The gas price is wrong

May 25, 2022

Presented by Project Canary

With help from Josh Siegel and Kelsey Tamborrino

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QUICK FIX

— The Senate gas price gouging bill gets a markup today, though its chances of final passage remain slim.

— Sen. Joe Manchin's bipartisan energy group is meeting again this afternoon.

— Joe Goffman, nominee to lead EPA's Air and Radiation Office, has a committee confirmation hearing today.

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A message from Project Canary:

Europe needs to reduce its reliance on Russian gas. But it's critical that new gas sources are low-carbon, low-emissions, and certified as responsibly sourced. Project Canary, a SaaS-based data analytics ESG company, scores responsible operations, freshwater use, and delivers independent emissions profiles via high-fidelity continuous monitoring technology to ensure gas meets the highest environmental performance standards. Learn how US-produced, Project Canary certified LNG could help transform global energy security.

Driving the day

PRICE GOUGING IN COMMITTEE: Senate Democrats' version of the gas price gouging bill gets a markup today in the Commerce Committee. Chair Maria Cantwell (D-Wash.) is sponsoring the bill, which would give the Federal Trade Commission an enforcement unit to analyze market data to make fuel prices transparent and ensure companies don't engage in price gouging. The House last week passed its own iteration of the bill, which would also give the president the power to declare energy emergencies, on party lines.

Both bills rely on a premise that Republicans reject all together — that oil firms are taking advantage of the war in Ukraine to hike up prices and pocket the difference — and the legislation will have pretty much no chance of getting through the 50-50 Senate. Industry groups and oil executives rebuff that they have much of a say in setting gasoline prices when oil prices are set on global markets and the pandemic and sanctions against Russia reduced global refining capacity.

"The largest non-state-owned oil company in the world (ExxonMobil) only has around 2 percent of the world's oil reserves and production. Even if there was a mechanism for upstream producers to price gouge on the commodity market — which there isn't — a company that controls such a small fraction of the world's oil does not have the power to set the price of gasoline," the American Exploration and Production Council wrote in a blog post.

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On the Hill

A 5TH MEET-AND-GREET (BUT WHO'S COUNTING): Senate Energy Chair Joe Manchin (D-W.Va.) is convening another meeting with a bipartisan group this afternoon to try and reach an energy and climate deal, several senators involved confirmed to POLITICO's Josh Siegel. The latest meeting comes in a crucial work week before the Senate takes off for Memorial Day recess, a self-imposed deadline some Democrats set to reach a handshake agreement with Manchin on a party-line reconciliation deal. With that looking unlikely, there are Democrats who want to see Manchin's bipartisan discussions start to show results.

"It's time to start figuring out if we are going to do reconciliation or not," Sen. Sheldon Whitehouse (D-R.I.) said. "I don't think there is any way the bipartisan group can come to something that has anything like the emissions reductions we need."

EPA NOM IN EPW: Biden's pick to lead EPA's Air and Radiation Office has a confirmation hearing in the Senate Environment and Public Works Committee today. Joe Goffman already leads the office as principal deputy assistant administrator and is a veteran of the Obama EPA and the Senate EPW staff.

Goffman was a chief architect of the Obama administration's Clean Power Plan, which was gutted by the Supreme Court. Goffman would have a key role in the Biden administration's replacement plan — a point that Sen. Shelley Moore Capito (R-W.Va.), ranking member of the committee, expressed concerns with.

EPA "Administrator [Michael] Regan has stated that even without new law, EPA will 'push the envelope' on new regulations, which Mr. Goffman will have a lot to answer for," Capito said in a statement to ME.

Chair Tom Carper (D-Del.) plans to praise Goffman as a bridge builder with wide support across environmentalists, labor groups and industry. "Utilities, the forestry sector, biofuel groups, and unions such as the AFL-CIO, the Steelworkers, and United Mine Workers all have voiced their support for Mr. Goffman's nomination," he plans to say according to talking points shared with ME.

DEMS PUSH OIL WINDFALL BILL: Rep. Ro Khanna (D-Calif.) and Sen. Whitehouse are releasing a letter today with 44 other Democrats calling on Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi to bring to the floor legislation that would tax large oil companies for windfall profits.

