Energy & Environment — Biden announces largest-ever oil reserve release
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Today we’re looking at the Biden administration’s historic oil reserve release, the EPA’s decision not to regulate a chemical linked to fetal damage and Democrats taking aim at the oil industry ahead of the midterms.
Let’s jump in.
Biden to release oil from strategic reserve
The White House on Thursday announced plans for the largest-ever release of oil from the United States’ strategic reserves.
It said in a fact sheet that it would release an average of 1 million barrels per day for the next six months, resulting in a total release of about 180 million barrels.
In remarks on the plan on Thursday, President Biden called on the oil industry to produce more, while also criticizing industry profits.
“Enough of lavishing excessive profits on investors and payouts and buybacks when the American people are watching, the world is watching,” Biden said.
“This is not the time to sit on record profits. It’s time to step up for the good of your country, the good of the world, to invest in immediate production that we need to respond to Vladimir Putin, to provide some relief for your customers, not investors and executives,” he added.
The move comes as Russia’s invasion of Ukraine causes oil, and thus gasoline, prices to skyrocket. Many buyers are rejecting Russian barrels, creating less overall supply and increased demand from elsewhere.
This has caused headaches for the Biden administration, which was already grappling with high consumer prices that have fueled GOP attacks. Oil supply had not rebounded to meet demand following coronavirus lockdowns, keeping prices elevated.
“These barrels will be a wartime bridge to additional U.S. production and other production that we expect later this year,” a senior administration official told reporters, noting that the plan was coordinated with U.S. allies.
The official said that the new, joint efforts would supply “well over” 1 million barrels each day to the market.
Officials did not offer specific estimates for how much the strategic reserve release would impact gas prices or when Americans could expect to see prices come down.
Later Thursday, Biden estimated that prices could be reduced by 10 cents or 35 cents per gallon, but said the impact his move will have is not yet known
‘USE IT OR LOSE IT’
The announcement was part of a broader plan released on Thursday that the White House said would address rising domestic gas prices.
The administration is putting pressure on oil companies to ramp up production on federal lands where drilling permits have been approved but unused.
The White House fact sheet said that Biden would call on Congress to approve legislation that would “make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing.”
The senior administration official described it as a “use it or lose it” policy.
Such legislation, however, would face high hurdles given Democrats’ extremely slim majorities in Congress and the Senate’s 60-vote threshold for most votes.
Invoking the Defense Production Act: The White House also said that Biden would authorize the use of the Defense Production Act to support the production and processing of minerals for batteries used in clean energy and electric vehicles, part of an effort to transition the U.S. to clean energy over time and reduce dependence on oil.
Specifically, it will boost production of lithium, nickel, cobalt, graphite and manganese for large-capacity batteries.
Read more about the White House’s move and overall plan here and dig into the specifics of its Defense Production Act announcement here.
EPA won’t regulate chemical linked to fetal damage
The Environmental Protection Agency (EPA) announced on Thursday that it won’t regulate a chemical that may be tied to fetal brain damage, upholding a Trump-era decision.
The EPA said in a statement that it would not regulate perchlorate in drinking water, saying the Trump administration’s decision was based on the “best available peer reviewed science.”
Perchlorate can disrupt the function of the thyroid gland, which can lead to developmental issues in children.
But, in 2020, the Trump administration determined that the substance “does not meet the criteria for regulation as a drinking water contaminant” under the Safe Drinking Water Act.
When he first took office, President Biden announced a review of the Trump-era decision not to regulate perchlorate. His administration’s decision to uphold its predecessor’s policy signifies a reversal of an Obama-era determination that the chemical does meet the criteria for regulation.
Environmental and public health groups have urged the regulation of perchlorate.
In 2019, the American Academy of Pediatrics suggested the EPA set the “strongest possible” limits for the substance due to its potential impacts.
“When fetuses are exposed during pregnancy, perchlorate endangers a child’s development. Children born with even mild, subclinical deficiencies in thyroid function may have lower IQs, higher chances of being diagnosed with attention-deficit/hyperactivity disorder (ADHD), and visuospatial difficulties,” the organization wrote at the time.
Read more about the Biden administration’s move here.
PELOSI SAYS NO TO GAS TAX HOLIDAY
Speaker Nancy Pelosi (D-Calif.) on Thursday poured cold water on the idea of suspending the federal gas taxes as a way to reduce the costs of higher gas prices for consumers.
