“Ukraine has said it will not extend the transit agreement with Russian state-owned Gazprom in order to deprive Russia of profits that Kyiv says help to finance the war against it.
Moscow’s suspension of gas for Austria, the main receiver of gas via Ukraine, means Russia will now only supply significant gas volumes to Hungary and Slovakia, in Hungary’s case via a pipeline running mostly through Turkey. In contrast, Russia met 40% of the European Union’s gas needs before Moscow’s 2022 invasion of Ukraine.”
In a series of panels about promoting North American gas, oil, and uranium energy in ways that will boost the economy and make North America strong and independent vis-a-vis world challenges, people are worried about the effects of Trump’s proposed tariffs which will hurt both countries’ economies and make energy more costly.
“European industry — and Germany first and foremost — was battered by the surge in energy prices following Russia’s invasion of Ukraine. The bloc rode out the immediate emergency better than expected, finding alternatives to Russian gas, for example, through imports of U.S. liquefied natural gas.
But the hope that European industry would swiftly recover has faded, even as the eurozone economy in the aggregate returns to growth.
Eurostat’s industrial production index for the eurozone remains below its 2021 level, and is trending lower. And policymakers are starting to realize that the turnaround they had expected is not materializing.”
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“The numbers underline the challenge of maintaining Europe’s competitiveness — and relevance — as China and the U.S. race to reshape the global economy within the context of an increasingly acute geopolitical rivalry.”
“What lies behind this shift? Some Americans prefer bigger cars, especially when gas prices are low, for their ample storage space, ability to see over other vehicles on the road, and perceived safety benefits (more on that later). But shifting consumer demands tell only part of the story.
For half a century, a litany of federal policies has favored large SUVs and trucks, pushing automakers and American buyers toward larger models. Instead of counteracting car bloat through regulation, policymakers have subtly encouraged it. That has been a boon for car companies, but a disaster for everyone else.”
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“After the 1970s OPEC oil embargo triggered a spike in gas prices, the federal government adopted an array of policies intended to reduce energy demand.
One of Congress’s most consequential moves was creating the Corporate Average Fuel Economy (CAFE) standards, which require that the average fuel economy (miles per gallon, or MPG) of a carmaker’s vehicles remain below a set threshold.
Pressed by auto lobbyists, Congress made a fateful decision when it established CAFE. Instead of setting a single fuel economy standard that applies to all cars, CAFE has two of them: one for passenger cars, such as sedans and station wagons, and a separate, more lenient standard for “light trucks,” including pickups and SUVs. In 1982, for instance, the CAFE standard for passenger cars was 24 mpg and only 17.5 mpg for light trucks.
That dual structure didn’t initially seem like a big deal, because in the 1970s SUVs and trucks together accounted for less than a quarter of new cars sold. But as gas prices fell in the 1980s, the “light truck loophole” encouraged automakers to shift away from sedans and churn out more pickups and SUVs (which were also more profitable).”
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“In the early 2000s, the federal government made these distortions even worse.
During the George W. Bush administration, CAFE was revised to further loosen rules for the biggest cars by tying a car model’s efficiency standard to its physical footprint (which is basically the shadow cast by the vehicle when the sun is directly above it). President Obama then incorporated similar footprint rules into new greenhouse gas emissions standards that are overseen by the Environmental Protection Agency (EPA).
Dan Becker, who led the Sierra Club’s global warming program from 1989 to 2007, told me that he and others warned federal lawmakers that adopting footprint-based standards was a mistake. “People like me were saying, ‘give carmakers another loophole and they’ll use it,’” he said. “But we lost.”
Those concerns proved justified. The average vehicle footprint expanded 6 percent between 2008 and 2023, a “historic high,” according to an EPA report, which also found that some carmakers, such as General Motors, actually had lower average fuel economy and higher average carbon emissions in 2022 than in 2017. To its credit, the EPA recently announced revisions to its vehicle GHG rules that would narrow (but not close) the gaps between standards for large and small cars.”
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“In the early 1960s, Europe raised the ire of American officials by slapping a 50 percent tariff on chicken exported from the United States. In retaliation, the US enacted a 25 percent tax on pickup trucks imported from abroad. The dispute is long forgotten, but the “Chicken Tax” lives on.
Although the tariff was initially aimed at Germany’s immense auto industry (Volkswagen in particular), it also applies to pickups imported from newer automaking powers such as Japan and South Korea, where carmakers are often adept at building vehicles much smaller than those available to Americans.”
