Daily on Energy: Biden’s comments on needing oil and gas for ‘a while’
Seymour Hersh #SeymourHersh
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BIDEN SEES A NEED FOR OIL AND GAS FOR A DECADE-PLUS: President Joe Biden’s pronouncement last night that we’re going to need oil and gas for “a while” was met with competing cheers and jeers from attendant lawmakers because it’s the defining question, the pretext of every energy policy debate Washington is undertaking right now.
Biden was making the case against the capital strategies oil majors implemented last year alongside their record-breaking financial performances. They should have plowed more of their earnings into expanding their oil and gas businesses to bring down prices, he argued during the State of the Union address, as he did throughout last year.
CONSTELLATION BRANDS, INC.
“I said, we’re going to need oil for at least another decade. And that’s going to exceed – and beyond that, we’re going to need it. Production,” Biden said, recalling conversations with oil majors.
For many Democrats, environmentalists, and clean energy interest groups, it is a description of a future that should be avoided, and could be avoided with aggressive policies to expand carbon-free energy sources and impose restrictions on oil and gas development.
For Republicans in the room, and oil and gas interests outside it, Biden’s words were an acceptance of an obvious truth that demand forecasts bear out.
Demand forecasts: The Energy Information Administration forecasts petroleum and natural gas to remain the most-consumed sources of energy well beyond the next decade and through 2050. That is the target year for the Paris agreement’s 1.5 degree Celsius warming limit and the year by which countless governments, including the U.S. under Biden’s targets, intend to reduce their emissions to zero on net.
EIA foresees exponential growth in sales of battery electric and hybrid electric vehicles but expects gasoline to remain the primary transportation fuel through mid-century.
In electricity, shares of generation from wind and solar are forecast to grow big time over the next decades. Renewables are not forecast to come close to displacing generation from natural gas, even though gas generation is expected to fall.
Where Biden is vs. where he’d rather be: Biden is faced with finding the faint line between meeting the economy where it’s at technologically and pursuing Democrats’ climate change goals.
The administration has advanced measures to restrict new oil and gas production on federal lands and penalize producers for excessive methane emissions, while encouraging the sector to increase output to bring down fuel prices and expand LNG exports to Europe.
Bob McNally, president of Rapidan Energy Group who served in the Bush administration, said Biden’s words reflect a tiptoeing away from “keep it in the ground” and back to “all of the above.”
“Having been repeatedly mugged by energy reality since late 2021, the president is starting to come to terms with the need for continued investment in hydrocarbons,” he told Jeremy.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email jbeaman@washingtonexaminer.com or bdeppisch@washingtonexaminer.com 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.
GERMAN AND FRENCH FINANCE FINANCE MINISTERS MEET WITH YELLEN OVER IRA: German Economic Minister Robert Habeck and French Finance Minister Bruno Le Maire traveled to Washington this week to meet with U.S. officials and voice their complaints over the Inflation Reduction Act and its $369 billion in green subsidies, which they say unfairly stifle competition and could violate trade laws.
The pair met with Treasury Secretary Janet Yellen yesterday to discuss the IRA’s “Made in America” provisions, which are aimed at reshoring domestic EV manufacturing, battery production, and other clean energy projects.
But they appear to have left the meeting with few new specifics on how, or to what extent, the U.S. and EU will work together on the green subsidies. Leaders committed only to communicating more closely with one another as they each put in place competing clean energy subsidies.
After their meeting, leaders said they had agreed on establishing more transparency around specific subsidies, so that the EU could match any U.S. effort if necessary. “It’s a process, and in a process you go step by step,” Le Maire told reporters. “You cannot have any fair competition if there is not full transparency on the level of public subsidies and public tax credits that are granted to private companies,” he added.
Habeck said a priority for Germany is to establish a U.S.-EU Trade and Technology Council, or TTC, that would seek to explore critical minerals development in the West and reduce reliance on China.
The Treasury Department was even more vague, saying only that Yellen and the EU ministers discussed their respective clean energy subsidy plans in the meeting, “stressing the need to stimulate innovation and technology development and deployment on both sides of the Atlantic,” Reuters reports. They did not signal any major concessions.
The background – rising trade tensions: Last week, European Commission President Ursula von der Leyen introduced the EU’s answer to the IRA, a “Green Deal Industrial Plan” that seeks to accelerate renewable energy project approval within the bloc and build out its own critical minerals supply chain.
HERSH REPORT – U.S. WAS BEHIND NORD STREAM ATTACKS: The famed Pulitzer Prize-winning investigative journalist Seymour Hersh wrote today that the U.S. carried out the explosions on the Nord Stream 1 and 2 gas pipelines linking Russia to Germany.
His report also includes that the claim was denied as “complete fiction” by the White House and the CIA.
Hersh, a former staff writer for the New Yorker and New York Times, claimed in a new Substack post that the Nord Stream blasts were a long-planned, covert operation carried out by U.S. Navy divers operating under the cover of NATO military exercises.
