Big Oil's toil and trouble

Apr 07, 2022

Presented by AVANGRID

With help from Kelsey Tamborrino, Catherine Morehouse, Alex Guillén and Gloria Gonzalez.

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QUICK FIX

— Democrats are pushing for another round of hearings with corporate oil leaders as they seek to keep the oil majors in the hot seat for high gasoline costs.

— The Senate Energy Committee will dive into critical mineral demand in the U.S. Members of both parties on the committee want greater domestic production to supplant foreign supplies that are needed to support the growth in renewables.

— Two nominees for TVA could have a rocky road to confirmation after some spicy tweets emerged in a committee hearing.

HAPPY THURSDAY! I'm your host, Matthew Choi. Tonya Parish from the Alliance for Automotive Innovation wins the trivia for knowing the EU flag has 12 stars. For today's trivia: Who was the youngest nominee ever confirmed to the Supreme Court? Send your tips and trivia answers to mchoi@politico.com. Find me on Twitter @matthewchoi2018.

Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today's episode: The political strategy behind Wednesday's Big Oil hearing.

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Driving the Day

GOING BACK TO THE WELL? The oil company executives who got a grilling Wednesday in the House hearing over gas prices are probably eager for a break from the scrutiny. But it may not be the last time they're hauled before Congress if Democrats get their way.

With the party facing political fire for high retail gasoline prices and the midterm elections fast approaching, Democrats are eager to cast blame on oil companies whose coffers are swelling from high oil prices.

The Energy and Commerce's Oversight Subcommittee beat out several other committees to bring the industry's executives into the room, even if the executives attended only virtually. Yet to come could be hearings at the Senate Commerce and House Oversight committees, which have both expressed interest in interrogating the industry executives or board members. Even though the E&C subpanel hosted Wednesday's hearing, several high-profile members of the full committee popped in to ask their questions.

The Senate Commerce Committee is still hoping for a hearing with the heads of Exxon Mobil, BP and Pioneer Natural Resources, a committee staffer told ME. Executives from the companies declined the invitation issued by Chair Maria Cantwell (D-Wash.) for the hearing that took place at her committee on Tuesday. A House Oversight spokesperson told ME the committee is still "continuing with our investigation into Big Oil's disinformation on climate change and misleading promises about green energy investments."

House Natural Resources Chair Raúl Grijalva appeared content with E&C's job probing the industry leaders when asked if he would try again to bring the executives before his own committee after they declined to show this week.

"The fossil fuel companies I invited to testify are some of the biggest oil producers on public lands—yet they claimed they needed even more public lands and waters for drilling if they were going to help lower gas prices," he added in a statement to ME. "They turned down the opportunity to make their case to our Committee, so we can move forward with the assumption that those claims are as absurd as they sound."

Raul Grijalva speaks.

Raul Grijalva speaks. | Chip Somodevilla/Getty Images

ICYMI, lawmakers at Wednesday's hearing blasted the heads of the country's biggest oil firms for the record high consumer prices that are helping to drive up their corporate profits. And they sought to dispute the executives' contentions that it was the energy market, not their c-suites, that were responsible for the high costs. Republicans largely defended the industry, and castigated the Biden administration for its climate agenda they said was hostile toward American energy.

Confrontations with fossil fuel interests are also proving to be a soap box for Democratic lawmakers to pitch post-BBB clean energy legislation. Without naming the defunct Democratic superbill — or the West Virginian senator who tanked it — Rep. Kathy Castor (D-Fla.) said many of the country's energy woes would be on their way to being solved if Congress would pass the clean energy provisions passed out of the House last year, adding that it was blocked by "lobbyists aligned with the fossil fuel companies." EPW senators also used a hearing on energy security last month to make their pitches for the package's clean energy provisions as well.

For a round up of Wednesday's hearing, POLITICO's Ben Lefebvre and your host have you covered.

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On the Hill

TODAY'S HEARINGS: The Senate Energy Committee will dig into the country's critical mineral demand and mineral recycling today, following up on a hearing last week on domestic supply chains for the materials that are in high demand from the clean energy and EV industries.

