Biden barrels forward

Apr 01, 2022

Presented by Chevron

With help from Josh Siegel and Kelsey Tamborrino.

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QUICK FIX

President Joe Biden revealed his most ambitious plan yet to combat high gasoline prices: injecting a record 180 million barrels of oil in the market over six months.

Democrats are struggling to solve the fuel price problem. Most of their ideas have significant drawbacks and may not actually lead to relief at the pump.

FERC and the NRC are nervous about cyber and reliability threats to the grid and the fleet of nuclear plants.

HAPPY FRIDAY! I'm your host, Catherine Morehouse. Congrats to Ryan Taylor of Forbes Tate Partners for being the first to know Gangkhar Puensum in Bhutan is the highest unclimbed mountain in the world. Though its peak is about 4,000 feet lower than Everest's, Bhutan banned mountaineering in 2003. Special shoutout to EPRI's David Hunter for pointing out that the highest known unclimbed mountain is Olympus Mons on Mars, topping out at a whopping 72,000 feet.

For today: What is the largest U.S. city on the largest U.S. lake? Send your tips and trivia answers to cmorehouse@politico.com. Find me on Twitter @cmorehouse10.

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The Permian Basin in Texas and New Mexico is one of America's most prolific oil and natural gas resources. By the end of this year, we plan to increase Chevron's Permian oil and natural gas production by 10% while continuing to reduce our operations' carbon and methane emissions intensities.

Driving The Day

TRYING TO TAME THE BARREL: Stung by high gasoline prices, Biden officially announced the U.S. will again tap its strategic oil reserve — this time, to the tune of one million barrels per day for six months, POLITICO's Zack Colman and Ben Lefebvre report. That's about 5 percent of the roughly 20 million barrels per day that the U.S.consumes, and far higher than the previous record release of 50 million barrels announced in November.

The move is intended to temper inflated prices as average costs have spiked from $3.30 a gallon at the start of the year to more than $4.20 now because of supply chain constraints and heightened market volatility due to the war in Ukraine. Biden will also use the Defense Production Act to boost development of a critical minerals supply chain in the U.S. needed to support the growth of the U.S. electric vehicle fleet and bring more battery storage online to support high levels of wind and solar on the grid.

Biden has been put in a politically precarious position in recent months, balancing his clean energy promises with a desire to relieve consumer pain as gas prices. And recent polling from Quinnipiac shows many voters are upset with him: 41 percent blamed Biden for the rise in gasoline prices, while about a quarter saw the war in Ukraine and sanctions against Russia as the culprit.

SUBSCRIBE TO NATIONAL SECURITY DAILY : Keep up with the latest critical developments from Ukraine and across Europe in our daily newsletter, National Security Daily. The Russian invasion of Ukraine could disrupt the established world order and result in a refugee crisis, increased cyberattacks, rising energy costs and additional disruption to global supply chains. Go inside the top national security and foreign-policymaking shops for insight on the global threats faced by the U.S. and its allies and what actions world leaders are taking to address them. Subscribe today.

On the Hill

NEVER BE SATISFIED: Democrats in Congress seem unconvinced that the White House plans will work to bring down gasoline prices, even though they support the new effort.

"I wish that was the case that the president is taking care of the problem. He is addressing it in a significant way. But this is a big problem," Sen. John Hickenlooper (D-Colo.) told POLITICO's Josh Siegel.

Democrats are kicking around their own ideas, but so far, they're struggling to find consensus on what to do, since their ideas all have potential drawbacks and may not actually bring down prices. House Speaker Nancy Pelosi is hearing out ideas from members with the aim of putting forth a legislative package to act on as soon as next week before the Easter recess.

At her weekly press conference, Pelosi indicated she would be in favor of a rebate or direct payment to consumers, though she again dismissed the idea of pausing federal gasoline taxes.

"We need to help the president out and do some more," Rep. Donald McEachin (D-Va.) told Josh. "We need to do our part in Congress and pass legislation that maybe sends debit cards to folks to help pay for the gas."

