Biden’s Energy Policy in Squeeze

June 17, 2022

Biden energy. policy is now caught between the rock of climate change and the hard place of dealing with Putin’s squeeze on European energy supplies.
Washington Post has a profile of a key Biden advisor, Amos Hochstein, who straddles those conflicting priorities.

Washington Post:

(Amos) Hochstein, 49, advised Biden on energy security when he was vice president. During the Trump administration he served as an executive at the Houston-based natural gas company Tellurian and on the supervisory board of Naftogaz, the Ukrainian state-owned oil and gas company. He also has done a small amount of lobbying for Marathon, the country’s largest oil refiner.

Now he is taking on one of the biggest challenges facing the Biden administration: how to rein in rising energy prices in a world that remains dependent on fossil fuels while advancing a climate-change agenda that is built on phasing out oil, gas and coal.

The tension between the two tasks has been exacerbated by Russia’s invasion of Ukraine. The conflict has upended international energy markets and sent Democrats scrambling to address surging gasoline prices, a political liability, before the midterm elections.

Another hurdle is Hochstein’s résumé. As one of the only officials in the Biden administration with experience in the oil and gas industry, Hochstein has faced fierce criticism from environmentalists, who warn the world urgently needs to phase out fossil fuels to avert a climate catastrophe.

“I’m not a big fan of Amos. I think of him as 100 percent an oil-and-gas guy, not a climate guy,” said one official at a prominent environmental group, who spoke on the condition of anonymity to preserve their relationships within the administration.

But supporters say Hochstein’s knowledge of global oil and gas markets has helped Biden navigate an urgent political problem: rising prices at the pump that imperil Democrats’ chances in the midterms and have dragged down the president’s approval rating.

“I’m not aware of anybody — certainly at the senior political level — who comes close to Amos in terms of understanding the realities of the energy industry,” said Bob McNally, president of Rapidan Energy Group, a consulting firm. “I call him President Joe Biden’s energy whisperer.”

Reached by phone, Hochstein declined to comment on the record for this report.

While Hochstein is not a Biden insider in the mold of White House Chief of Staff Ron Klain, he speaks directly to the president and has earned his respect, according to people familiar with the matter. He has helped shape many of the administration’s attempts to tamp down gas prices, which have topped an average nationwide price of $5 per gallon as of June 11.

Most recently, Hochstein was involved in the decision to send letters on Wednesday to the CEOs of America’s largest oil and gas companies, according to a senior administration official, who like others interviewed spoke on the condition of anonymity because they were not authorized to speak publicly. In the letters, Biden informed the firms that he is considering invoking “emergency authorities” to boost refinery output.

Biden took office with ambitious plans for addressing climate change and accelerating the nation’s transition to clean energy. He vowed to slash U.S. greenhouse gas emissions at least in half by the end of the decade, with the ultimate goal of eliminating economywide emissions by mid-century.

But the war in Ukraine has complicated these plans. Soaring gas prices have prompted Biden to take several steps that are anathema to climate activists, such as authorizing a historically large release from the Strategic Petroleum Reserve and resuming oil and gas leasing on federal land.

In Europe, which imported about 40 percent of its natural gas and more than a quarter of its oil from Russia before the conflict, the European Union has unveiled a plan to slash its dependence on Russian fossil fuels by strengthening energy-efficiency targets and deploying more clean energy technologies. But the 27-nation bloc also has sought to boost the flow of gas into the continent.

Washington Post:

Biden’s supporters say the focus on gas prices and helping Europe through an energy crisis has made it harder for the administration to tout the steps it has taken to protect the environment, including new rules cracking down on greenhouse gas emissions from cars and trucks and policies to cut methane emissions from oil and gas operations across the United States.

On Tuesday, the White House announced it is reversing former president Donald Trump’s action weakening a landmark environmental law on the construction of pipelines, highways and other projects. The new rule will restore a requirement that federal agencies scrutinize the climate impact of major infrastructure projects.

Administration officials say the recent maneuvers to increase the fuel supply are meant to address the immediate price shocks created by Russian President Vladimir Putin’s invasion of Ukraine and the inflationary pressure that preceded it. They remain committed, they say, to combating climate change and reducing the nation’s reliance on fossil fuels over the long term.

AP:

President Joe Biden on Wednesday called on U.S. oil refiners to produce more gasoline and diesel, saying their profits have tripled during a time of war between Russia and Ukraine as Americans struggle with record high prices at the pump.

“The crunch that families are facing deserves immediate action,” Biden wrote in a letter to seven oil refiners. “Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis.”

Gas prices nationwide are averaging roughly $5 a gallon, an economic burden for many Americans and a political threat for the president’s fellow Democrats going into the midterm elections. Broader inflation began to rise last year as the U.S. economy recovered from the coronavirus pandemic, but it accelerated in recent months as energy and food prices climbed after Russia invaded Ukraine in February and disrupted global commodity markets.

Chris Tomlinson in Houston Chronicle:

I studied Russia and its military for seven years as a U.S. Army Soviet intelligence analyst, and I’m disappointed to refresh those skills. Putin is a former KGB colonel committed to authoritarianism and a more significant threat to human rights than most Americans appreciate.

