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— Oil and gas execs meet with Energy Secretary Jennifer Granholm today about increasing refining capacity, but doubts abound on how much immediate relief can be achieved.
— Capitol Hill gave a tepid reaction to President Joe Biden's call for a gas tax holiday, fretting about a loss of infrastructure funds and limited price impact.
— The House Science Committee tackles the federal government's role in monitoring greenhouse gas sources and sinks today.
HAPPY THURSDAY! I’m your host, Matthew Choi. Meguire Whitney’s Ryan Serote gets the trivia for knowing Joseph F. Smith was the last president of the Church of Jesus Christ of Latter-day Saints to have personally known Joseph Smith. For today: What are the three countries that make up the Kingdom of Denmark? Send your tips and trivia answers to [email protected]. 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: Why Manchin’s resistance to direct pay could harm Biden’s climate goals.
RUNNING ON FUMES: Confidence is not running high that today’s meeting between Energy Secretary Jennifer Granholm and oil and fuel making company executives will deliver much as far as curbing fuel prices, industry sources told ME. The executives have already been meeting regularly with Biden administration officials at DOE and the National Economic Council to figure out how best to reverse the nearly year-long climb in gasoline prices. While both the government officials and industry executives have their respective wish lists, there’s little to be done in the near term that will ease prices at the pump.
“Pro forma is probably right,” said one industry lobbyist who requested anonymity because he wasn’t authorized to talk publicly about expectations for the meeting.
Biden on Wednesday gave an address that reiterated his administration’s stance that Russia was to blame for the fuel price surge and was noticeably lacking new ideas about actions the executive branch could take to combat them. Instead, he asked Congress to temporarily suspend the gasoline tax for 90 days, something the legislature is unlikely to do. He also asked states to either suspend their own gasoline taxes or “or find other ways to deliver some relief,” and for companies to “refine more oil” — a difficult task given that fuel makers are already operating at 94 percent capacity.
Industry groups such as the American Exploration and Production Council are requesting faster permitting times for pipelines and easier access to public lands for drilling — perennial asks to which the administration is unlikely to acquiesce. In fact, the Interior Department in January is expected to propose new rules that would raise the royalty rates companies pay to produce oil on federal land.
Biden in his letter to refiners last week dangled the possibility of at least temporarily waiving the Jones Act, a decades-old law that says only American-flagged ships can carry fuel and other goods between U.S. ports. The industry would likely jump at that, but there’s doubt that the administration could overcome union opposition to doing so, sources told ME. As far as Biden’s idea of Congress temporarily suspending the gasoline tax — and nudging state lawmakers to follow suit — there are plenty of reasons to doubt that it will become reality.
Average gasoline prices have drifted six-cents lower in the past week, and could drop more as oil prices fall on worries of a recession. Where they go from here is completely up in the air — issues at a major Chevron refinery in California could further strain the country’s fuel-making capacity, which is already lower than it had been several years ago because of refinery closures and a shortage of workers. Prices could start to fall in the coming weeks as summer driving season winds down and new refining capacity is expected to open in Kuwait and elsewhere. But with prices already high, the White House doesn’t have the luxury of telling voters that the market will eventually sort itself out.
AND WHAT DO THE LAWMAKERS THINK? While Biden has some support within his party, several Democrats weren’t shy in dismissing a gas tax holiday as a nonstarter Wednesday — a dead end in a closely divided Congress with a packed agenda ahead of the August recess. Lawmakers raised particular issue with a gas tax holiday’s impact on the Highway Trust Fund. House Transportation Chair Peter DeFazio told reporters the summer driving season after passing a massive bipartisan infrastructure package isn’t the time to nix one of the key revenue streams for infrastructure projects, both at the federal and state level.
Senate Energy Chair Joe Manchin noted the 90 day period would end just before Election Day, and asked “which politician up here is going to be voting to put that 18 cent tax back on a month before the November election?”