Pelosi acknowledged that the proposal, which has been floated by some Democrats in recent weeks, sounds appealing in theory. But she argued it doesn’t help consumers much in the long term since oil companies are not required to pass on the savings.
Furthermore, suspending the gas tax would take away the primary source of money for the Highway Trust Fund, which finances roads and mass transit.
“The pro is very showbiz. ‘OK, let’s just do something, there it is.’ But it is not necessarily landing in the pocket of the consumer,” Pelosi said at a press conference in the Capitol.
She suggested that measures such as rebates or direct payments to consumers would be more effective to provide Americans relief from the higher cost of gas.
“How do we help people directly? If you’re going to have to pay for it and you don’t want it to come out of the Trust Fund, something could be a rebate card or a direct payments. And those are the things that are being considered,” Pelosi said.
Democrats are looking to pin the blame on oil companies for high gas prices, potentially signaling an election-year goal of refocusing scrutiny on an issue that has dogged President Biden’s approval ratings.
Two different House committee chairs have called for oil CEOs to testify on disparities between falling oil prices and consumer gas prices. While three companies rebuffed House Natural Resources Committee Chairman Raúl Grijalva(D-Ariz.), several others are set to testify before the House Energy and Commerce Committee Wednesday.
“While American families struggle to shoulder the burden of rising gas prices from Putin’s war on Ukraine, fossil fuel companies are not doing enough to relieve pain at the pump, instead lining their pockets with one hand while sitting on the other,” Energy and Commerce Committee Chairman Frank Pallone Jr. (D-N.J.) and investigations subcommittee Chairwoman Dianna DeGette (D-Colo.) said in a statement Tuesday.
Some oil industry analysts have pushed back on Democratic accusations, pointing to the so-called rocket and feather phenomenon, in which gas prices typically rise quickly in accordance with the price of oil but are slower to drop in response to oil dips.
Gas stations “are often about three to four days behind on fully passing increases along, and prices then go down more slowly because stations try to recoup margins they lost when prices went up,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
But regardless of industry trends, both congressional Democrats and Biden have frequently accused major oil companies of price gouging and, since the Ukraine conflict began, accused them of continuing to profit from the conflict while allowing American consumers to bear the burden of higher costs.
A bill sponsored by Sen. Sheldon Whitehouse (D-R.I.) and Rep. Ro Khanna (D-Calif.) would tax major oil companies on windfall profits and provide rebates to Americans from the proceeds.
Congressional Democrats have demanded answers from oil executives before, most notably in a House Oversight and Reform Committee hearing in late 2021 examining the extent to which they were aware of the connection between burning fossil fuels and climate change.
So what’s new? The latest push differs in one key aspect, however: With the 2022 midterm elections approaching, voters are likely to blame the party in power for pain at the pump, if they don’t blame oil companies.
Rep. Katie Porter (D-Calif.), a member of both the Oversight and Natural Resources panels, told The Hill more Oversight hearings in which CEOs would be asked to testify specifically on gas prices are currently under discussion.
“We had them in under Rep. Khanna’s leadership to talk about climate change disinformation, and I think it’s entirely appropriate to have them back,” she said.
Rep. Dina Titus (D-Nev.), meanwhile, introduced legislation earlier this month with Rep. Peter DeFazio (D-Ore.) that would create a windfall profit tax on oil companies for adjusted taxable income (ATI) this year more than 110 percent greater than average pre-pandemic ATI.
Asked if voters will be receptive to the idea of oil companies as the source of their woes, Titus told The Hill, “I believe so.”
“Big corporations are not very popular these days,” Titus added.
WHAT WE’RE READING
- BLM approves controversial bison grazing plan for American Prairie (The Billings Gazette)
- Ukraine: Russians leaving Chernobyl after radiation exposure (The Associated Press)
- Internal EPA report describes “incredibly toxic work environment” in New Chemicals Division (The Intercept)
- How High Energy Prices Could Help Both the Climate and the U.S. (The Wall Street Journal)
- New maps show strong correlation between redlined places in Seattle and worse air quality (The Seattle Times)
And finally, something offbeat and off-beat: Monkeying around.
That’s it for today, thanks for reading. Check out The Hill’s energy & environment page for the latest news and coverage. We’ll see you tomorrow.
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