“Last June, the Navy divers, operating under the cover of [the NATO exercise] known as BALTOPS 22, planted the remotely triggered explosives that, three months later, destroyed three of the four [pipelines],” Hersh wrote, saying the decision “came after more than nine months of highly secret back and forth debate inside Washington’s national security community about how to best achieve that goal.”
Note well: Hersh’s post is based solely on a single source, a person “with direct knowledge of the operational planning.”
Note also that Hersh, now 85, has become increasingly controversial for his reporting over the past decade. Among other things, Hersh’s reporting has disputed the U.S. government’s account of the killing of Osama bin Laden and questioned whether the Syrian government used chemical weapons in its attacks on civilians. He said in a 2018 interview that he “doesn’t necessarily buy the story that bin Laden was responsible for 9/11.”
Asked for comment by Hersh, White House National Security Council spokeswoman Adrienne Watson said of the claim: “This is false and complete fiction.”
The information vacuum: Hersh’s dispatch is filling a void of information about the attacks. Daily on Energy has been noting the few updates that have come in, such as yesterday’s item on German investigators saying they had no evidence that Russia, or any foreign actor, was behind the explosions, though their investigation is ongoing.
CONSTRUCTION BEGINS AT CALIFORNIA UTILITY-SCALE SOLAR SITE: Construction has commenced at the site of the 300-megawatt Desert Quartzite solar energy project, the Bureau of Land Management announced yesterday.
Desert Quartzite, a project of France-based EDF-Renewables, will be installed on 3,000 of public land in Riverside County and has a planned capacity sufficient to power some 120,000 homes in south-central California. It’s expected to begin operation in December 2024.
The Biden administration intends to permit 25 gigawatts of renewable energy projects on public lands by 2025. BLM is currently processing 64 utility-scale onshore clean energy projects proposed in the western U.S., Interior said in a recent announcement.
NEVADA LITHIUM MINE UNWORRIED BY RULING BLOCKING WASTE PLAN: Developers of the Thacker Pass lithium mine in Nevada are looking on the bright side of a federal court ruling remanding to the Bureau of Land Management a record of decision approving the mine.
District Judge Miranda Du remanded to BLM its record of decision approving the mine’s operations plan, but the remand only requires BLM to reconsider whether developer Lithium Americas has adequate mining-claim rights to the lands over the area where they intend to dispose of mine waste.
The decision did not otherwise find fault in BLM’s permit, which litigants sought on the basis that the bureau failed its environmental review obligations under NEPA and other laws.
Lithium Americas pledged to work with BLM to complete the work required on the ROD, it said yesterday.
The company recently announced that General Motors will join in on the mining project, expected to begin operation in 2026, with a $650 million equity investment.
STATES EYE NEW FEES AND TOLLS TO REPLACE LOST GAS TAXES FROM EVS: The U.S. push for electric vehicles has forced states to consider new ways to raise funds to build and maintain roads to replace lost gas tax revenues.
Motor fuels taxes currently make up the largest share of state transportation budgets, but the funds have been shrinking for years as cars have gotten more fuel-efficient.
In 2022, gas taxes accounted for 38.4% of states’ transportation revenue, down from 41.1% in 2018. Those funds are expected to dry up even more in the years ahead: One recent estimate predicts states could lose as much as $87 billion in gas tax revenue by 2050 as the proportion of EVs and highly fuel-efficient vehicles increases.
To replace gas tax revenue, states are considering adding new tolls, implementing fees at public EV charging stations, or adding a vehicle-miles traveled tax (or VMT fee) that charges drivers based on the number of miles traveled.
At least a dozen states have commissioned studies on VMT fees to eventually replace the gas tax, though just several—Oregon, Utah, and Virginia— have formally adopted them. VMT fees are a political lightning rod, sparking concerns about privacy and economic equity.
Fees at public EV charging stations are another option currently used by at least four U.S. states. But a lack of public EV charging networks is a major hurdle, and many states do not yet have the necessary infrastructure in place to generate enough revenue using that fee structure.
Another, less popular option, is adding new tolls to roads. Most recently, Michigan Gov. Gretchen Whitmer, a Democrat, suggested she was open to the idea, after a new projection that her state could generate more than $1 billion annually in transit funds by adding a 6-cent per mile toll on 14 major highways. But opponents have cited major affordability concerns, noting that it could limit some drivers’ ability to commute or travel within the state. Read more on the various state-led efforts here.
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THURSDAY | FEBRUARY 9
9:00 a.m. 1324 Longworth. The House Natural Resources Committee’s Oversight Subcommittee will hold a hearing titled “Dependence on Foreign Adversaries: America’s Critical Minerals Crisis.”
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Original Author: Jeremy Beaman, Breanne Deppisch
Original Location: Daily on Energy: Biden’s comments on needing oil and gas for ‘a while’