Can you believe the price of gas? States move quickly to help drivers

“Tymon said there’s no guarantee that savings from cutting gas taxes would be passed on to consumers, whereas other relief mechanisms would have more control.

“If you do suspend the gas tax, you’re stopping a critical source of revenue that’s used to invest in transportation infrastructure,” he said. “It doesn’t seem like it’s a good precedent to set.”

Environmentalists are worried that a tax rebate could be a perverse incentive for gasoline-guzzling cars to hit the road more in an age of worsening climate change.”

America can’t solve its gas price problem (or its Russia problem) with drilling

“Biden has done nothing to halt oil leasing. In fact, the Biden administration has outpaced Trump in issuing drilling permits on public lands and water in its first year, according to federal data analyzed by the Center for Biological Diversity. His administration set a record for the largest offshore lease sale ever in the Gulf of Mexico last year, before a federal court blocked the lease sale for not considering climate impacts.

There was a temporary pause on new federal leases in the first few months of Biden’s administration when he placed a moratorium on them while the administration reviewed how to better integrate climate costs in lease sales. Meanwhile, the president has done nothing to prevent the vast amount of gas production that occurs on private lands or halt existing oil leases on federal lands. The moratorium is now irrelevant, anyway, because a Louisiana federal judge ruled against it last June. (There’s a second, temporary pause on new lease sales because another court invalidated the administration’s use of a social cost of carbon.) The US also became the world’s largest exporter of liquified natural gas (LNG) for the first time in 2021.

Clark Williams-Derry, an energy analyst with the Institute for Energy Economics and Financial Analysis, offered a reality check to those complaining that climate regulations have changed the fate of oil and gas. “The idea that the tiny marginal changes in US policy have anything to do with the big shifts we’ve seen in prices is just preposterous,” he told Vox. The marginal Biden measures — like reversing Trump-era environmental rollbacks — haven’t made any kind of dent in the global oil market.”

“oil companies have made it clear in earnings calls with shareholders that they don’t plan to produce much more, anyway. Remember that just two years ago the industry was in a complete free fall when demand crashed because of the pandemic. Banks sought government bailouts for oil investments that went under, and oil prices actually hit negative levels as producers grew desperate for oil to be taken off their hands.”

““If the president wants us to grow, I just don’t think the industry can grow anyway.’’ The largest US fracking companies reiterated in earnings calls in February that they intend to keep output roughly flat, according to reporting from the Wall Street Journal.

In other words, now that companies are making handsome profits, they’re using that extra cash to reward investors and pay down debts, not invest in new production.”

“LNG exports don’t solve Europe’s or America’s energy challenges. In some ways, they exacerbate them.

To export gas to Europe, a facility first needs to convert it to liquified natural gas, which cools and pressurizes the methane so it can be shipped across continents. On the other end of the ocean, another facility must turn it back into gas for shipment via pipeline.

That’s a lot of infrastructure, which is impossible to scale up in enough time to make an impact on current prices. There’s one new LNG terminal that opened this year in Louisiana. On the European side, the LNG terminals are already at capacity. This isn’t going to help make up Russia’s supply of 40 percent of Europe’s gas either.

So it’s not particularly helpful or possible to boost exports to Europe, but it also wouldn’t help prices in the US.

Williams-Derry says that US exports of liquified natural gas have been the primary reason for climbing prices. In 2016, the US completed its first LNG export terminal in decades, which the gas industry hoped would alleviate a glut of natural gas that was keeping US gas prices too low for the industry’s liking.

“The reason we’re experiencing higher natural gas prices right now is we’re exporting more,” Williams-Derry said last week. “It’s not that we’re consuming more. It’s not that we’re producing less. It’s that we’re exporting.””

“LNG will always be the more expensive option because of its processing and transport. “By locking yourself into a gas-powered future, you’re locking in higher costs for the long haul,” Williams-Derry said. “There’s not a good alternative to Russian gas if you want to have inexpensive gas in Europe.”

“If you’re going to double down on gas, essentially, you’re doubling down on Russia,” Williams-Derry added.”

“The biggest risk is if the US and Europe respond to this crisis by over-investing in the future of fossil fuels. Actions like building LNG terminals and approving new leasing don’t help in the short term when people are struggling to pay high bills. It doesn’t achieve energy independence. But it would lock the world onto a dangerous path for climate change.”

How high can gas prices go?