"A windfall tax combined with a rebate to consumers would curb Big Oil's greed and deliver immediate relief to families struggling with high gas prices," wrote the Democrats in the letter, obtained by ME.

Democrats backing the oil windfall idea told Josh that they're hopeful a separate bill being written by Finance Chair Ron Wyden (D-Ore.) will incorporate the idea in some form. But Sen. Richard Blumenthal (D-Conn.), who is also on the letter, acknowledged both the price gouging bill in today's Commerce markup and any windfall legislation would have a hard time passing the Senate.

WATER IN ENERGY: The Senate Energy Water and Power Subcommittee dives into 16 conservation and water security bills today, including amendments to the bipartisan infrastructure package and a host of localized water priorities. The bills include some bipartisan measures, including two Montana-specific measures by both of the state's senators and a bill by Sens. John Hickenlooper (D-Colo.) and Mitt Romney (R-Utah) for endangered fish recovery programs. It also includes a Democratic "aquabus" package by Sens. Martin Heinrich (D-N.M.) and Ben Ray Luján (D-N.M.), which includes Rep. Melanie Stansbury's Water Data Act, that would consolidate municipal water management information to increase transparency.

HAALAND'S SENATE DATE DELAYED: Interior Secretary Deb Haaland's Senate appearance scheduled for today has been postponed after Senate Appropriations Interior Subcommittee Chair Jeff Merkley tested positive for Covid on Monday. The committee didn't have a make up date as of Tuesday afternoon, but it'll likely have to wait until after the Memorial Day recess.

Haaland was slated to go before the subpanel to defend the department's fiscal year 2023 budget, where she would have faced prominent Republicans vocal in their criticisms of the administration's federal oil and gas leasing policy (Sens. Lisa Murkowski, Mitch McConnell, Capito and Cindy Hyde-Smith all serve on the subcommittee). Republicans on the Senate Energy Committee and Manchin pilloried Haaland during their budget hearing with the secretary last week, lambasting the administration's leasing timeline as effectively barring domestic production growth.

SOLAR PROBE GETS SPOTLIGHT ON SENATE FLOOR: Several Democratic senators took to the Senate floor Tuesday to reiterate their concerns over the Commerce Department's circumvention probe into solar components from four Southeast Asian nations and urged a swift preliminary determination. Nevada Sen. Jacky Rosen said the "petition is built upon a house of cards," referring to a recent report that Auxin Solar used data inaccurately in petitioning Commerce.

Fellow Nevada Sen. Catherine Cortez Masto argued the delays from the probe are also undercutting the solar investment tax incentives that lawmakers' worked to extend under the Trump administration. "If nothing's moving forward, nobody's getting the benefit from that investment tax credit," Cortez Masto said. "We want to move forward with clean energy. Solar is a way to do that. But we need a ramp to get there," she added.

Of course, not all Democrats are in lockstep on the probe. Ohio Sen. Sherrod Brown is expected to soon lead a letter to the administration on the probe, according to his office. Brown told ME in a statement last week that if "undue political influence on this case is allowed to prevail, it would lead to more risks and vulnerabilities tomorrow by sending the message to non-market countries that our trade enforcement laws and future [antidumping and countervailing duties] cases can be undermined through aggressive political lobbying."

A message from Project Canary:

Around the Agencies

BLOCK THE EXPORTS? The Biden administration isn't ruling out restricting fuel exports to stop the steady rise of U.S. prices, Energy Secretary Jennifer Granholm told reporters in Louisiana Tuesday. Granholm made the remark while touring a Strategic Petroleum Reserve site in the state as the administration struggles to bring down record gasoline and diesel prices. The administration already unveiled the country's largest ever release from the SPR to bring more crude to market.

"We can handle the amount the president has asked for," Granholm told reporters after her SPR tour. "And we will continue to do that million barrels a day," alluding to President Joe Biden's 6-month release plan announced in March.

