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NATURAL GAS PRICES SURGING: Relief from inflation isn’t coming from the U.S. natural gas market this week, where gas is trading at a 13-year high again today after breaking through that ceiling on Monday.
NYMEX natural gas futures are above $7 per MMBtu and have closed up all week. The last time futures traded at these levels was December 2008.
Vinicius Romano, senior analyst with Rystad Energy, said prolonged winter temperatures are one element adding upward pressure to the market.
U.S. gas storage levels were also at their lowest in three years at the end of March, according to the Energy Information Administration. EIA said in a blog post this morning higher-than-normal withdrawals in recent months due to cold temperatures were partly responsible.
The other factor: International demand for U.S. natural gas is also sky-high, especially in Europe, where the EU plans to supplement its gas supplies with U.S. LNG as it simultaneously stages its exit from Russian gas.
EIA and Romano both implicated the high demand and record-high LNG exports for driving prices up.
What’s in play: The temperature factor may soon change with spring’s arrival, but the demand for gas shipments will not.
European leaders have made clear they badly want U.S. LNG, and the Biden administration has promised to help them get it.
At the same time, President Joe Biden is under lots of pressure from green activists to back off the administration’s commitments on LNG.
Basav Sen, climate policy director at the Institute for Policy Studies, said yesterday the joint U.S.-EU gas acquisition task force is “an excellent example of how not to conduct energy policy in a transparent and democratic manner during a climate emergency.”
One more thought: If natural gas prices remain high or keep rising, despite the advent of spring, it may put some congressional Democrats up more firmly against Biden’s LNG push.
The Biden administration has already faced numerous calls from Democratic lawmakers to ban the export of domestic fossil fuels because of how high prices are at home.
“When establishing U.S. LNG export policies, we understand there are geopolitical factors and global and regional markets to consider,” 10 Democratic senators wrote to Energy Secretary Jennifer Granholm in February, asking for restrictions on LNG exports (note, that was before the war in Ukraine and administration’s gas task force came about).
Seven of the 10 signatories represent New England, which in general face higher energy costs than most other U.S. regions and where regional benchmark gas has traded as high as 4.5 times higher than Henry Hub gas in the last year.
“However,” they said, “the administration must also consider the potential increase in cost to American families because of higher export volumes.”
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LNG GROUP WELCOMES EXPORT-IMPORT FINANCE PROGRAM: The Export-Import Bank’s approval of a new “Make More in America” financing initiative yesterday showed the agency “continues to understand that the U.S. LNG export industry creates thousands of jobs… while bringing the environmental and economic benefits of American natural gas to our global allies and trading partners,” LNG Allies CEO Fred Hutchison said in a statement.
The Export-Import Bank said the program will incentivize environmentally beneficial export ventures, a category LNG Allies said “clearly” encompasses U.S. LNG export projects “since they mostly displace coal use in foreign power projects or natural gas from countries such as Russia that have a much higher greenhouse gas footprint than U.S. gas production.”
Ex-Im’s announcement specifically named renewable energy and energy storage-related projects as those it considered environmentally beneficial. It didn’t name LNG.
But some environmentalists treated the announcement warily, perhaps anticipating Ex-Im will use the same justification as Hutchison’s group outlined to provide financing to LNG export projects.
Green groups have broadly opposed the Biden administration’s new position on natural gas, especially on increasing LNG exports to a struggling Europe, as we noted yesterday.
“The last thing the Biden administration should be doing is allowing for an expansion of fracked gas infrastructure that would worsen these crises and do nothing to solve short term energy needs,” Mahyar Sorour, deputy legislative director at the Sierra Club, said in a statement yesterday.
REPUBLICAN ANTI-WOTUS SALVO: Three members of the Congressional Western Caucus filed an amicus brief yesterday in the upcoming Supreme Court case, Sackett v. EPA, urging the court to side with landowners in its case over what waterways are considered “Waters of the United States” (WOTUS) and drop what they argue is overly burdensome regulation that hinders proper environmental protection.
“Confusion, unpredictability, and litigation have surrounded the scope of federal authority of our nation’s navigable waterways for decades, and as our amicus brief states, Congress never intended to give the EPA jurisdiction over every ditch, puddle, or stream,” Reps. Dan Newhouse of Washington state, Mariannette Miller-Meeks of Iowa, and Rodney Davis of Illinois wrote in their brief. “Farmers, ranchers, small business owners, and landowners deserve certainty, and it is our hope that the Supreme Court will finally put an end to this regulatory confusion.”
Newhouse joined a group of 200 Republican House Republicans in calling on the Biden administration in March to drop its plan to expand the scope of WOTUS until the high court rules on Sackett v. EPA.
“Farmers, ranchers, small business owners, and landowners deserve certainty, and it is our hope that the Supreme Court will finally put an end to this regulatory confusion,” lawmakers wrote in the amicus brief. Read it in full here.
THE EU IS WEIGHING A BAN ON RUSSIAN OIL IMPORTS: The European Union is weighing whether to adopt a phased-out ban of Russian oil imports. According to the New York Times, E.U. officials are not planning to put the embargo up for consideration until after the final round of the French elections on April 24.
A phased-out ban would give countries like Germany, which is heavily dependent on Russian energy supplies, more time to secure an alternative.
E.U. officials and diplomats told NYT there is a growing sense that the oil embargo would take place in the absence of additional large-scale atrocities like the horrors seen in Bucha, Ukraine.
“The Commission and E.U. members have smartly shied away from defining red lines that would trigger a sanctions response since Russia attacked Ukraine,” Emre Peker, a director at the Eurasia Group, told the Times.
“I expect the E.U. will shy away from defining triggers,” Peker added, “as continued escalation by Russia in eastern Ukraine and revelations from Bucha and elsewhere continue to drive momentum behind a hardening European stance. Any other major catastrophes that unfold will just add more impetus to the E.U. response.”
WHITE HOUSE AND MCCARTHY DENY PENDING EXIT: National climate adviser Gina McCarthy tweeted yesterday her team has “much more work to do” after Reuters reported that she is planning to leave the White House.
The outlet reported she plans to step down, citing two sources, although it provided no timeline.
White House spokesman Vedant Patel said the report “is not true.”
“There are no such plans underway. Gina and her entire team continue to be laser focused on delivering on President Biden’s clean energy agenda,” Patel said via email.
McCarthy has been helping command the Biden White House’s climate policy since day one and through the course of the unsuccessful negotiations over Biden's “Build Back Better” spending agenda.
The White House is now being extra careful not to reveal too much this go-round about any conversations going on behind the scenes with Sen. Joe Manchin about how to move some version of the legislative package forward, Politico reported.
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THURSDAY | APRIL 21
10:00 a.m. The Federal Energy Regulatory Commission will hold its monthly open meeting.
11:00 a.m. Woodridge, Ill. The House House Science, Space, and Technology Subcommittee on Investigations and Oversight will hold a field hearing in Illinois on electric vehicle batteries and U.S. critical minerals supply.
THURSDAY | APRIL 28
The House Science, Space and Technology Committee will hold a hearing on the findings of an intergovernmental panel report, titled, "Climate Change 2022: Mitigation of Climate Change." Location and time TBA.