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OIL MARKET LATEST: President Joe Biden can breathe a sigh of relief as his administration was successful in working behind the scenes to help OPEC and its allies resolve differences to gradually restore all of the oil production they shuttered during the pandemic.
Crude oil prices have fallen nearly 5% today, and are below $70 for the first time since early June, as OPEC+ increases production and worries over the delta variant of COVID-19 reduce demand.
Gasoline prices tend to lag crude oil price declines, but Americans should start feeling relief at the pump before the end of summer driving season around Labor Day. That would relieve Biden of a political liability as his administration seeks to counter criticism that his big spending proposals are leading the country into a prolonged inflationary period.
“Biden can relax, even though the U.S. president has about as much influence over gasoline prices as he has over the weather,” said Jim Krane, the Wallace S. Wilson Fellow for Energy Studies at Rice University’s Baker Institute for Public Policy, in an email to me.
Under the deal announced on Sunday, OPEC+, a group of oil-producing nations led by Saudi Arabia and Russia, will increase output each month by 400,000 barrels a day, beginning in August. That will add about 2% to the world’s supply by the end of 2020.
Uncertain outlook: Despite the instant relief seen in oil markets so far, there’s still a “robust debate among barrel counters about the direction of near-term crude oil and therefore retail gasoline prices,” Bob McNally, president of Rapidan Energy Group, told me.
Some influential banks and analysts say crude prices will resume soaring, with supply remaining tight in the coming months (especially if there’s an active Gulf hurricane season). Others say there is plenty of spare capacity that could be unleashed to cap prices, and argue the market has been downplaying the risk of another demand slowdown from a COVID-19 resurgence.
One more key variable: Biden does have some control over what is the biggest remaining variable for oil markets in the near term, said Abhi Rajendran, director of research at Energy Intelligence.
The Biden administration has been pressing to revive the 2015 Iran nuclear agreement, which would enable Iranian oil barrels to reach the global market by lifting harsh Trump administration sanctions.
Rapidan Energy expects Iran to increase exports to 2 million barrels per day, up from about 1 million barrels per day currently, within a month of Biden lifting sanctions.
While analysts still expect a deal to happen, there are signs the Biden administration is growing frustrated about Iranian foot-dragging. Biden is considering additional sanctions on Iran’s oil sales to China as a way to force Tehran to come to a deal, according to the Wall Street Journal, which would make global supply even tighter.
“For oil markets, it’s a huge difference,” Rajendran told me. “On one hand, you unlock more Iranian supply. On the other hand, you go back to treating Iran like Trump did.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe). Email [email protected] or 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.
GRANHOLM GRAPPLES WITH GREEN JOBS CHALLENGE: Energy Secretary Jennifer Granholm solicited ideas this morning from clean energy sector leaders on how to create unionized high-paying jobs, seeking to address an area of tension in Biden’s aggressive climate plans.
“What specific policies would create union jobs?” Granholm posed during a roundtable event she hosted on how to rebuild energy jobs after the pandemic.
Biden has promised his American Jobs Plan would put hundreds of thousands of people to work in high-paying clean energy jobs. But the clean energy industry has historically been hostile to unions and its jobs are historically lower wage and less stable compared to fossil fuel work that stands to lose out from Biden’s plans.
“The clean tech industry is incredibly anti-union. … It’s a lot of transient work, work that is marginal, precarious and very difficult to be able to organize,” Jim Harrison, director of renewable energy for the Utility Workers Union of America, said in a great New York Times story over the weekend exploring the challenge.
Is a job ‘surge’ coming?: Granholm’s roundtable event focused on the rollout of the agency’s 2021 United States Energy and Employment Report, which found the clean energy industry showed “great resilience” during the pandemic, especially the wind, storage, and electric vehicle sectors, which all added jobs last year.
The analysis showed there were 839,000 energy jobs (across all sectors) lost in 2020, a 10% decline from 8.4 million to 7.5 million jobs (the energy-efficiency sector was hit particularly hard, bleeding 2.1 million jobs, a 11.4% decline.)
The energy industry recouped 560,000 jobs of those lost jobs by the end of the year.
Granholm said she anticipates a “huge surge” in job growth this year and beyond if the government makes the “right investments.” But a big key to the political success of Biden’s plans will be whether these jobs will be high-paying and unionized, including work building wind turbines, transmission lines, advanced nuclear reactors, and electric vehicle components.
What Biden could do: Senate Democrats as part of their infrastructure reconciliation package are expected to push for a prevailing wage mandate, which requires that certain projects pay a certain level set by the government.
Madeline Janis, executive director of Jobs to Move America, speaking at the roundtable event, called on policymakers to expand and open up Buy America requirements and to require companies seeking federal contracts providing clean energy equipment and electric fleets to commit to providing high wages and job-training.
CHINA’S CARBON MARKET UNLIKELY TO CURB EMISSIONS FAST: China launched the world’s largest carbon-trading system on Friday in a step toward ratcheting up its fight against climate change, but it’s unlikely to help the top-polluting nation reduce its emissions in the near future, as I report for a story posted this morning.
China’s long-planned emissions trading program is almost three times bigger than the second-largest, the European Union’s system that first launched in 2005.