DOE announced a notice of sale of up to 40.1 million barrels of crude from the SPR on Tuesday, including 1.1 million barrels of sweet crude from June 21 until June 30 and 39 million barrels of sour crude oil from July 1 to Aug. 15. The deadline for bids is June 1 and contracts will be awarded by June 10. Up to 7.1 million barrels will be from the Bayou Choctaw site Granholm toured on Tuesday.

AND WHERE IS GRANHOLM NOW? The Energy secretary is in Colorado today for ARPA-E's Energy Innovation Summit in Denver, where she'll deliver remarks and moderate a fireside chat. Transportation Secretary Pete Buttigieg is also dialing in with a video message.

Afterward, Granholm is heading to Golden, Colo., to swing by DOE's National Renewable Energy Laboratory with Rep. Ed Perlmutter (D-Colo.).

A LOCAL APPEAL FOR FEDERAL PROTECTION: Over 120 elected officials from Western municipalities are urging Haaland to protect more federal lands in the West to preserve biodiversity and combat climate change. In a Tuesday letter to Haaland and Bureau of Land Management Director Tracy Stone-Manning, the officials called on BLM to more aggressively protect federal lands via designating "Backcountry Conservation Areas; Wilderness Study Areas; Areas of Critical Environmental Concern; and working with The White House to designate national monuments through the use of the Antiquities Act."

The administration aims to conserve 30 percent of the country's lands and waters by 2030 under its America the Beautiful Initiative, which the local officials praise as crucial to protecting the country's biodiversity. Read the letter here.

Beyond the Beltway

WINTER IS COMING: International Energy Agency Executive Director Fatih Birol had a bleak warning for the next winter season, telling the World Economic Forum in Davos, Switzerland that "I cannot exclude the risk this winter that we are facing a rationing of gas." He added that he is advising European governments to create contingency plans, The New York Times reports.

So far, an embargo on Russian natural gas seems out of the question for European leaders creating sanctions on Moscow's cash cow energy industry. Berlin warns a loss of Russian gas would cause an economic recession. The country provided Germany over half of its natural gas before the invasion.

"Europe is paying for its over-dependence on Russian energy," said Birol, who urged European leaders to prioritize energy efficiency to cut down on its reliance on Russian imports. Read more from the New York Times.

IT'S JUST SITTING THERE: Russian crude oil is having a hard time selling with potential buyers cautious about breaking sanctions, Reuters reports. About 62 million barrels of the country's Urals crude oil is held up in ships at sea waiting for someone to buy it, Reuters reported, citing data from analytics firm Vortexa . The U.S. banned Russian oil as part of its sweeping blockade on the country's energy imports shortly after the invasion of Ukraine, and the European Union is inching toward a phase out sanctions package, if it can get an obstinate Hungary on board.

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The Grid

— "Navy Details Plan to Cut Emissions and Boost Energy Efficiency," via Bloomberg Law.

— "Activists push against LNG plants, want renewable energy in southwest Louisiana," via The Lafayette Daily Advertiser.

— " Stellantis, Samsung SDI to build new JV battery plant in Indiana," via Reuters.

— "Accelerated Clean Energy Development Could Save Americans $5 Billion Annually, Protecting against Inflation and Rising Natural Gas Prices," via RMI.

— "Que calor! Spain tells civil servants to limit use of air conditioning ," via Reuters.

THAT'S ALL FOR ME!

A message from Project Canary:

Russia's invasion of Ukraine has sent European countries scrambling to reduce their reliance on Russian gas and achieve energy security while gas prices skyrocket. At the same time, as calls to meet net-zero goals increase, it's critical that gas supplied to Europe meets the highest environmental performance standards.

How does the energy supply chain meet both energy security and climate goals? As U.S. LNG exports look set to play an integral part in meeting Europe's demands for gas, it's critical that this gas is responsibly sourced and independently certified as low-emission, low-methane, and focused on sustainable freshwater use. Enter Project Canary. As an ESG data analytics company, we score and verify responsible operations, delivering independent emissions profiles via high-fidelity continuous monitoring technology to ensure gas meets the highest environmental standards. Learn how Project Canary certified LNG could help meet both geopolitical challenges and our world's environmental needs head-on.