Other Democrats, meanwhile, plugged other priorities. "The incentives have to be rearranged right now for big oil producers. They are making record profits because of higher prices," Sen. Richard Blumenthal (D-Conn.) told Josh, pressing legislation he co-sponsored that would tax large oil and gas companies' windfall profits from surging crude prices.

Sen. Tammy Duckworth (D-Ill.) promoted her legislation to allow for year-round sales of gasoline blends with 15 percent ethanol – an idea the Biden administration is considering. "We can and should do more," she said in a statement.

SENATORS URGE Sens. Kevin Cramer (R-N.D.) and Chris Coons (D-Del.) called on Biden to boost U.S. LNG exports as means to fight climate change. In a letter released today, the pair argue that displacing dirtier Russian natural gas in favor of U.S.gas — which emits less methane and has an overall lower greenhouse gas footprint — "will have the dual benefit of reducing global greenhouse gas emissions while diminishing the leverage of bad actors."

More broadly, the senators ask Biden to consider trade policies that would lower global emissions — including through a carbon border adjustment mechanism, which the pair has also worked on together. The Europe Union is working on its own carbon border mechanism, and the lawmakers fear such action could leave the U.S. behind if the administration doesn't step up to the plate.

"[W]e are concerned that unilateral action could lead to discrimination against U.S. businesses, driving a wedge where there should be a bond," the letter reads, adding that the war in Ukraine "has underscored the need for close cooperation with nations who share our values."

YE OLDE MINING LAWS: Senators on the Energy and Natural Resources Committee lamented the lack of advances in U.S. mining regulations since the law that still governs much of the industry was passed in 1872. "If we want a modern mining permit process, I think it's fair to say we also need a modern mining law," Sen. Martin Heinrich (D-N.M.) said during a hearing on the need for the U.S. to establish a domestic supply chain for critical minerals.

Heinrich said an updated law should generate royalties from mining companies — similar to those currently paid by federal oil and gas leaseholders — as well as funding to clean up abandoned mines. Republican lawmakers pushed for a more streamlined permitting process, while acknowledging that old mining practices were "terrible." "No one wants to go back to that. Nobody. But we've got to figure out how to do this," said Sen. James Lankford (R-Okla.). POLITICO's Jordan Wolman has more.

Coming up: The committee announced it will hold a hearing on April 7 to discuss critical mineral demand and recycling.

CONFIRMED: The Senate on Thursday confirmed Joseph DeCarolis by voice vote to become administrator of the Energy Information Administration, the Energy Department's independent statistical arm. In a statement, Granholm called him the "perfect fit" for the role, "especially as he shepherds new efforts at the EIA to model immense growth and opportunities in clean energy and zero-carbon technologies."

KEEPING UP THE E15 TALK: Nearly 30 bipartisan lawmakers in the House reiterated calls for the president to reinstate the year-round availability of E15 fuel, as well as reverse course on the proposed retroactive reduction to 2020 and 2021 Renewable Volume Obligations, in response to Russia's invasion of Ukraine. "Upholding the RFS and permanently reinstating the year-round availability of E-15 would lower fuel prices for hardworking Americans," they wrote.

The ethanol industry also kept up the pressure Thursday , expressing disappointment the White House did not include any actions on E15 in its suite of announcements. "It is baffling to us that President Biden continues to overlook ethanol, which is the most readily available, lowest-cost, and lowest-carbon option for extending our nation's fuel supply," said Renewable Fuels President and CEO Geoff Cooper.

A message from Chevron:

Around the Agencies

EPA STICKS TO TRUMP-ERA WATER REGS: EPA won't regulate perchlorate in drinking water, standing by a Trump-era decision not to set standards for the chemical that has contaminated drinking water for millions of Americans and is connected to developmental issues in fetuses and children, Pro's Alex Guillén reports. The agency said in a news release the decision "is supported by the best available peer reviewed science."

