REFINING INFLATION: President Joe Biden is homing in on the refining sector as being a choke point for fuel supplies – and floating the notion that he could use the Defense Production Act to try to raise gasoline production. Fuel makers "are making record profits at the expense of American families," press secretary Karine Jean-Pierre said at Wednesday's White House press briefing. President Biden "is calling on oil refiners to invest those record profits to increase capacity so costs at the pump will come down. He is signaling he is prepared to use any emergency tools he has, but those companies have a responsibility to step up, too," she added. The White House comments -- which echo the letter it sent to refinery bosses – come as gasoline prices hover above $5 a gallon as the peak summer driving season gets underway (though, as Bloomberg notes, the rally may be taking a breather). What wasn't said: What actions exactly the White House thinks the industry can take in the short term. The refinery bottleneck comes after a number of plant closures – six by the EIA's count – over the past three years has reduced U.S. oil processing capacity to 17.9 million barrels a day from 18.9 million during the first half of 2020. And expanding a plant's capacity to produce more gasoline, diesel or other fuels can take years. The refiners are now running nearly flat out but still struggling to meet the demand for fuel in both the United States and abroad. The U.S. exported 650,000 barrels a day of gasoline during the week ended June 10, according to the EIA. Jean-Pierre, when asked by a reporter what Biden could do to convince companies to increase production, punted: "We are saying, we need you to act," she said at the brief. "The letter is intended to solicit companies' best ideas on how to increase capacity and how the government can help them do it." Energy Secretary Jennifer Granholm is expected to meet with industry leaders to discuss what's next. Exxon Mobil, one of the largest fuel makers in the country, responded to Biden by basically telling the administration to look inward: "In the short term, the U.S. government could enact measures often used in emergencies following hurricanes or other supply disruptions -- such as waivers of Jones Act provisions and some fuel specifications to increase supplies." Trade associations the American Petroleum Institute and American Fuel & Petrochemical Manufacturers sent their own letter, saying "Today's situation did not materialize overnight and will not be quickly solved." But over the longer term, the company said Biden "can promote investment through clear and consistent policy that supports U.S. resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines." Even climate hawk Democrats are sensitive to the fact that politically they have to at least publicly support greater oil and fuel production to help tamp down on prices that are top of mind for many voters. Sen. Tina Smith (D-Minn.) suggested she would be okay with Biden acting to increase refining capacity and output if industry won't or can't do it on their own. "It's a good thing the president is looking at all of the authorities he has to address this really serious problem for American consumers," Smith told ME. GREENS SEEK TO OVERTURN PERMITS: Environmental groups Center for Biological Diversity and Wildlife Guardians sued the Biden administration to challenge about 3,500 drilling permits approved for companies seeking to extract oil and gas from federal land. The lawsuit, the latest to draw the Interior Department and Bureau of Land Management's oil and gas leasing program into the courtroom, says the administration failed to take into account how methane emissions from the drilling would damage the overall environment and therefore violated the National Environment Protection Act, the Endangered Species Act and the Federal Land Policy and Management Act. "BLM myopically considered the localized impacts of a small subset of [permit] approvals, failed to take a hard look at cumulative impacts,ignored the effects that additional greenhouse gas pollution would have on climate-imperiled species, and failed to prevent the unnecessary and undue degradation of public lands, as is the agency's duty," the groups say in the lawsuit filed in U.S. District Court for the District of Columbia. The groups specifically target how greenhouse gas emissions created in one place affect endangered species everywhere: "Fossil fuels are driving the extinction crisis, and the Bureau of Land Management is making things worse by failing to protect these imperiled species," said Brett Hartl, government affairs director at the Center for Biological Diversity. Interior declined to comment. But the lawsuit follows a strategy the groups used when they sued Interior last year over the environmental review underpinning November's offshore oil and gas lease sale. The U.S. district judge in that case sided with the groups and ruled that the leases were invalid, causing a huge setback for the companies seeking to expand drilling – and possibly carbon capture activities -- in the Gulf of Mexico. EXCLUSIVE: RYAN UNVEILS BUY AMERICAN SOLAR BILL: Fresh off the Biden administration's move to invoke the Defense Production Act to spur solar manufacturing and enact a two-year pause on new solar tariffs, Ohio Democratic Rep. Tim Ryan is unveiling new legislation to expand Buy American provisions to include solar power purchase agreements. The EAGLE SOLAR Act also states that solar energy used to power the federal facilities cannot come from solar panels produced using power from coal-fired power plants, or from forced labor and shipped by China. "It's a cornerstone to a bigger strategy of how we rebuild the manufacturing base here and dominate these industries of the future," Ryan told ME. Ryan, who is running to succeed Sen. Rob Portman in a closely watched Senate race, has positioned himself as a domestic manufacturing proponent, while his opponent J.D. Vance has attacked his stance on tariffs. Ryan called Biden's move to freeze tariffs a bad idea, saying the president "is getting some bad advice on that." Republican House lawmakers also blasted the administration's tariff move on Wednesday in a letter led by Reps. Bob Latta of Ohio and Cathy McMorris Rodgers of Washington. "The decision to waive tariffs sends a clear message to our foreign adversaries that our trade enforcement laws will not be upheld by your Administration," Republicans wrote. Ryan also sided with solar manufacturers who are skeptical about the administration's plan to use the DPA to boost solar panel manufacturing and said they were not consulted by the White House about the strategy. "I would be concerned if you're doing something on tariffs on solar panels, and you're not talking to First Solar or industrial Midwest solar manufacturers who are trying to grow their companies here," Ryan told ME, referring to the solar company with an Ohio manufacturing location. Speaking of talking: Two dozen leading solar industry executives are in Washington this week urging Congress to pass clean energy incentives, including a long-term extension of the solar Investment Tax Credit (ITC) with direct pay, Solar Energy Industries Association says. INDUSTRY LOBBIES AGAINST METHANE FEE: The oil and gas industry has launched a fresh lobbying push against a potential fee on methane emissions as key Democrats continue negotiations over a slimmed-down reconciliation climate and social spending package. Groups led by the Western Energy Alliance, Energy Workforce & Technology Council, U.S. Oil & Gas Association and Independent Petroleum Association of America wrote that any new methane fee "would merely be punitive in nature" in a new letter shared exclusively with POLITICO's Josh Siegel The letter was sent to Sen. Shelley Moore Capito of West Virginia, the top Republican of the Environment and Public Works Committee, who already opposes a methane fee. But Leslie Beyer, CEO of the Energy Workforce & Technology Council, told Josh this "won't be the last" letter from the coalition as it pursues a "long-term strategy" to push Democrats to drop the methane fee. Specifically, the groups say the methane fee included in the House-passed version of the original Build Back Better bill last year created a "complicated and logically incoherent" formula that "penalizes companies that have achieved lower emissions rates and disincentivizes them to further reduce emissions." Before Sen. Joe Manchin blew up talks in December, the methane fee was one of the remaining sticking points in negotiations over a wide-ranging reconciliation package. The House passed-methane fee would begin at $900 per ton for emissions reported in 2023 and ramp up to $1,500 in 2025. That measure also includes $775 million for grants, rebates and loans to help them deploy technologies to stop methane leaks. BUT: Don't look at those House numbers as written in stone. A person familiar with the ongoing talks said Sen. Tom Carper has been working on the industry's issues, and that "discussions have been immensely productive and include changes to the House-passed methane emissions reduction program."
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