TODAY’S KEY TAKEAWAYS: Rail strike threatens energy markets. Biden buying oil at $80 after Democrats stopped Trump from buying at $24. Can cleaner jet fuel take off with new climate law? Push to shorten mine permit process gains steam. Peltola promises bipartisanship after being sworn in.
NEWS OF THE DAY:
ENERGY SECTOR WARNS OF ‘DEBILITATING’ OUTCOMES FROM RAIL STRIKE: Trade groups are sounding the alarm on the threat of a rail strike to energy markets, warning Washington that a mass freight disruption would make resources more scarce and send prices of everything from coal to gasoline higher.
Catch up: Major rail carriers and labor unions have until Friday to reach an agreement on contract negotiations before a cooling-off period lapses and workers are permitted to strike.
The prospect of strikes has been looming for months, such that the White House created an emergency board to help mediate disputes between operators and the unions.
What they’re saying: If the administration’s efforts come up short and a strike ensues, it could result in “a debilitating logistics chokepoint for the movement of energy and materials resources essential to our grid reliability and energy affordability,” Rich Nolan, head of the National Mining Association, said in a statement.
Service issues are already taking their toll, said Nolan, who used the upcoming winter as his frame of reference. Disruptions to coal deliveries “[impede] the delivery of essential fuel as utilities work to shield consumers from soaring natural gas prices and build up stockpiles to ensure they have the fuel security needed for the winter.”
American Fuel & Petrochemical Manufacturers, which represents refiners, wrote congressional leaders yesterday to ask for their intervention. Service stoppages would potentially force refiners to cut production, AFPM president and CEO Chet Thomson said.
OIL:
Biden May Buy Oil Just Below $80; Democrats Stymied Trump at $24
Steven T. Dennis, Bloomberg, September 13, 2022
The Biden administration is considering replenishing the Strategic Petroleum Reserve when oil dips below $80 a barrel, just two years after Democrats blocked former President Donald Trump from filling the reserve at a fraction of that price.
Biden in March ordered the release of a record 180 million barrels of oil from the reserve in an attempt to stem supply shortages and the rapid rise of gasoline prices in the US following Russia’s invasion of Ukraine. The administration now is looking to protect US oil-production growth and prevent crude prices from plummeting, according to people familiar with the matter.
Trump in March of 2020 was looking to stabilize the oil industry after Covid-19 hit in 2020 and crushed global petroleum demand. With oil at the time priced at about $24 a barrel, Republicans proposed spending $3 billion to fill up the reserve. But the idea became a political football in larger negotiations on trillions in coronavirus relief, with Senate Democratic Leader Chuck Schumer proclaiming that his party had blocked a “bailout for big oil.”
That decision effectively cost the US billions in potential profits and meant Biden had tens of millions of fewer barrels at his disposal with which to counter price surges.
It also will take more oil to fill the reserve than two years ago. In March 2020, the reserve had 634 million barrels stored out of a capacity of 727 million barrels. After a record drawdown last week, the reserve is down to 442 million barrels, its lowest level since 1984.
Benchmark US oil futures jumped by almost $3 a barrel after Bloomberg reported the White House plan to restock emergency reserves. The contract settled close to a one-week high at $87.31 on Tuesday, extending the year-to-date advance to 16%.
GAS:
Clean Jet Fuel Could Take Off With New Climate Law
Amy Harder, Cipher, September 14, 2022
The U.S. government is for the first time in history singling out and subsidizing cleaner aviation fuel.
Such a move is poised to help clean up one of the most high-profile ways our society contributes to climate change—and one of the most difficult given the sheer dynamics required to keep planes in the sky.
With nearly $370 billion flowing from the federal spigots, the Inflation Reduction Act signed into law last month supercharges existing tax credits and gives first-ever subsidies to a range of technologies considered essential in helping the U.S. reach net-zero emissions by 2050.
Included in that first-ever bucket is sustainable aviation fuel (SAF). SAF embodies not one thing, but a range of liquid fuels produced from various raw materials through different technologies. The fuel is capable of directly replacing or mixing with traditional fossil-fuel-based jet fuel.
Aviation accounts for about 2.5% of global carbon emissions, but its impact could be more than 1.5 times that figure given the warming effect of contrails (those innocuous-looking white cloud lines that form at the end of planes), according to 2021 scientific research.
The tax credit applies for about half as long as earlier proposals, but it’s nonetheless notable because SAF didn’t get any support from the infrastructure law passed last year, which poured more than $100 billion into a range of other climate technologies.
“The biggest stumbling block is economics,” said Graham Noyes, executive director of the Low Carbon Fuels Coalition, a group representing a broad cross-section of companies that are somehow involved in the pursuit of low-carbon fuels, including SAF.
“Even though it’s not the 10 years we would have liked to have seen, having five years of the credit will be an enormous boost,” Noyes told Cipher. “It will allow the industry to begin to scale up and deploy new feedstocks and technologies at scale.”