But China is initially limiting its scheme to involve only 2,225 of its own companies in the power sector. Critics say the carbon price is not high enough, a fraction of the rate of Europe’s, to compel emissions reductions.
There could also be a surplus of permits that could mean polluters will buy allowances cheaply. That same problem happened in Europe initially, where there was an over-allocation of allowances that kept the carbon price low.
China’s scheme also does not set an absolute cap on emissions.
“Along the margins, it could make some difference. The general idea is it will slow down the increase in China’s emissions in the power sector, but not stop and cut anytime soon,” said George David Banks, an international climate adviser to former President Donald Trump who is now a fellow at the Bipartisan Policy Center.
The good and bad news: Chinese officials say the carbon market will help Beijing begin reducing its emissions before 2030 toward the goal of fulfilling its eye-popping new goal announced last year of reaching carbon neutrality by 2060.
But China is also under pressure from the Biden administration and other world leaders to constrain its emissions this decade, meaning not to allow their emissions to keep rising, to show its carbon-neutral target for 2060 is credible.
“Both of the following are true,” said Nat Keohane, president of the Center for Climate and Energy Solutions. “This is an incredibly important step for China in beginning to put in place policies to drive emissions down from a peak and meet President Xi’s goal of carbon neutrality, and the Chinese program is going to take some time before it really starts to bite.”
IT’S INFRASTRUCTURE WEEK (REALLY): Congress will take the first steps to pass a major infrastructure spending bill this week, capping off years of bipartisan efforts to find a way to fix the nation’s aging roads, bridges, and waterways, the Washington Examiner’s Susan Ferrechio reports.
Senate Majority Leader Chuck Schumer has scheduled a test vote Wednesday on a $1 trillion infrastructure bill that was authored by a group of Democrats and Republicans and has Biden’s endorsement.
The vote will culminate years of rejected proposals, failed talks, and party infighting over how to pay for massive and growing infrastructure needs across the country as well as expand critical broadband.
The bipartisan measure includes nearly $580 million in new spending on a broad array of traditional infrastructure that includes roads and bridges as well as mass transit, water pipes, airports, ports, electric vehicle chargers, and electric buses.
BIPARTISAN NUCLEAR CREDIT BILL BACK AGAIN: A bipartisan group of senators re-introduced legislation Friday authorizing the EPA to create a first-of-its-kind credit program to keep financially struggling nuclear plants from shutting down.
The American Nuclear Infrastructure Act adds growing momentum for Congress to provide aid to existing nuclear reactors as part of infrastructure talks. Last week, the Senate Energy Committee approved sprawling legislation from its chairman Joe Manchin establishing a nuclear credit program providing $1.2 billion annually in subsidies.
Democratic senators and a bipartisan group of House lawmakers have recently introduced legislation to provide production tax credits to keep nuclear plants from retiring.
The Biden administration has already said it supports providing credits for existing nuclear plants to stay online, a necessity if it wants to meet its goal of 100% carbon-free power by 2035.
INTERIOR TOUTS SOLAR PROJECT APPROVALS: The Interior Department said Friday it is making progress on Biden’s goal of permitting at least 25 gigawatts of onshore renewable energy by 2025.
Interior’s Bureau of Land Management gave final approval to the 400-megawatt Southern Bighorn solar project in Nevada and announced the start of construction for the 200-megawatt Arrow Canyon solar project in the same state. Southern Bighorn will provide 300 temporary construction jobs and five permanent jobs during operation, Interior said, while Arrow Canyon will create 500 temporary jobs and then 12 permanent jobs.
CONSERVATIVE GROUP PLUGS CLIMATE BILL: The conservative group Citizens for Responsible Energy Solutions unveiled a six-figure advertising campaign this morning thanking the Senate for recently passing by a wide bipartisan margin a bill to help farmers access voluntary markets to sell carbon credits.
The $250,000 campaign, featuring a Wall Street Journal ad and digital commercials, urges the House to quickly follow suit and pass the Growing Climate Solutions Act, which proponents see as a first step to engage the agriculture sector in climate policy.
New York Times As frozen land burns, Siberia fears: ‘If we don’t have forest, we don’t have life’
Wall Street Journal Cities try to phase out gas stoves — but cooks are pushing back
New York Times Building solar farms may not build the middle class
Wall Street Journal Saudi-owned Motiva suspends $6.6 billion petrochemical expansion
TUESDAY | JULY 20
10:30 a.m. 2123 Rayburn. The House Energy and Commerce Committee’s subcommittee on oversight and investigations will hold a hearing entitled, “Stopping Digital Thieves: The Growing Threat of Ransomware.”
WEDNESDAY | JULY 21
10 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a hearing to examine “the potential cybersecurity threats facing our nation’s infrastructure.”
THURSDAY | JULY 22
10 a.m. 406 Dirksen. The Senate Environment and Public Works Committee’s subcommittee on chemical safety, waste management, environmental justice, and regulatory oversight will hold a hearing to examine “current issues that adversely affect environmental justice communities.”
TUESDAY | JULY 27
10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to examine White House budget request for the Department of the Interior for Fiscal Year 2022.
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Original Author: Josh Siegel