Granholm took to the White House briefing room lectern Wednesday to address some of the raised eyebrows from lawmakers and reporters and acknowledged a gas tax holiday would be a “modest” tool, with the meat and potatoes of high prices lying with supply.
DUE FOR A RAISE? Just so you know, the last time Congress raised the federal gas tax was in 1993. As you can imagine, the dollar then isn’t the same as the dollar now, so actual revenues from the tax have decreased considerably — by about half. But as Manchin pointed out, touching the gas tax has been politically radioactive since. The White House was adamant not to raise the tax to finance the bipartisan infrastructure package while negotiating the legislation last year.
That has led to the gas tax funding a smaller share of the Highway Trust Fund, said Paul Bledsoe, strategic adviser at the Progressive Policy Institute who worked on the Senate Finance Committee the last time the tax was raised. When gasoline prices are low, there is political appetite to raise the tax to pay for projects, and there have been bipartisan pushes in the past to do so on a sliding scale that keeps the tax up with inflation while pulling back when prices go high.
The White House predicts pausing the gas tax to cost roughly $10 billion from the trust fund. But Biden said highways would continue to be maintained through higher tax revenues and a lower deficit this year.
“We can do both at the same time,” Biden said. “We can bring down the price of gas and give families just a little bit of relief.”
API WANTS TO SHOW BIDEN THE WORLD: Refining shimmering splendor! The American Petroleum Institute and several other oil and gas interest groups are inviting Biden to tour some of the country’s key industry sites, from the Marcellus Shale to Gulf Coast refineries, ahead of his visit to Saudi Arabia next month. The trade groups offered the invitation in a letter today, where, though supporting the trip to Saudi Arabia as addressing important priorities, they urged Biden to “reconsider the immense potential of U.S. oil and natural gas resources” and focus on domestic energy production.
IN COMMITTEE: The House Science subpanels on research and the environment have a joint hearing today on federal programs for monitoring both the sources and sinks of greenhouse gas emissions. The committee will hear from air research and data directors from the National Institute of Standards and Technology, NOAA, NASA and EPA. The committee held a hearing two weeks ago on measuring and monitoring methane leaks from the oil and gas industry.
MISSED REVENUE: U.S. taxpayers would have received an additional $11.8 billion in revenue over the nine years leading up to 2021 from oil companies drilling on public land if the Interior Department had raised the royalty rates for oil production on federal land, a study from left-leaning advocacy group Public Citizen shows using Interior data. Interior has held the royalty rate for onshore production at 12.5 percent for decades. By not raising the rate to what it charges for oil produced offshore — 18.75 percent — it left billions of dollars on the table, according to the report.
“The Interior Department must impose rules that end the practice of allowing the fossil fuel industry to pay artificially low royalty rates for the use of public lands,” Public Citizen President Robert Weissman said in a press release.
The report comes as Interior is expected to propose a new rule in January that would change the parameters around its leasing program for fossil fuel development on public land. Interior called for higher royalty rates in its November review of the oil leasing program. In February, the department briefly had on its Web site draft language that would have raised its onshore royalty rate by 50 percent.
ANOTHER MINE SAFETY NOM: Moshe Marvit will be nominated to join the Federal Mine Safety and Health Review Commission, the White House announced Wednesday. Marvit currently leads the commission’s field office in Pittsburgh. The Senate still has to vote to confirm two nominees for the commission. The term of the current chair, Arthur Traynor, end in August.
— Warren Evans was named special senior adviser for climate change in the Office of the President at the Asian Development Bank.
— “DOE loan office director skeptical about pace of transmission buildout,” via POLITICO.
— “Russian refinery says it was struck by drones from direction of Ukraine,” via Reuters.
— “Chemical board chair faced EPA watchdog investigation,” via E&E News.
— ”California has billions to spend on gas-price relief — and no deal on help,” via POLITICO.
THAT’S ALL FOR ME!