“The US is not a major consumer of Russian crude oil, which makes up less than 4 percent of US consumption, so banning imports shouldn’t have a huge effect; the US doesn’t import any Russian gas. The US can make up the oil gap with imports from other countries, and the Biden administration already is pursuing that path by opening talks with Venezuela. Nor is Russia all that reliant on the US, because US purchases account for about 9 percent of its exports.

The bigger impact on the price of oil comes from what Biden’s announcement portends. Global oil prices have been fluctuating wildly in recent days, reflecting that there is a wide range of uncertainty over what could happen next. One of the uncertainties is whether more countries will follow the US’s move to ban imports, taking Russian oil off the table for a number of foreign markets. Cutting out Russia makes oil more expensive, because it upends the existing network of pipelines and makes countries’ paths to getting oil longer and more expensive.”

Ukraine crisis prompts Germany to rethink Russian gas addiction

“Behind the rude awakening on energy security lies an even more unsettling realization for many German elites: That a decades-long goal of bringing Berlin and Moscow closer together through mutually beneficial trade seems to have failed.”

“The idea that growing trade links with other nations would help to gradually embed Western democratic standards in those countries has already taken a hit when it comes to China, which has only become more and more repressive despite growing economic links. Still, leading German politicians have long held out hope that “Wandel durch Handel” might still work with Russia, and defended Nord Stream 2 as a tool to also influence Russia for the better.
“Obviously, this policy has totally failed when it comes to Russia,” said Marcel Dirsus, a non-resident fellow at the Institute for Security Policy at Kiel University. He argued that instead of influencing Moscow by making Russia more dependent on Germany, the policy had the opposite effect.

“Right now, when push comes to shove, Berlin is dependent on Moscow when it comes to energy, and that influences the way it positions itself,” he said, referring to Berlin’s initial reluctance to include Nord Stream 2 in potential sanctions against Russia in the case of further aggression against Ukraine.

It took weeks of internal bickering and harsh international criticism before Scholz’s Social Democrats agreed to put the pipeline on the sanctions table.

“Now, they are coming to this realization [that they are too reliant on Russia] and now they are also admitting it in public, but now it’s too late,” Dirsus said.”

Biden promised a harder line on Saudi Arabia. Why can’t he deliver?

“Since the FDR presidency, Saudi Arabia has been an important United States partner. It is a major energy producer and home to the two most significant sites in Islam, and for decades, America had provided security guarantees to the kingdom. In return, the US has depended on Saudi Arabia as a counterweight to Iran in the Middle East, an intelligence partner against terrorist groups, and a dominant investor with an enormous sovereign wealth fund. But MBS’s ruthless intransigence had put the relationship to the test.

Biden’s government-in-waiting recognized that MBS demanded a different approach. Daniel Benaim, who advised the campaign and is now a senior Middle East diplomat, searched for a way to elevate human rights. In summer 2020, he proposed a “progressive course correction” that spelled out consequences for future malign behavior.

Benaim suggested a six-month review of policy, but it’s not clear whether Biden’s State Department has conducted such a reassessment. (The State Department declined to comment on the record, as did the White House.)”

“Overall, the Biden administration has responded to MBS with an approach that keeps human rights concerns behind closed doors because, advisers say, the relationship with Saudi Arabia is so integral to US policy. By balancing the concerns of human rights activists and the Washington national-security establishment, Biden’s team has found that it is disappointing both, as well as supporters of the crown prince.

A month into office, Biden broke with Trump by releasing the intelligence agencies’ report on Khashoggi. It showed unequivocally that MBS was responsible for the killing of the Virginia resident in the Saudi consulate in Istanbul. Blinken announced the new “Khashoggi Ban” that would prohibit government agents who target dissenters from entering the US.

It was a good step, but Biden didn’t follow through. The formal ban was implemented against 76 Saudis but not the prince himself. Critics say true accountability would have meant putting MBS on the banned list. MBS hasn’t visited the US since Trump, but that relates to an implicit policy of distancing him, not a formal declaration that he’s banned. (MBS’s brother, who was reportedly involved in the Khashoggi operation, quietly visited the White House in July.)”

“On the campaign, Biden said he would stop supporting the war in Yemen. More than 375,000 Yemenis had died by the end of last year, and the devastating death toll led Obama alumni to take responsibility for supporting the 2014 Saudi invasion. The State Department says it is working with Saudi Arabia to end the war in Yemen.

