Texas officials earlier this year to assure them it wants energy firms in the state to “succeed and prosper” and that it would keep investing there.
Big picture: Texas is a resource abundant, money-making machine. Its wells accounted for 43% of crude oil production in 2020, more than four times the share that came from no. 2 producing state North Dakota, and it also led the pack as top natural gas producer the same year. The Permian Basin, which sits mostly within Texas’s borders, accounts for nearly half of total U.S. oil production every day.
Texas is among a pack of several Republican-led states that have passed or proposed laws to take on companies determined to be boycotting or divesting from fossil fuels.
New York Times Snowmobiles in slush: Sports are on thin ice in the warming Arctic
Reuters Fearing Russian cutoff, German industry braces for gas rations race
Washington Post In a massive Chinese sinkhole, scientists find a secret forest
ClimateWire The West, reliant on hydro, may miss it during heat waves
MONDAY | MAY 23
4:00 p.m. Evergreen Action will host Sen. Tina Smith and Rep. Ro Khanna for a “Policy + Pints'' discussion about passing the $555 billion in energy and climate change-related provisions from the Democrats' stalled reconciliation proposal.
TUESDAY | MAY 24
12 p.m. The House Select Climate Crisis Committee will hold a hearing that examines ways to create an affordable and resilient food supply chain in the face of climate change. The panel will hear testimony from nonprofit groups including ReFED, the North American Renderers Association, the National Audubon Society, and more.