California, Massachusetts and other states set their own standards for perchlorate, which also factored into the agency's decision to bypass federal regulations. The call from Biden's EPA predictably angered environmentalists who have long fought for federal standards, and the Natural Resources Defense Council will likely restart its lawsuit challenging the Trump-era decision.

"The EPA's failure to protect drinking water from widespread perchlorate contamination is unscientific, unlawful and unconscionable," said Erik Olson, NRDC's senior strategic director for health.

FERC, NRC HASH OUT CYBER, RELIABILITY CONCERNS: Regulators homed in on grid cybersecurity and reliability risks during a joint meeting between FERC and the Nuclear Regulatory Commission held Thursday — the agencies' first since 2019.

There was particular interest in the timeline for advanced nuclear reactors, which advocates say could address many of the reliability problems looming over the power grid as intermittent generation sources like renewables ramp up. North American Electric Reliability Corporation Vice President of Engineering and Standards Howard Gugel told the meeting that "traditionally, most of our baseline generation has kept at a flat level, and it's going to be important for us as we go forward to design generation that can rapidly ramp up and down to be able to meet" more variable renewable energy loads.

Advanced reactors are expected to be operational by the late 2020s to early 2030s , according to DOE and the NRC. The agency is seeing "clear commercial interest" in designs for advanced reactors, NRC's Deputy Office Director for Engineering in the Office of Nuclear Reactor Regulation Andrea Kock. There are more than 10 developers in the pre-application process, and the agency expects to see more than 13 applications by 2027.

Regulators and staff were also candid about ongoing cybersecurity concerns, warning that supply chains for nuclear reactors in particular remain a major vulnerability as the power sector braces itself amid the heightened threat of a Russian cyberattack. "We cannot underestimate the ability of our adversaries. I believe that threats — as we've all noted — they continue to change and continue to emerge," said FERC Commissioner Willie Phillips.

STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president's ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.

Beyond the Beltway

CLIMATE BILL HEADS TO HOGAN: An ambitious climate bill is on its way to Maryland Gov. Larry Hogan's desk after passing the state's House and Senate this week. The bill calls for reducing statewide greenhouse gas emissions 60 percent below 2006 levels by 2030, and aims to reach net-zero emissions by 2045.

Hogan, a Republican, has called the bill "reckless and controversial" and is unlikely to sign it. But the Democratic legislature may have the votes and time to override him. If made law, it won't be the first time in recent history the state legislature pushed through a climate bill without the governor's blessing: In 2019, Hogan neither vetoed nor signed a bill that required the state to generate 50 percent of its power from renewables.

COAL EXEC BEHIND BARS: A former coal executive was arrested on Thursday on money laundering charges and a scheme to pay bribes to government officials in Egypt in exchange for contracts with a state-owned company, the Justice Department announced. Charles Hunter Hobson, whose company was not named, bribed Egyptian officials to secure approximately $143 million contracts in coal contracts, according to the DOJ.

Hobson, of Knoxville, Tenn., was charged on seven counts: three counts of violating or conspiring to violate the Foreign Corrupt Practices Act, one count of conspiracy to launder money, two counts of money laundering, and one count of conspiracy to commit wire fraud.

The Grid

"The Razor's Edge of A Warming World," via GQ

"Experts say blending hydrogen into gas pipelines won't work," via Canary Media

" Biden turned the ruble into rubble. Then it quickly came back.," via POLITICO

THAT'S ALL FOR ME!

A message from Chevron:

Balancing energy security, costs, and the need to reduce emissions have become an increasingly important part of the energy conversation at home and abroad. In the Permian Basin, we plan to increase oil production by 10% in 2022 while continuing to reduce both carbon and methane emissions intensities. And in the years to come, we expect to grow our Permian production beyond 1 million barrels of oil equivalent per day. Every day, we look for opportunities to make our own environmental footprint smaller as we strive to produce energy that Americans—and customers throughout the world—can count on. Find out more.