Sending troops to Ukraine would be the old-fashioned way of defeating a rising dictator threatening to subsume neighboring nations to create an empire. But this world war is what Russians call “gibridnaya yoyna,” or hybrid warfare, a conflict where the economic, media and covert realms are more critical than body-strewn battlefields.

Putin launched the world’s first hybrid war years ago when he began meddling in other nations’ politics. He laid the groundwork for his criminal invasion of Ukraine by slow-walking natural gas shipments to Europe beforehand.

The best tactic to stymie Putin’s aggression is to stop buying Russian oil and gas. The trick, though, will be to replace all of Russia’s exports so countries don’t suffer from their embargoes, and that means producing more in Texas.

U.S. oil firms say they are committed to providing affordable and plentiful energy. If true, they should step up production in the short-term while developing clean energy alternatives for the long. But CEOs at the largest companies are more interested in profiteering.

Exxon Mobil reported $5 billion in profits and is tripling the amount it will spend buying back shares. Chevron booked $6.3 billion and has promised $10 billion in buybacks this year. Total Energies collected $4.9 billion in profit and may double share repurchases this quarter.

BP booked $6.2 billion in profits even after taking $24 billion in losses from its Russian operations and will reward investors with an extra $2.5 billion. Shell posted adjusted earnings of $9.1 billion and planned to buy back $8 billion in shares.

Oil companies reported their highest earnings in years, but none announced significant plans to increase oil and gas production. By meeting investors’ demands for higher returns instead, Big Oil boosts its share price, keeps consumer prices high, and collects windfall profits.

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8 Responses to “Biden’s Energy Policy in Squeeze”

  1. Mark Mev Says:

    I’ve been trying to learn more about the lack of US gasoline refinery capability for lighter sweeter crude compared to heavy sour crude. From my limited understanding, a decision was made over a decade ago to not upgrade or build new refineries capable of refining the higher priced light sweet crude because they calculated that more money could be made importing cheaper sour heavy crude even with the increased price of refining said crude.
    So now, they import the heavy crude for the majority of refineries, and export the lighter crude at the world market prices.
    Please add, rip apart, or point me to more detailed analysis. Thanks.

    • jimbills Says:

      Building a refinery is extremely capital intensive and subject to heavy regulation. The U.S. hasn’t built much new refining capacity since the 1970s. U.S. oil production peaked in 1970 (or seemingly did until decades later with fracking) and there wasn’t a great need for new refineries until very recently. That has come into conflict with fracking, since it produces lighter crude (and a lot of it) and there wasn’t enough refining capacity here to manage it. But like nuclear, it can take a decade for something as large as that to go from the drawing board to operation.

      There had been news of refineries built specifically for fracking getting started a few years ago:
      https://www.forbes.com/sites/davidblackmon/2020/07/25/first-new-us-oil-refinery-since-1977-targets-bakken-shale-crude/

      I’m not sure if that was tabled or is still in construction.

      Of course, any company is going to prioritize profits. If it’s less expensive to just export the lighter crude for refining for the market, that’s the way they’ll go. I’d guess that most companies aren’t entirely sure how long the fracking boom will last, also, leading to some hesitancy in building new refineries.

  2. rhymeswithgoalie Says:

    Vivek Ramaswamy in the video is the classic Master-of-the-Universe finbro sociopath that has disregarded any social good that might interfere with them making money from capital markets and financial derivative scams.

  3. J4Zonian Says:

    Nothing will fundamentally change
    Children commonly resort to denial—including what’s called Stockholm Syndrome but should be called family syndrome, identifying with the abuser—when faced with unpredictably cruel caregivers.

    It is of course no accident that so many oil producers are dictators;
    It’s the resource curse, stupid! And it’s cursed the US.

    Whatever Democrats have said about transitioning to renewables, their policies are clearly bent towards not. They’re sort of OK with renewables being built, as long as it’s not too fast & doesn’t actually displace much fossil fuel or nuke energy, inconvenience anybody rich & important, or require any courage on their part.

    Where’s FDR when we need him?

    The Democrats collaborated to make sure our FDR lost. In the midst of the most dire crisis in history, their priority was to make sure they & their masters were protected from unpleasant feelings.

    Anyone who thinks the Democrats have any intention of pushing the transition any faster than “market forces”, ie, any faster than the oligarchs are willing for it to go as they suck everything they can out of a dying world, is deluding him or herself.

    Everything the Democrats do makes it clear the only important thing to them is preserving BAU so they can milk it. Biden made that clear during the campaign. He made it clear again by refusing to do any of the things he could have done to get the power to do what’s needed—packed the court, pushed statehood for DC & the colonies, er, territories, declared an emergency, embraced progressive positions (or progressive Democrats) to win easily winnable seats in both houses, (which they then lost, creating the current stalemate) campaigned for & pushed a strong Green New Deal…

    The phenomenal amount of corruption, corporate graft, sops to fossil fuels, & betrayal of all sense as well as the US & world public, in every bill they pretend they can pass (with failure assured, given the legislative math constraint they’ve created for themselves by refusing to do all those things) all reveal how far they are from being anything but a drag on a world actually trying to save itself.


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