Overnight Energy: Trump prepares to buy 30M barrels of oil amid industry slump | Coronavirus offers reprieve from air pollution | Energy regulators split on delaying actions amid outbreak
FILL ‘ER UP: The U.S. government will buy 30 million barrels of oil from producers amid a financial downturn for the industry.
The Department of Energy (DOE) announced Thursday it would conduct the sales to fill the Strategic Petroleum Reserve (SPR), fulfilling a pledge by President Trump to offer assistance to the oil industry as prices plummet with the twin threats of the coronavirus and a pricing war between Saudi Arabia and Russia.
“It is a common sense move. Everyone who has done any version of investing knows you try to buy low and sell high. The same goes with filling the SPR over time,” Energy Secretary Dan Brouillette said in a call with reporters.
This initial purchase comes as oil has fallen to about $25 per barrel, down from roughly $50 a month ago and a steep decline from the average $60 price tag for oil already in the reserve.
The 30 million barrel purchase announced Thursday is a far cry from Trump’s Friday pledge to fill America’s emergency fuel supply “right up to the top,” maxing out at 77 million barrels.
But DOE said it plans to hold additional sales, perhaps as soon as in two to three months, and is preparing to ask Congress for $3 billion to fill its fuel reserves.
The purchase comes as Treasury Secretary Steven Mnuchin floated spending as much as $20 billion to assist the oil industry, figures Brouillette said the two had not discussed.
Stocking up on oil will no doubt anger some Democrats, who have repeatedly warned that coronavirus aid should include no lifelines for the fossil fuel industry.
“Diverting public funds to bail out this industry will do nothing to stop the spread of this deadly virus or provide relief to those in need,” House lawmakers wrote in a Tuesday letter spearheaded by Rep. Nanette Diaz Barragán (D-Calif.). “A bailout tells the American public that fossil fuel investors can rely on U.S. taxpayers to cover their bills when the industry’s corporate executives’ risky investments don’t pan out.”
Democrats in the Senate echoed a similar sentiment, fearing that money spent propping up the oil industry will accelerate climate change.
“Using federal assistance–including low-interest loans, royalty relief, tax breaks, or strategic petroleum reserve purchases–in order to prop up oil companies would be a wasteful misuse of government resources that would exacerbate the climate crisis,” Sens. Ed Markey (D-Mass.), Jeff Merkley (D-Ore.) and Bernie Sanders (I-Vt.) wrote in a letter to Trump.
Purchasing 30 million barrels now, even with record low oil prices, would still carry a significant cost, coming in at just below $1 billion.
But Brouillette told reporters he feels confident he has the backing from Congress as it weighs future coronavirus relief packages.
Numerous Republicans have already expressed support for the purchase — House Minority Leader Kevin McCarthy (R-Calif.) pegged it as “the right call.”
And when asked if he had personally heard pushback from Democrats, Brouilette simply said, “No, I have not.”
The offer to purchase crude is only open to small- and mid-sized U.S. companies with fewer than 5,000 employees. The oil itself must be produced within the U.S. as well.
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THE THINNEST OF SILVER LININGS: Environmental experts say the planet is getting a breather from the constant output of pollution by humans as the coronavirus puts many activities by individuals and businesses on hold.
Smog levels in China were reduced after factories shuttered during the outbreak there, and satellite images show a significant drop in air pollution in Italy while the country remains in a nationwide lockdown.
Similar declines are soon expected in the U.S., where half of all car trips are to and from work or school.
But while the coronavirus pandemic could disrupt daily routines for months, experts say the drop in heat-trapping emissions, while beneficial, will likely amount to just a blip in trend lines that show the world is moving toward unsustainable levels of carbon dioxide, or CO2, emissions.
“The damage from CO2 just accumulates, so every ton we don’t release is not inflicted on the environment, but if everything goes back to business as usual when this ends, it won’t have much of an impact,” said David Archer, a professor of geophysical sciences at the University of Chicago.
Experts say emissions are likely to drop this year, continuing a trend already driven by the closure of coal-fired power plants as utilities transition to cleaner forms of energy.
And as schools close and more Americans work from home, the decline in travel is likely to aid the emissions dip.
Vehicle emissions are expected to drop in the U.S. In New York City, traffic congestion was measured at 17 percent this week, compared to 52 percent during the same period in 2019, according to transit data company TomTom.
Air traffic, however, is a more complicated piece of the emissions puzzle.
Airlines have asked the federal government for $50 billion in economic relief amid massive declines in passenger travel as countries close borders, conferences are canceled and family vacations are postponed.
“What counts is not the reduction in the number of people flying but the number of airplanes flying. There are a lot of airplanes running half empty,” said Michael Gerrard, a professor at the Columbia Law School and director of the Sabin Center for Climate Change Law.
Many airlines are flying with planes that are anywhere from 30 percent to 50 percent full, whereas this time last year flights were about 80 percent full, according to information collected by Airline Data Inc.
While planes still account for just a small percentage of global emissions, the airline industry is one of the fastest growing sectors with greenhouse gas emissions. Emissions increased 32 percent between 2013 and 2018.
With more online meetings being held amid the outbreak, some clean energy advocates hope it could lead to a behavioral shift.
“We’ve seen a rise of fly-in, fly-out business travel, where 30 people come in and out, everyone shakes hands and then leaves almost immediately,” said Dan Rutherford, aviation director at the International Council on Clean Transportation.
“That’s bad for the environment and now people are understanding it’s bad for public health, so I’m curious if that takes more of a long-term hit.”
GOTTA REGULATE: One commissioner on the Federal Energy Regulatory Commission (FERC) has proposed delaying certain regulatory actions amid the global coronavirus outbreak.
The commission’s chairman, however, is cool to the idea.
The organization’s one Democratic commissioner, Richard Glick, said in a Thursday statement that while FERC is required by law to carry out certain actions, it should pause others to allow the industry to focus on its response the virus.
“I believe we should refrain from acting to allow parties who are otherwise dealing with the pandemic to avoid putting resources toward seeking rehearing of a Commission order,” Glick said.
Chairman Neil Chatterjee, however, said Thursday on a call with reporters that in some cases it might be good to be flexible but that in general “the last thing the industry needs right now is delays.”
He added that delays would be unfair for those waiting on the commission to act.
FERC regulates the interstate transmission of electricity, natural gas and oil. The energy industry has been particularly affected by the coronavirus, with oil prices plummeting this week to the lowest level since 2003.
On Thursday, Chatterjee also laid out the commission’s own plan for its employees to deal with the virus.
He said in a statement that most of the commission’s employees are teleworking and that its headquarters will be closed to visitors until further notice.
All of its technical work through May will either be done through conference calls or web-conferencing or it will be postponed.
OUTSIDE THE BELTWAY:
Coronavirus outbreak may speed decline of US coal sector, S&P Global reports.
Tribes expect little help in fight to protect elders from coronavirus, Stateline reports.
Crop-dusting bill heads to Idaho governor, the Associated Press reports.
FROM THE HILL’S OPINION PAGES:
Coronavirus calls for an aggressive Green New Deal, writes Michael Brownstein, associate professor of philosophy at John Jay College and the Graduate Center, CUNY.
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