Both Chair Joe Manchin (D-W.Va.) and ranking member John Barrasso (R-Wyo.) have stressed the need to bring critical mineral supply chains home, particularly as renewable energy and battery storage increase their share of the U.S. energy mix.

"Every company involved in the downstream manufacturing of products that contain critical minerals has a responsibility to know where their parts and materials are coming from," Manchin plans to say according to a draft of his remarks. "Companies must commit to building partnerships with domestic producers and material processors, and when they source overseas, transparency is a prerequisite."

Two EPA nominees are scheduled to get a committee vote yet again in the Environment and Public Works Committee today : David Uhlmann, tapped to lead EPA's enforcement, and Carlton Waterhouse, nominated to be the agency's solid waste point person. But the jury's still out on how far the duo will actually go.

Sens. Bill Cassidy (R-La.) and Cynthia Lummis (R-Wyo.) have vowed to block EPA nominees until the agency approves their home states' energy priorities. The senators' offices told ME this week nothing has changed on that front.

A committee aide told ME that Carper continues "working with his colleagues to address any outstanding reservations they have with each nominee, so that the Senate can fill these important leadership posts at EPA."

Across the Rotunda in the House Select Committee on the Climate Crisis , lawmakers will examine ways to promote energy efficiency to lower emissions, decrease dependence on foreign energy and bring down consumer costs.

OLD TWEETS HAUNT TVA NOMINEES: A trove of unburied tweets may hurt the chances of a bipartisan confirmation for two of President Joe Biden's three nominees to join the Tennessee Valley Authority. During a confirmation hearing Wednesday to fill the seats on the federally owned utility's board of directors, Republican senators brought up tweets from two of the nominees that disparaged fossil fuels — and one that knocked Sen. Joni Ernst (R-Iowa).

Ernst printed out a tweet from nominee Beth Greer, who currently serves as chief of staff for the office of former Vice President Al Gore, that read "hideous," in response to a 2015 tweet from Ernst about her speech as the Republican response to then-President Barack Obama's State of the Union address. Ernst said she would vote "no" on Greer.

And GOP Sens.Jim Inhofeof Oklahoma and Shelley Moore Capito of West Virginia knocked nominee Michelle Moore for tweeting she was "overjoyed for the defeat of all those disgusting oil and gas pipelines" and comparing oil to opioids in another.

TVA has come under scrutiny during the Biden administration. Its low penetration of wind and solar generation in comparison to national levels and its high energy prices drew a backlash from Democrats on the House Energy and Commerce Committee earlier this year. Sen. Ed Markey (D-Mass.) spent much of the hearing echoing those concerns and asking the nominees to help steer TVA toward a clean energy future.

RISCH LEANS TOWARD KIGALI RATIFICATION: Senate Foreign Relations ranking member Sen. Jim Risch (R-Idaho) had good things to say about the Kigali Amendment , the 2016 treaty addition that would phase down use of the potent heat-trapping hydrofluorocarbons under the landmark Montreal Protocol. "With ratification of this amendment, the U.S. can better position itself to uphold our interests as we transition away from these substances to the newer, more efficient substances that replaced HFCs globally," he said during a Wednesday hearing on several pending treaties. "These really need to move," he said later of Kigali and two unrelated treaties.

ME FIRST: END IT NOW: Sens. Roger Marshall (R-Kan.) and Mike Braun (R-Ind.) are introducing legislation today to enforce sanctions on Russian energy shipments immediately, nullifying the June 24th grace period for energy-related transactions under the current sanctions executive order. The Republicans pointed to the ruble's recent resurgence from its precipitous decline last month as proof that the country's economy is weathering sanctions better than the administration had hoped. Read the bill text here.

READYING THE GRID: Reps. Sean Casten (D-Ill.) and Paul Tonko (D-N.Y.) will introduce the EV Grid Act today to direct the Energy Department to study and develop a plan to meet the anticipated electricity demand from new electric vehicle charging infrastructure. The study would include the anticipated growth in the use of EVs under the president's climate targets and would assess how much additional electrical generation, transmission and distribution capacity will be needed to meet the demand.

