Daily on Energy: Delta fears drive oil price drop a week after Biden’s OPEC plea

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OIL PRICES DROP: Oil prices have dropped to their lowest level since May, pressured by concerns about weak demand because of the economic fallout from the delta variant.

Both Brent, the international benchmark, and U.S. WTI have declined for six days in a row, and are trading at $65.87 and $62.95 respectively as of this writing.

That likely means gasoline prices in the U.S. have peaked this year, and could easily fall below $3 a gallon by the end of September or earlier, says Patrick De Haan, head of petroleum Analysis for GasBuddy.

This development reinforces the notion that the timing of President Joe Biden’s call to OPEC and its allies to boost oil production last week was a bit weird.

“It looks like the additional oil wouldn't have been necessary,” De Haan told me. “But we also now have the benefit of hindsight.”

Warning signs aren’t new: The International Energy Agency just last week projected oil demand to fall the rest of this year because of the Delta variant. With OPEC+ already scheduled to restore production this month, U.S. gasoline prices should come down over time, as pump prices typically lag changes in crude.

OPEC+ has resisted Biden’s request for the group to produce more oil beyond an agreement reached in July to increase output each month by 400,000 barrels a day, arguing the market doesn’t need more crude.

Now, it could even intervene to stop the slide in oil prices when it meets next on Sept. 1, analysts say.

Biden could still benefit: The president of course had legitimate political reasons to make his call to OPEC, even if staying quiet would have helped him avoid criticism from the left and right.

The White House has been aggressive in trying to limit the political liability of high gas prices as it seeks to address criticism that Biden's big spending proposals are leading the country into a prolonged inflationary period.

De Haan suggested Biden could benefit from oil and gas prices peaking, even if his call to OPEC went unheeded.

“I wonder if Biden tried to guess the peak of oil prices so now that they decline, he can somehow take credit for the decline,” he said.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe). Email jsiegel@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.

JUDGE REJECTS OIL PROJECT BACKED BY TRUMP AND BIDEN: A federal judge rejected permits approved by the Trump administration for a major Alaska oil project, finding the government did not fully account for climate change impacts and its potential harm to polar bears.

The decision by U.S. District Judge Sharon Gleason, an Obama administration appointee, puts Biden in an awkward position.

The Biden administration had defended ConocoPhillip’s Willow oil project in the National Petroleum Reserve-Alaska in federal court, in what some saw as a bow to the state’s influential GOP Sen. Lisa Murkowski.

That decision prompted an outcry from environmentalists, who said Biden was contradicting his vows to move off fossil fuels by supporting a multi-billion dollar project capable of producing 160,000 barrels per day of oil.

Murkowski had argued the project would help her oil-dependent state rebuild its economy from the pandemic.

High stakes: The National Petroleum Reserve is an often overlooked 23.5-million acre area of federal land in northwest Alaska — roughly the size of Indiana — where there has long been energy development, as opposed to the more controversial neighboring Arctic National Wildlife Refuge.

But ConocoPhillip’s final investment decision was contingent on navigating court challenges at a time when investors have moved away from supporting oil projects in the Arctic, which is warming at a much faster rate than the rest of the world.

A spokeswoman for ConocoPhillips said the company “will review the decision and evaluate the options available regarding this project.”

Environmental groups, though, are calling on Biden to use the court decision as justification to pull support for the project all together.

GINA MCCARTHY REBUKED FOR ‘ALL OF THE ABOVE’ MANTRA: Climate adviser Gina McCarthy further muddled the Biden administration’s position on natural gas, and infuriated environmentalists, with a comment this week touting its “all of the above” strategy.

That phrase, often used by the Obama administration to support fracking, was hoped by climate activists to go extinct under Biden.

“The president’s plan is an all-of-the-above’ strategy and we are looking at every opportunity, of course, to get renewable energy into the marketplace as fast as we can but we are not picking and choosing winners. We are investing in every winner we can find,” McCarthy said during a visit to San Diego Gas & Electric’s Emergency Operations Center to learn about how the company has tried to reduce wildfire risk.

McCarthy was asked if natural gas is part of the White House’s energy equation, according to coverage by the San Diego Union-Tribune.

McCarthy could have simply been speaking to the crowd. San Diego Gas & Electric is owned by Sempra Energy, one of the top U.S. exporters of natural gas. The Biden administration has nodded to the role of LNG in displacing coal in developing countries. But climate activists are having none of it.

“Truly gobsmacked that McCarthy has once again used _that_ phrase, particularly in relation to the Biden administration's position on fossil gas. Just completely unacceptable. I thought we killed ‘all of the above’ during 2nd term Obama...we don't have time for this nonsense,” tweeted David Turnbull, strategic communications director at Oil Change U.S.

PERMISSIVE FLARING IN TEXAS: Most flaring of natural gas in the West Texas Permian Basin is being done by companies lacking permits from the state to do so, according to a study published today by the environmental group Earthworks.

Producers in the Permian intentionally burn excess natural gas, an unwanted byproduct of oil extraction, when there is insufficient pipeline or other infrastructure to transport the gas for use. Flaring primarily emits carbon, but some of the natural gas can escape as methane, and the practice has become a significant contributor to greenhouse gas emissions.

How it works: The report compared permitting records from the Texas Railroad Commission with flares witnessed on flights equipped with gas imaging cameras that were conducted across three months last year by the Environmental Defense Fund. It found that of 227 flares observed, between 69% and 84% were likely unpermitted.

Oil giants Shell and ExxonMobil were among the violators, the report said. Shell did not have a permit for any of its observed flares. Exxon only had permits for two flares.

The companies dismissed the findings: Exxon’s spokesperson told Politico the report is “deliberately misleading” since some flaring is exempt or pre-authorized by state rules.

Texas has more liberal rules on flaring compared to other states and regularly grants exceptions to regulations that require gas produced from oil wells to be captured and used.

A Shell spokesperson denied the company was flaring without a permit.

EPA BANS PESTICIDE CHLORPYRIFOS IN FOOD USE: The EPA announced yesterday it is reversing a Trump administration decision by banning the use of the pesticide chlorpyrifos from use on food crops because it causes neurological damage in children.

EPA’s final rule, which goes in effect in six months, follows an order in April by the Ninth Circuit Court of Appeals that directed the agency to stop the agricultural use of the chemical unless it could prove its safety.

Chlorpyrifos is a widely used pesticide currently approved for use on more than 80 food crops. A number of other countries, including the European Union and Canada, and some states, including California, Hawaii, New York, Maryland, and Oregon, have taken similar action to restrict the use of Chlorpyrifos on food.

The Obama administration had proposed banning all uses of chlorpyrifos, but former EPA Administrator Scott Pruitt withdrew the rule, questioning the significance of data linking the pesticide to neurological damage in children. It is already banned for household use, but will remain permitted for nonfood uses such as on golf courses, turf, utility poles, and ant treatments.

PARKS SERVICE GETS NOMINEE: Biden has nominated Charles Sams, a longtime natural resource manager who is of Native American heritage, to lead the Interior Department’s National Park Service, the White House announced yesterday.

Sams is currently a council member to the Northwest Power and Conservation Council, as an appointee of Oregon Gov. Kate Brown, who recommended Sams to Biden (hat tip to Axios’ Andrew Freedman).

The National Park Service has lacked permanent leadership in recent years. It had four acting administrators during the Trump administration.

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THURSDAY | AUG. 19

The House and Senate are out on recess.

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Tags: Energy and Environment, Daily on Energy

Original Author: Josh Siegel

Original Location: Daily on Energy: Delta fears drive oil price drop a week after Biden’s OPEC plea