Last February, Biden ended “offensive” support for the war. Yet last month the Senate, with White House encouragement, approved a $650 million arms sale to the kingdom for “defensive” weapons to Saudi Arabia, a distinction that many experts reject.”

“Biden has made one big move: He won’t talk to MBS directly. The president, thus far, has only held phone calls with his father, King Salman bin Abdulaziz Al Saud. This has reportedly angered MBS. But it’s an insufficient form of retribution. “The big punishment for murder and dismemberment of a journalist is you don’t get to meet the president yourself? You can meet with anyone else and get all the weapons you need,” said Andrea Prasow of the Freedom Initiative. “The consideration of human rights is not integrated into US policy. It’s an add-on.”

Why is there so much hedging in US policy toward Saudi Arabia, even when the Biden administration has set out to shake things up?”

“The Biden team now seems resigned to a close relationship with Saudi Arabia in order to achieve its own policy objectives, like cheap gas prices and an accord with Iran.”

Dems shift gears on Russian pipeline, backing Biden against Cruz’s gambit

“Top Senate Democrats have long opposed a Russian natural gas pipeline that’s set to enrich Vladimir Putin. But those lawmakers are putting those concerns aside to back up President Joe Biden as he navigates increasingly precarious talks with Moscow.

Democrats have consistently supported sanctions on the Nord Stream 2 pipeline, arguing that the project will jeopardize Europe’s energy security and allow Putin to blackmail his enemies. But as the Senate prepares to vote next week on legislation from Sen. Ted Cruz (R-Texas) that would force Biden to impose those sanctions, Democrats on Wednesday signaled a significant shift in their posture.

The reason, Democrats say, is that they don’t want to undermine Biden while he engages with Russia over its military buildup on the border with Ukraine. As Putin flirts with an invasion of the U.S. ally, Democrats argued Cruz’s legislation would undercut Biden as he seeks to project unity with European allies — and would remove a key leverage point in the talks.”

Analysis: U.S. wants more oil, but OPEC+ can’t turn on the tap much harder

“U.S. pressure on OPEC+ to pump more oil and cool red-hot crude prices has shone a spotlight on a relatively new problem for the producer group: it doesn’t have much extra capacity to hike output faster, even if it wanted to.”

“OPEC+, which includes Russia, has resisted pressure for swifter hikes, sticking to its plan of gradually raising output by 400,000 barrels per day (bpd) each month since August, saying it worries a faster increase will lead to a glut in 2022.

Yet OPEC+ can’t even hit those goals. Production by OPEC+ was 700,000 bpd less than planned in both September and October, according to the International Energy Agency (IEA), raising the prospect of a tight market and high oil prices for longer.”

“plunging investment in production caused by the pandemic and environmental pressure on oil majors, particularly in poorer OPEC states, means just three OPEC members – Saudi Arabia, the United Arab Emirates and Iraq – have the extra capacity in place to hike supplies relatively quickly.”

“Saudi Arabia is now producing close to 10 million bpd but has never produced more than 11 million bpd for a sustained period of many months, even though it says it has more capacity available.”

The Saudi Arabia-Russia oil war, explained

“three years ago Russia made a deal to coordinate its production levels with the group, in a pact known as OPEC+.”

“Saudi Arabia, the cartel’s leader, suggested the participants collectively cut their oil production by about 1 million barrels per day, with Russia making the most dramatic cut of around 500,000 barrels a day. Doing so would keep oil prices higher, which would bring in more revenue for nations in the bloc whose economies are heavily dependent on crude exports.”

“Riyadh considered the move necessary as Asia, which is roiling from thousands of cases of coronavirus mainly in China and South Korea, no longer consumes as much energy as it did only a few months ago. China’s refineries, for example, cut their imports of foreign oil by about 20 percent last month. Lower demand leads to a drop in the commodity’s price, which thus hurts countries’ bottom lines.

The Russians, wary of such a move for weeks, opted against the plan. It’s still unclear exactly why that’s the case. Some say Russia wants prices to stay low to hurt the American shale oil industry or is gearing up to seize a bigger sliver of Asian and global oil demand for itself.

“The Russians are more worried about market share and think they’d do better competing with the Saudis rather than cooperating at this point,” says Emma Ashford, an expert on petrostates at the CATO Institute in Washington.

Saudi Arabia didn’t take too kindly to the Kremlin’s decision and responded by slashing its export prices over the weekend to start a price war with Russia. That brought the price per barrel down by about $11 to $35 a barrel — the biggest one-day drop since 1991.”