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“In 1984, Congress stopped allowing small business owners to take a tax deduction for the purchase price of cars used for work. But the bill included a giant loophole: To protect those who need a heavy-duty vehicle (think farmers or construction workers), Congress made an exception, known as Section 179, for cars that weigh over 6,000 pounds when fully loaded with passengers and cargo. Today such behemoths are eligible for a tax deduction of up to $30,500, while business owners who opt for a smaller car can claim nothing at all.”
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“Every time a car owner fills her gas tank, a portion of the bill goes into the federal Highway Trust Fund, a central source of funding for roads and mass transit. That tax rate is set at $0.184 per gallon, a level that has been frozen since 1993, when Bill Clinton was less than a year into his presidency. Congressional proposals to increase the gas tax to close a yawning highway budget gap, or at least tie it to inflation, have gone nowhere.
Over the last 31 years, consumer prices have risen 113 percent, making the real value of the gas tax less than half what it was in 1993. That decline has reduced the cost of powering a huge SUV or truck with abysmal gas mileage”
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“Car safety rules are laid out in the encyclopedic Federal Motor Vehicle Safety Standards (FMVSS), which touches on everything from power windows to seat belts. But the FMVSS revolves around protecting a vehicle’s occupants; nothing within its 562 pages limits a car’s physical design to protect someone who might come into contact with it in a collision. That omission invites an arms race of vehicle size — precisely what the US is experiencing.”
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“consider who benefits from oversized vehicles. American carmakers like Ford and GM (which are headquartered in Michigan, a crucial swing state) rely on juicy margins from big SUVs and pickups, which are more expensive and profitable than smaller models. They enjoy protection from foreign competition through tariffs like the Chicken Tax, as well as favorable policies like CAFE’s light-truck loophole.
The regulatory status quo suits domestic automakers just fine — and they act as a roadblock to even modest attempts to change it.”
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“As American sales of big SUVs and trucks have surged, their owners are likely to resist policy moves they see as penalizing them. Many are likely to be unaware of the federal loopholes and policy oversights that have distorted their vehicle choices.”
“The US is the largest crude oil producer in the world, pumping out nearly 13 million barrels on average every day in 2023, an all-time record, according to new data from the US Energy Information Administration.
That’s an awkward milestone for President Joe Biden, who has arguably done more than any modern president to facilitate America’s transition away from fossil fuels to greener alternatives.
For the last six years, America has outstripped Russia, Saudi Arabia, and other OPEC countries in crude oil production. And it has picked up the pace under Biden, who had approved more permits for oil and gas drilling on public lands by last October than former President Donald Trump had by the same point in his presidency.
Biden has expedited the construction of an oil pipeline in West Virginia and approved the Willow oil project in Alaska, over the opposition of environmental activists and despite his 2020 campaign promise to stop drilling on federal lands altogether.”
“the pause is a limited one. It will only affect exports of LNG to countries with which the U.S. does not have a free trade agreement, and it does not prevent exports from the eight LNG export facilities already operating—though it will slow construction on several other export facilities, including one in Louisiana that would be America’s largest when finished. Even with the “pause” in place, the White House says America’s LNG exports are expected to double by the end of the decade, thanks to America’s booming natural gas industry and the energy needs of a world that’s getting wealthier.
While it is all a bit complicated, what the Biden administration announced last week amounts to an attempt to slow the growth of America’s natural gas exports—underpinned by the rationale that the slowdown will reduce global carbon emissions.
That’s a rationale based on some dubious assumptions. The climate activists who pushed the White House to consider the “pause” on new LNG export facilities point to an analysis released in November by former Environmental Protection Agency (EPA) policy advisor Jeremy Symons. Among other things, that report found that planned expansions of LNG exports in the U.S. would cause an increase in carbon emissions equal to the current level of emissions from the entire European Union.”
“Even if Symons’ report is right—indeed, an increase in natural gas exports seems likely to result in more global use of natural gas, even if he’s wrong about the scale of the increase—there’s a huge blind spot in that analysis. On his Slow Boring Substack, liberal blogger Matthew Yglesias points out that Symons “doesn’t even purport to estimate the net impact on emissions.”
In other words: How much would the increase in global natural gas consumption offset emissions from dirtier forms of fuel like coal and oil?
That’s the key question to ask. A significant reason why the United States has seen an overall decrease in carbon emissions in recent years is due to natural gas supplanting coal as the country’s top energy source.
The Biden administration is well aware of how exporting more natural gas could facilitate a similar transition in other parts of the world. When the Department of Energy signed off on a new LNG export facility in Corpus Christie, Texas, in March 2022, it concluded that “to the extent U.S. LNG exports are preferred over coal in LNG-importing nations, U.S. LNG exports are likely to reduce global [greenhouse gas] emissions on per unit of energy consumed basis for power production.””