LAWMAKERS HOPE TO TAP DPA FOR RENEWABLES: Sen. Bernie Sanders (I-Vt.) and Reps. Cori Bush (D-Mo.) and Jason Crow (D-Colo.) introduced legislation Wednesday to invest $100 billion and use the Defense Production Act to boost the renewable energy supply chain. The legislation, dubbed the Energy Security and Independence Act , would also provide $10 billion to procure and install heat pumps and $30 billion over 10 years to weatherize homes, as well as establish a domestic renewable energy industrial base task force. Biden announced last month his administration would use the DPA to help critical mineral production.

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Around the Agencies

RFS ON THE DOCKET: EPA is staring down a deadline today to decide what to do with 36 petitions for small refinery exemptions to biofuel blending requirements under the 2018 compliance year for the Renewable Fuel Standard. The Trump administration had granted 31 of the petitions and denied five, but the U.S. Court of Appeals for the D.C. Circuit granted a request from EPA in December to review the exemptions, giving EPA until today to issue new determinations.

The agency is also looking ahead toward volumes for 2023 and beyond since the RFS program is in its final year of congressionally mandated biofuel blending volumes. During a Wednesday Senate EPW hearing justifying EPA's budget request, EPA Administrator Michael Regan called the upcoming rule an "opportunity to stop ping-ponging back and forth, learn from the past lessons of what the courts have dictated and move forward in a very sound way to meet Congress' intent of getting the biofuel levels introduced into this market that I think we all want to achieve."

Regan also said the agency is "evaluating what options" it has on bringing down fuel prices amid the Ukraine crisis, and declined to rule out lifting the summer-time ban on E15 fuel.

Pedal to the metal: EPA will also propose new greenhouse gas tailpipe standards for model year 2027 and beyond vehicles "by 2023," Regan said at the hearing, putting it in line for finalization late that year or early 2024. That regulation is highly anticipated as a key part of achieving President Joe Biden's goal of 50 percent electric vehicle sales by 2030.

MOUNTAIN VALLEY DEFENSE: FERC will defend its decision to let construction on part of the Mountain Valley Pipeline continue amid ongoing legal challenges from environmentalists asserting the commission hadn't completed sufficient environmental review.

The case is in the D.C. Circuit and the parties will present oral arguments today, Bloomberg Law reports . The court has ruled against FERC on numerous project approvals recently, sending them back to the commission for review. The legal uncertainty of the commission's approvals was a large motivator behind its controversial policy statements increasing environmental scrutiny in its permitting process.

Beyond the Beltway

PUERTO RICO POWER FAILURE: Puerto Rico's embattled energy grid suffered a "massive island wide outage" on Wednesday, according to LUMA Energy, the company that has operated the island's grid since June 1. The exact cause is unknown, but LUMA said a failed circuit breaker at the Costa Sur power plant could have triggered the outage. Power restoration on the island of 3 million people could extend well into Thursday.

ALASKA LEAK: ConocoPhillips leaked an estimated 7.2 million cubic feet of natural gas in a leak last month on Alaska's North Slope, according to the company. The leak at the Alpine oil and gas development prompted personnel evacuations and unnerved the surrounding communities, with some residents relocating further south. POLITICO's E&E News' Heather Richards has more.

RELEASE THE CRUDE: High-consumer countries are readying the release of 120 million barrels of crude reserves to help cool markets, IEA Executive Director Fatih Birol announced.

The news sparked a precipitous drop in U.S. crude futures Wednesday morning, sending them down to just over $96 after settling at $101.96 on Tuesday afternoon. WTI settled at $96.23 Wednesday afternoon.

FOR LAUGHS: "'They Switched It For Molasses!' Yells Energy Secretary Discovering Nation's Entire Oil Reserves Stolen," via The Onion.

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The Grid

— "China state refiners shun new Russian oil trades," via Reuters.

— "FERC likely to pursue market rule boosting low-carbon, flexible power resources," via POLITICO.

— " High Energy Prices Challenge Wall Street's Green Shift," via The Wall Street Journal.

— "Supreme Court reinstates Trump rule limiting state water authority," via POLITICO.

THAT'S ALL FOR ME!

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