Subscribe today to the Washington Examiner magazine and get Washington Briefing: politics and policy stories that will keep you up to date with what's going on in Washington. SUBSCRIBE NOW: Just $1.00 an issue!
WILL RUSSIA FEEL THE SQUEEZE? The major question following the European Union’s proposal today to completely ban Russian oil imports by the end of the year is how badly it will hurt Russia.
Analysts agree that the EU embargo will force Russia to cut its crude production, since the country now faces a shortage of buyers. Though some customers in Asia have increased their purchases of Russian crude, analysts say that volume is not enough to offset the loss from the West.
"Russia's ability to redirect all unwanted cargoes from the West to Asia are limited, meaning that, in the case of embargoes, Russia will be forced to cut production further as it lacks storage capacity for extra crude volumes," Rystad Energy analysts said in a report published earlier this week.
“In this early phase of sanctions and embargoes, Russia will benefit as higher prices mean tax revenues are significantly higher than in recent years,” senior Rystad analyst Daria Melnik said in the report. “Pivoting exports to Asia will take time and massive infrastructure investments that in the medium term will see Russia’s production and revenues drop precipitously.”
But Moscow still stands to gain in the short-term from the surge in prices: Analysts found that Russia stands to collect roughly $180 billion in energy tax revenues this year due to heightened demand for energy supplies.
News of the EU’s proposed sanctions also touched off a spike in oil prices this morning, with futures for global benchmark Brent crude climbing by more than 3.7% before settling around $108 a barrel. Futures for U.S.-based West Texas Intermediate, meanwhile, climbed to just below $106.
And it’s not a done deal yet: Still, any sanctions package requires unanimous approval from all 27 EU member states, and two holdouts remain: Slovakia and Hungary, which are both deeply dependent on Russian oil supplies.
EU leaders said they have been weighing efforts to soften the blow for the two countries. Efforts being discussed include granting the countries some form of exception from the embargo, or a longer transition period to find reliable alternative suppliers.
Leaders from both countries said this week that they will insist on being exempt from any Russian oil embargo before voting to approve the sanctions.
European Commission President Ursula von der Leyen did not elaborate on whether the two countries will receive their requested exemptions from the sanctions, although it appears “likely,” the Associated Press reports.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email jbeaman@washingtonexaminer.com or bdeppisch@washingtonexaminer.com 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.
ON OIL, IMPORTS ARE UP AND PRODUCTION IS STEADY: Total crude oil imports were up and refinery inputs were down over the last week, according to the EIA’s newest weekly petroleum status report.
The U.S. imported 397,000 more barrels per day versus the previous week to average 6.3 million barrels per day.
Meanwhile, total oil production averaged 11.9 million barrels last week for the third straight week.
INDIA BOOSTS COAL PRODUCTION: India announced this week that it is boosting its coal production to record highs, seeking to secure supplies and counteract the adverse effects of a nationwide fuel shortage, which has strained its power supply and touched off rolling blackouts during a blistering heatwave.
India’s Coal Minister Pralhad Joshi said on Twitter this week that state-run Coal India increased its coal output last month to 53.47 million tons—a 6% increase from April 2019.
The turn to coal has been necessitated by surging demand in the wake of post-COVID-19 reopenings coinciding with supply chain problems, the Financial Times reports. India is the world’s second-largest coal producer and consumer, depending on it for about 70% of power.
FOREIGN RELATIONS APPROVES KIGALI: The Senate Foreign Relations Committee unanimously approved the Kigali Amendment to the Montreal Protocol this morning, setting the stage for full ratification of the treaty provision.
The Biden administration sent the amendment, which calls for the phasedown of hydrofluorocarbons used in refrigerant products, to the Senate in November. The compounds have a global warming potential that can be hundreds to thousands of times greater than CO2, according to the EPA.
Stemming the greenhouse gas pollutant has bipartisan support. The Energy Act of 2020, which passed with Republican support and was signed by Donald Trump, included language directing EPA to oversee phasedown of HFCs.
NEW COMMERCE MEMO SUGGESTS ACCELERATION OF SOLAR PROBE: The Commerce Department looks to be accelerating its circumvention inquiry involving solar imports from Asia and is providing a new measure of clarity to a particular group of manufacturers, which the department says is not subject to its probe.
Commerce circulated a memo on Monday soliciting additional comment from interested parties and specifying that “[silicon] wafers produced outside of China with polysilicon sourced from China are not subject to these circumvention inquiries.”
“They’re now being told basically, ‘You’re outside the scope of his order.’ So, that sends a certain signal to the market about who has a product that is basically never going to get tariffs from this proceeding,” an industry source told Jeremy.
Other questions Commerce raises in the memo are “atypical” in that they come earlier during the life of the circumvention probe than normal, the source also said.
“Clearly, Commerce is accelerating in some sense in the sense that they're asking questions from a timeline perspective that normally come much later,” the person said, adding that the memo will be seen as a win for the companies that manufacture their wafers outside of China but not necessarily by others.
The Biden administration is under immense pressure from the solar industry and some congressional Democrats to quickly resolve the inquiry, as we detailed Monday, the argument being the prospect of tariffs on imports threatens business.
Status report: Briefs challenging the facts or legality of the petition were due on Monday.
Heather Zichal, CEO of the American Clean Power Association, said the filings that were submitted “clearly refute the strained assertion that solar panels coming from Cambodia, Malaysia, Thailand and Vietnam” are circumventing duties on Chinese imports.
BIDEN NOMINATES TWO FOR NRC VACANCIES: The White House announced two nominees yesterday to fill vacancies at the five-member Nuclear Regulatory Commission: Annie Caputo and Bradley Crowell.
Caputo served on the NRC once before. Trump nominated her to serve the remainder of former commissioner William Ostendorff’s term, which expired in June 2021.
Crowell currently works as director of the Nevada Department of Conservation and Natural Resources and served as assistant secretary of energy for congressional and intergovernmental affairs during the Obama administration.
GREEN GROUPS WEIGH IN ON ROE DRAFT: Environmental groups are adding their lobbying power to fight over abortion.
Evergreen Action executive Director Jamal Raad criticized the “radical” Samuel Alito-authored draft opinion first circulated Monday evening and looped abortion into his group’s mission.
“There can be no climate justice without reproductive justice, and Evergreen Action is committed to supporting our allies in the fight to ensure that everyone in this country is able to make their own decisions about their reproductive future,” Raad said.
Abigail Dillen, president of environmental law group Earthjustice, called the prospective overturning of Roe “a dangerous step in advancing a political agenda that could overturn established rights and precedents.”
The Rundown
Energy Intel Gazprom puts Europe on guard: Who might be next?
New York Times Russia could sell more energy to Asia, but has to slash prices
Washington Examiner New Mexico wildfire covers over 145,000 acres, forcing mass evacuations
Calendar
FRIDAY | MAY 6
10 a.m. Plymouth, Mass. The Senate Environment and Public Works Committee will hold a field hearing at the Plymouth Town Hall on decommissioning nuclear plants in the U.S.