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“this looks like a politically motivated maneuver aimed at garnering election-year praise from environmental activists on the left”
“The move to regulate fuel economy came about a few years earlier, following the 1973–74 Arab embargo that suddenly ended the flow of oil from OPEC nations. In the face of skyrocketing oil prices, Congress froze gasoline prices to protect American consumers from pocketbook shock. Then came the hard part. Elected officials sought to require U.S. automakers to build the smaller, more economical cars that unquestionably would have been built had gasoline prices been allowed to rise freely. Yet the fuel economy standards hit passenger sedans hard while leaving light trucks, which were not seen as passenger vehicles, almost untouched.
As the fuel economy standards began to bite consumers, they found that trucks provided comfort and safety no longer available in the downsized sedans. Truck sales surged, and in 1990, Ford placed a four-door body on a Ranger truck frame and introduced the Ford Explorer, a passenger vehicle that satisfied the government’s truck definition. This inspired an explosion of similar SUV production across the industry. Trucks became beautiful, expensive, and highly desirable.”
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“All the while, the fuel economy standard for trucks remained less strict than for sedans. To make things even better for U.S. producers, almost-prohibitive tariffs on European light trucks were extended to the rest of the world. Many foreign producers eventually jumped the tariff wall and built trucks and cars here, but the home-grown industry enjoyed an early advantage.”
“Clean energy is rapidly rising on the Texas power grid, but regulators in the Lone Star State are now considering a plan that could give fossil fuels a boost.
The zero greenhouse gas emissions trio — wind, solar, and nuclear energy — provided more than 40 percent of electricity in the state in 2022. It was a year when several Texas cities experienced their hottest summers on record, driving electricity demand to its highest levels ever as fans and air conditioners switched on. Winter proved stressful too, with freezing temperatures last month pushing winter electricity peaks to record-high levels, narrowly avoiding outages.”
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“Texas leads the US in oil and natural gas production, but it’s also number one in wind power. Solar production in the state has almost tripled in the past three years. Part of the reason is that Texas is particularly suited to renewable energy on its grid. Wind turbines and solar panels in Texas have a high degree of “complementarity,” so shortfalls in one source are often matched by increases in another, smoothing out power production and reducing the need for other generators to step in. That has eased the integration of intermittent energy sources on the grid.
Coal, meanwhile, has lost more than half of its share in Texas since 2006. For a long time and across much of the country, the story was that cheap natural gas from hydraulic fracturing was eating coal’s lunch on the power grid. Coal was also facing tougher environmental regulations like stricter limits on mercury, requiring coal power plants to upgrade their equipment, and raising electricity production costs.”
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“in Texas, natural gas’s share of the electricity mix has been holding around 40 percent for more than a decade. On the other hand, renewable energy has surged as coal withered. Wind alone started beating out coal in 2019 and is now the second-largest source of electricity behind natural gas in the state.
An important factor is that the state has its own internal power grid, serving 26 million customers and meeting 90 percent of its electricity demand. It’s managed by the nonprofit Electric Reliability Council of Texas, or ERCOT. In the freewheeling Texas energy market, the cheapest sources of electricity become dominant, and wind and solar — with low construction costs, rapid build times, and zero fuel expenses — have emerged as winners.”
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“Some lawmakers are now working to tilt the balance toward fossil fuels. “There are different political figures who are trying to incentivize gas power plants or deny, prohibit, or inhibit renewables,” Webber said.
Last year, the Texas legislature passed a law that would prevent the state’s retirement and investment funds from doing business with companies that “boycott” fossil fuels.
Texas Lt. Gov. Dan Patrick said one of his legislative priorities for this year is to secure more support for natural gas-fired generation. “We have to level the playing field so that we attract investment in natural gas plants,” Patrick said during a press conference last November. “We can’t leave here next spring unless we have a plan for more natural gas power.””
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“While wind and solar power are ascendant, they are intermittent, and regulators want to make sure there is enough dispatchable power like natural gas to ramp up on still, cloudy days. The new proposal would create a credit scheme that would encourage more of these dispatchable plants to come online and extend a lifeline to some existing generators that are struggling to compete. But it would also raise the costs of electricity production.
Environmental groups like the Sierra Club noted that the proposal leaves the door open for other tactics for balancing electricity supply and demand, like energy storage, increasing energy efficiency, and demand response.”
“There is one key factor explaining why imports to the EU from Russia haven’t fallen further: energy — and its price. During the five years that preceded the war, energy-related products represented two-thirds of all imports from Russia, in monetary terms.
European countries needed to find alternative providers before they could stop buying from Moscow — and even when they reduced their energy purchases, soaring prices meant that cash flows to Russia did not decrease proportionally.”