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OIL’S OBSTINACY: Oil prices are barreling ahead today, with Brent crude holding above $86 after closing above the same mark on Friday for the first time since it peaked there in October.
West Texas Intermediate is above $84 per barrel, having risen more than 18.5% from Dec. 14 to Jan 14.
Jacques Rousseau of ClearView Energy Partners pointed to supply outages in Libya and Ecuador, as well as Kazakhstan, as helping to drive the upward trend, but the consensus also appears to be that the omicron variant is not weighing down demand in the way traders feared when it first broke onto the scene around Thanksgiving.
“The demand side is more difficult to read at this point, but rising oil prices suggest to us that the Omicron variant could be less disruptive to mobility than the Delta variant,” Rousseau told Jeremy.
In short, the high and rising prices are demonstrating some measure of permanence and by extension are carrying into 2022 a political challenge for President Joe Biden, who has been forced to try to dent fossil fuel costs while simultaneously pursuing green policies to reduce their use.
The high prices seen last fall fueled months of oil and gas politicking from the Biden administration during the fourth quarter, as Biden and officials requested an FTC investigation into the industry for unfair business practices, released Strategic Petroleum Reserve crude oil, and eventually encouraged more output from domestic producers.
Mike Muller, head of Asia for Swiss-based Vitol Group, said over the weekend he expects Biden to release more oil from the SPR.
“The market’s saying: ‘More, please,’” Muller said.
The White House hasn’t made any recent indications, but the administration said following the initial SPR announcement that it may return to the reserve if conditions warrant. That would seem to be a safe political play for Biden, as congressional Democrats have shown in pressing him to open the reserve that they see it as designed for these particular circumstances.
Some analysts have maintained the SPR has little prospect for greatly affecting prices in the way that additional production could, but leaning strongly into that strategy beyond Energy Secretary Jennifer Granholm’s urging domestic producers to “get your rig count up” would pose special political challenges, especially as Biden’s energy and climate agenda remains stalled.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Jeremy Beaman (@jeremywbeaman). Email [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
STORM LEAVES TENS OF THOUSANDS WITHOUT POWER: States in the eastern U.S. have tens of thousands of households without power after the weekend’s winter storm.
More than 27,000 customers in North Carolina are without electricity, and West Virginia has more than 25,000 without power, according to poweroutage.us. South Carolina tops the list with more than 29,000 without power as of this morning.
GAS DEMAND UP GOING INTO STORMY WEEKEND: Gasoline demand surged around the country heading into the weekend as the winter storm headed eastward.
U.S. gasoline demand jumped 17.1% on Friday versus the prior Friday and was 8.9% higher than the four-week average, according to GasBuddy data.
DOJ APPEALS TRADE COURT TARIFF EXEMPTION RULING: The Justice Department on Friday appealed a ruling the U.S. Court of International Trade delivered last year that struck down an effort initiated during the Trump administration to impose tariffs on previously exempted bifacial solar panels.
In November, Judge Gary Katzmann enjoined the government from enforcing a presidential proclamation aimed at expanding tariffs for the panels and to increase duties on modules, ruling the proclamation was beyond President Donald Trump’s authority.
Leading solar trade group Solar Energy Industries Association, which was among plaintiffs that originally sued over the proclamation, expressed disappointment with the Biden DOJ’s decision to appeal.
“Continuing this legal fight in light of the history of the case is another government misstep in this long and tortured saga and provides no benefit to the American workers, public, or clean energy goals,” SEIA General Counsel and Vice President of Market Strategy John Smirnow said in a statement.
SEIA has been lobbying Biden not to extend Section 201 tariffs on solar imports after the U.S. International Trade Commission recommended that he do so last month to protect domestic manufacturing of cells and modules.
YOUNGKIN MOVES TO WITHDRAW FROM GREENHOUSE GAS INITIATIVE: Gov. Glenn Youngkin signed an executive order over the weekend to begin the process of withdrawing from the Regional Greenhouse Gas Initiative.
Youngkin ordered a report on the cap-and-trade regime’s costs and benefits and directed the state’s director of the Department of Environmental Quality and secretary of natural and historic resources to notify the RGGI of his intent to withdraw either by regulatory action or legislation.
The order framed the decision as a bid to save ratepayers from costs associated with the purchase and sale of emissions allowances among utilities in Virginia, which in 2021 sold more than $227 million in allowances, it said.
Youngkin had described the arrangement as “really a carbon tax.”
Democrats argue that pulling out of RGGI is counterproductive in light of the Virginia Clean Economy Act, signed by Democratic Gov. Ralph Northam in 2020, which mandated that Virginia’s power grid decarbonize by 2050 and ordered regulations on electricity generation toward that goal. They argue that a multistate trading market will help meet that goal.
OFFSHORE WIND MOVES FORWARD IN NEW YORK: Norwegian energy giant Equinor and BP have finalized purchase and sale agreements with regulators related to their joint offshore wind venture off New York’s coast, stakeholders announced on Friday.
Under the PSAs, Equinor and BP agree to provide 1,260 megawatts of renewable offshore wind power from their Empire Wind 2 project and 1,230 MW of power from their Beacon Wind 1 project.
The agreements follow news last week of a pending offshore wind lease auction at which the Interior Department will make more than 488,000 acres of federal waters available to developers.
SCOTLAND CONCLUDES OFFSHORE LEASING ROUND: The Scottish government’s Crown Estate Scotland today announced results from “ScotWind,” its first offshore wind leasing round in more than a decade, which yielded 17 new floating and fixed offshore projects.
Applicants included BP Alternative Energy Investments and Shell New Energies, and aggregate new capacity under ScotWind is projected to be 24,826 megawatts. The public corporation said applicants will pay £700 million in option fees to the Scottish government.
“Just a couple of months after hosting COP26, we’ve now taken a major step towards powering our future economy with renewable electricity,” said Crown Estate Scotland Chief Executive Simon Hodge.
SCHWARZENEGGER WARNS AGAINST CALIFORNIA ‘SOLAR TAX’: “Let’s call it what it is: a solar tax,” Arnold Schwarzenegger writes in a New York Times op-ed published today criticizing the California Public Utilities Commission’s net metering proposal.
The Governator acknowledges the criticisms of the existing incentives for rooftop solar – namely, that they shift costs to people too poor to install solar or who live in apartments – but argues that cheaper solar benefits everyone. He also boasts that the state has exceeded the goal he set out in 2006 as the Republican governor to add solar panels to 1 million roofs.
In weighing in against the proposal, Schwarzenegger is joining Elon Musk, who last week bashed it as a “bizarre anti-environment move.”
The Rundown
Associated Press From oil-rich UAE, South Korea president vows climate action
Bloomberg Car advertising finally goes electric
The Guardian Norway blows up hydro dam to restore river health and fish stocks
Calendar
WEDNESDAY | JAN. 19
10:30 a.m. Rayburn 2123 The House Energy and Commerce Committee will hold a hearing entitled “Securing our Energy Infrastructure: Legislation to Enhance Pipeline Reliability.”
THURSDAY | JAN. 20
10:30 a.m. Rayburn 2123 Energy and Commerce Committee and its Oversight and Investigations Subcommittee will hold a hearing entitled “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains.”
12 p.m. The National EV Charging Initiative will host a first-of-its-kind electric vehicle summit.