MINING:
Push to shorten U.S. mine permit review process gains steam
Ernest Scheyder, Valerie Volcovici, Reuters, September 1, 2022
U.S. mining companies, automakers and a bipartisan group of congressional members are recommending that the federal government cut the time needed to permit a new mine in order to boost domestic production of electric vehicle minerals.
The requests, submitted this week to a committee that will propose changes to the General Mining Law of 1872, comes amid rising pressure on the EV industry to procure lithium, copper, and other minerals from domestic or ally sources.
The Interagency Working Group on Mining Reform has been studying ways to change the law, which governs hardrock mining on U.S. government land, since February. Public comments were due this week. Any changes would need to be approved by the full U.S. Congress and President Joe Biden.
“Today’s lengthy, costly, and inefficient permitting process makes it difficult for American businesses to invest in the extraction and processing of critical minerals in the United States,” Chris Smith, Ford Motor Co’s chief government affairs officer, wrote to the committee.
Ford, which has lithium supply deals with Nevada’s pioneer and Utah’s Compass Minerals International Inc, asked for faster mine permitting, greater transparency in the review process and a boost to federal funding of geological mapping.
EV maker Rivian Automotive Inc said it supports mine permitting reform “done in a more efficient and coordinated way.”
State and federal approval for a mine can take more than a decade, compared to an average of a few years in Canada and Australia, which have large mining sectors.
POLITICS:
Peltola sworn in as member of U.S. House
Family, other House members celebrate nation’s first Alaska Native Congress member
Mary Peltola was sworn in on Tuesday as Alaska’s sole member of the U.S. House of Representatives, becoming the first Alaska Native to serve in Congress.
Peltola, a Democrat from Bethel, praised her predecessor, Republican Rep. Don Young, who died in March, saying that, like Young, she would represent all Alaskans.
“Don Young was a true institution, an Alaska icon,” she said. “I’m committed to securing his legacy of bipartisanship.”
Peltola touched on her roots.
“It is the honor of my life to represent Alaska, a place my elders and ancestors have called home for thousands of years, where to this day, many people in my community carry on our traditions of hunting and fishing,” she said.
The event was celebrated by fellow House members and by members of Peltola’s family and other supporters sitting in the House gallery, with people rising a few times to applaud and cheer the historic occasion. Family members who attended the ceremony included her husband, Gene Peltola, seven children, two sisters and two grandchildren.
They were photographed with Peltola and House Speaker Nancy Pelosi at a ceremony after the official swearing-in.
There were a few things unique about the event. Most House members are joined on the floor by other members of their state’s House delegation – with Alaska having only one member, members from different states gathered around Peltola. And U.S. senators usually don’t attend many sessions of the other chamber, but both of Alaska’s senators – Republicans Lisa Murkowski and Dan Sullivan – joined Peltola.
For more than 20 minutes before the ceremony, Peltola chatted with Murkowski and Sullivan, as well as House members who lined up to greet her. They included the three most senior House Democrats – Pelosi, from California; Majority Leader Steny Hoyer of Maryland and Majority Whip James Clyburn of South Carolina – and Sharice Davids of Kansas, one of the two other Indigenous women in the House.
After Peltola was sworn in, Hoyer said it was an honor to welcome her. He credited her willingness to work with Republicans as contributing to Alaskans electing her.
“Like so many other Americans, they want to be represented by someone who is focused on bipartisanship and not on confrontation,” he said.
Alaska Federation of Natives Co-chairs Ana Hoffman and Joe Nelson attended the ceremony. Hoffman said afterward that the event was “spectacular.”
“Mary was very much in the place in which she belongs,” Hoffman said. “And she brought Alaska here in such a real way. One of the people from home said by Mary being in Washington, D.C., it makes D.C. feel that much closer to Alaska. And it absolutely does. That is a perfect way to describe what Mary has done here.”
Hoffman said hearing Peltola speak some Yup’ik on the House floor brought a sense of belonging to the chamber. Hoffman also said there were probably more people wearing piluguks, a style of mukluk, than has ever happened before during a member’s swearing-in.
Nelson compared having Indigenous-language words spoken in Congress to land acknowledgements.
“There’s no more powerful land acknowledgement than the Native people just speaking and being part of the land,” he said.
The ceremony came a day after Peltola announced her staff members, who have a bipartisan background. Alex Ortiz, Young’s last chief of staff, will be her chief of staff. Claire Richardson, who worked in the administrations of Democrat Tony Knowles and independent Bill Walker, will be Peltola’s interim director of constituent services. Larry Persily, who has worked in various federal, state, and municipal positions and a longtime journalist, is her senior policy adviser. Hector Jimenez will be her scheduler; his background includes serving as her deputy campaign manager and working in the oil and gas industry. And Josh Wilson, who has worked for Republican politicians, is her interim communications director.
Peltola’s term in office ends on Jan. 3, 2023. Whether she serves beyond then depends on the outcome of the Nov. 8 election for the next two-year House term, in which Peltola faces Republicans Sarah Palin and Nick Begich and Libertarian Chris Bye in a ranked choice election.