SPR LATEST: One takeaway from the decision, announced this morning, to cancel the latest strategic petroleum reserve purchase because of high prices: The Energy Department has struggled to refill the emergency stockpile in line with its end-of-year target, or under the prices originally outlined.
In October, it announced a buyback plan targeting oil prices of between $67 to $72 per barrel to replenish the SPR, which it later raised to $79. In its most recent refill, last month, the department exceeded those prices— spending an average of $81 per barrel to replenish the reserves.
Why it matters: The administration earned intense criticism for President Joe Biden’s 180-million barrel sale of SPR oil in March 2022, the largest one-time drawdown in history that sent SPR levels plummeting to a 40-year low.
Though the SPR sales were effective in helping lower gas prices, Republicans blasted Biden as using the SPR for political gain by ordering the sales ahead of the 2022 midterm elections.
The SPR currently stands at around 363 million barrels, according to data from the Energy Information Administration— down from 600 million at the start of 2022.
As today indicates, recovery efforts are likely to be slower than anticipated: WTI crude was trading above $85 Wednesday, and futures were trading above $80 for most of the rest of the year.
Some analysts see oil heading much higher over the summer. JP Morgan said it now expects Brent prices to rise to $90 per barrel by May and $100 per barrel by September, while Bank of America Global Research said in a new market note today that it expects more bullish prices for both Brent and WTI, with prices expected to peak around $95 per barrel by summer.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email bdeppisch@washingtonexaminer dot com or nancy.vu@washingtonexaminer dot 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.
FED REPORTEDLY BLOCKS INTERNATIONAL EFFORT TO PUT CLIMATE IN BANK RULES: U.S. financial regulators, led by the Federal Reserve, have blocked efforts to include climate change in rules for banks advanced by the Basel Committee on Banking Supervision, Bloomberg reports, citing anonymous sources.
The Basel committee, which coordinates among financial regulators on capital rules and other regulations for banks, was under pressure from some European officials to agree on requiring banks to disclose their strategies for addressing climate change. But Fed officials pushed back on the effort, saying that it would exceed their mandate.
Related – Powell speaks on climate: Notably, Fed Chairman Jerome Powell, who maintains that the central bank cannot use its monetary or regulatory tools to pursue climate goals, reasserted that stance in a speech today at Stanford. Powell said that “we are not, nor do we seek to be, climate policymakers.” He also said that the Fed is “alert” to the risk that it will be pressured over time to engage more on climate policy.
While other Fed officials have been more open to the idea, Governor Christopher Waller has sounded even more skeptical, opposing the Fed’s limited climate regulatory efforts by saying that climate change does not pose a threat to financial stability, as we’ve previously covered in Daily on Energy.
CURRENT AND FORMER HOUSE DEMOCRATS BLAST LNG PAUSE: Two Democrats, Rep. Vicente Gonzalez and retired Rep. Martin Frost, took aim at the Biden administration’s LNG pause in a new op-ed yesterday, arguing that the pause reneges on a “multi-decade era of bipartisan cooperation” on U.S. energy policy, including under former President Barack Obama, and risks making the nation more reliant on adversaries for energy supplies.
Writing for RealClearPolitics, Gonzales and Frost—who both represented Texas, the largest oil- and gas-producing state—praised the U.S.’s new status as the world’s largest LNG supplier.
They argued that U.S. LNG dominance has created a “new geopolitical tool” for the country, and one that is helpful when going toe-to-toe with OPEC and energy-rich nations that have sought to leverage their energy influence in previous decades to shape foreign policy—most famously during the 1973 oil embargo.
“We are living in a uniquely challenging time where unwise domestic policies in Washington can have profound foreign geopolitical implications,” they wrote. “DOE’s decision to stall LNG exports is certainly one of them.” Read the op-ed here.
TRANSPORTATION DEPARTMENT ISSUES FINAL FREIGHT SAFETY RULES: The Transportation Department finalized a new rule yesterday requiring all major freight railroads to maintain a minimum crew of two people per train.
Secretary Pete Buttigieg described the new two-person minimum yesterday as “long overdue.”
“Common sense tells us that large freight trains, some of which can be over three miles long, should have at least two crew members on board— and now there’s a federal regulation in place to ensure trains are safely staffed,” Buttigieg added.
Why it matters: The new rule follows several high-profile train disasters, including the February 2023 derailment of a 150-car freight train in East Palestine, Ohio. That derailment, which sent toxic chemicals spewing into the nearby air and water and forced state officials to order a controlled burn to avoid an explosion, prompted renewed federal attention and a push for action, including from Ohio’s congressional delegation, which led the push for rail safety bills in both the House and Senate.
Rail unions have also spent years pushing for the adoption of two-crew minimums, which were one of their biggest asks during their 2022 protracted negotiations with rail operators that nearly ended in a strike.
Reaction: Sen. Sherrod Brown, who co-sponsored a bipartisan rail safety bill with fellow Ohioan Sen. J.D. Vance, said yesterday that the rule is a step in the right direction, but stressed the importance of passing the safety legislation as well to make the changes permanent.
“Big rail lobbyists will do everything they can to roll this back,” Brown said on Twitter. “We must pass our bipartisan rail safety bill to make these changes permanent & require the railroads to do more to prevent derailments.”
AFPM EXPANDS SEVEN-FIGURE AD BLITZ AGAINST BIDEN’S CAR POLICIES AHEAD OF LIKELY SENATE VOTES: The American Fuel and Petrochemical Manufacturers (AFPM) expanded a seven-figure ad campaign to nine states this week taking aim at the EPA’s newly finalized passenger vehicle regulations, asking voters to contact their senators ahead of expected votes to block the regulations.
The ads will air in Georgia and Maine, in addition to originally airing in Michigan, Pennsylvania, Wisconsin, Arizona, Nevada, Ohio and Montana. Ads were airing in those seven states since February to raise awareness of Biden’s push for EVs.
The ad calls Biden’s regulations a “ban” on new gas-powered cars, and tells voters to call their senators ahead of the chamber’s expected vote on disapproval resolutions overturning the agency’s rules regulating tailpipe emissions from light, medium, and heavy-duty vehicles.
“The United States Senate has the power to stop President Biden’s unlawful policy banning most new gas cars, but it’s going to take both Democrats and Republicans to deliver on that and protect consumer freedoms,” AFPM President and CEO Chet Thompson said in a written statement.
DOE’S PLAN TO DECARBONIZE BUILDING SECTOR: The Department of Energy released a plan yesterday for reducing greenhouse gas emissions from buildings – the first sector-wide strategy for decarbonization in buildings from the federal government.
In partnership with other agencies, such as the Department of Housing and Urban Development and the Environmental Protection Agency, the plan is meant to reduce GHGs from buildings by 65% by 2035, and 90% by 2050.
“America’s building sector accounts for more than a third of the harmful emissions jeopardizing our air and health, but the Biden-Harris Administration has developed a forward-looking strategy to slash these pollutants from buildings across the nation,” said Energy Secretary Jennifer Granholm.
The blueprint has four basic objectives: increasing building energy efficiency, accelerating onsite reductions, reforming the connection between buildings and the electricity grid, and reducing emissions from producing, transporting, installing, and disposing of building materials. To reach those goals, the department plans to fund research and development to create lower-cost technologies, directly fund and finance these technologies, and implement building codes and appliance standards that are less emissions-intensive.
Why it’s important: If the plan is able to reach a 90% reduction in emissions from the sector, this could save consumers more than $100 billion in annual energy costs, and avoid $17 billion in annual health costs. Read more on that here.
RUNDOWN
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