Energy & Environment – Oil profits drive windfall taxes – Advice Eating

Gregory Nash

The oil industry posted big gains on Friday, fueling calls for consumer relief from activists and progressives. Also, some House Democrats want Speaker Nancy Pelosi (D-Calif.) on board with a gas tax holiday, and the EPA is poised to keep the seven-year-old smog rules.

This is Overnight Energy & Environment, your source for the latest news on energy, the environment and more. For The Hill we are Rachel Frazin and Zack Budryk. Someone forwarded this newsletter to you? Subscribe here.

Let’s jump in.

Progressives use quarterly oil earnings

Energy giants Chevron Corp. and Exxon Mobil Corp. reported huge gains on Friday, supported by sky-high gas prices, and told investors they plan to leave oil production largely unchanged.

Chevron earned $6.3 billion in the first quarter, quadrupling its profit from the same period last year, while Exxon raked in $5.5 billion, more than double the first quarter last year.

According to the AAA, oil and gas companies are among the biggest beneficiaries of soaring gas prices, which have risen 44 percent in the US over the past 12 months. Crude oil remains above $100 a barrel amid supply constraints from the pandemic and the Russian invasion of Ukraine.

Progressives Pounce: Oil company critics called the reports evidence the fossil fuel industry was being eroded at a time when gas prices have been skyrocketing. Environmental groups have called for taxes on windfall oil company profits to be passed on to consumers.

Facing medium-term headwinds, in part due to pump pains, Congress Democrats have attributed the hikes to a combination of corporate greed and the Ukraine crisis. Republicans have pointed the finger at the policies of the Biden administration.

Representative Ro Khanna (D-Calif.) Citing earnings reports in support of the bicameral windfall tax legislation he introduced with Sen. Sheldon Whitehouse (DR.I.), tweeted, “Big Oil’s earnings have skyrocketed in the last quarter , while hard-working Americans have suffered at the pump. Let’s go over my law with @SenWhitehouse to stop this profiteering.”

But industry is not on board with the rising production: Despite calls from the Biden administration to increase oil production to drive down consumer prices, Chevron and Exxon executives said Friday they would keep production relatively flat.

Exxon instead announced plans to triple its share buybacks to $30 billion by 2023, while Chevron said it would buy back a record $10 billion of stock by the end of the year.

“I want to acknowledge the very real impact that high prices are having on families around the world,” Exxon CEO Darren Woods said on a conference call. “You may recall that we anticipated this for 2020 with industry investment levels well below what is needed to offset the depletion.”

Major shareholders have urged the oil and gas giants not to invest too much in new production, arguing that those investments could turn bad if oil prices inevitably fall.

Read more from The Hill’s Zack Budryk and Karl Evers-Hillstrom here.

VULNERABLE DEMS PRESS PELOSI IN DECISION ON GAS TAX HOLIDAY

Embattled Democrats are pushing Speaker Nancy Pelosi’s (D-Calif.) decision to reject a gas tax holiday, urging party leaders to reconsider a proposal as lawmakers bang over sky-high gas prices.

The grumbling is particularly loud among lawmakers, who face tough re-election battles in November and are keen to bring home policies they say would offer tangible and immediate savings to drivers at the pump.

As the summer driving season quickly approaches, they don’t hide their dismay with their own leadership’s argument that the tax exemption would prove ineffective.

What you say: “I think they focus on things that would be helpful, but they’re longer-term. And I focus on the shorter term. And I think if they came to my district, they would see that we have a near-term need that needs to be addressed,” said Rep. Elissa Slotkin (D-Mich.).

Slotkin acknowledged that Congress has no silver bullet to deal with high prices. But suspending the state gas tax, which is currently 18.4 cents a gallon, would be an efficient and effective way to bring costs down quickly, she said.

“It’s not perfect what I’m proposing, but it’s something,” Slotkin said. “And if you’re from a state where people drive 40 miles one-way to work, you’re interested in anything that helps.”

Rep. Chris Pappas (DN.H.), another supporter of the gas tax exemption, echoed these concerns, calling the proposal “the most immediate way we can achieve much-needed relief”.

In states like his, where the economy relies heavily on tourism, the tax suspension would have an added benefit as it would “encourage people to travel this summer.”

Read more from The Hill’s Mike Lillis.

The EPA is attempting to maintain Obama-era smog standards

The Environmental Protection Agency (EPA) signaled late Thursday that it would keep an Obama-era rule on ground-level ozone pollution despite calls from environmentalists to tighten it.

The draft assessment released by the agency on Thursday is just the first step in officially maintaining the standards; The EPA’s Clean Air Scientific Advisory Committee will meet in June to make a decision, and EPA Administrator Michael Regan will have to sign out afterwards.

However, environmentalists and anti-air pollution groups have expressed dismay at the move, which confirms one of Trump EPA’s final decisions in December 2020.

The 2015 standards set a maximum of 70 parts per billion (ppb) for ozone, the main component of smog. Proponents have urged both Regan and his predecessor, Andrew Wheeler, to tighten the standard to 60 ppb.

They were hopeful after the announcement last October that the EPA would review the rule in response to legal challenges.

β€œTo propose that the EPA maintain the completely outdated smog pollution standards that have left most Americans facing unhealthy air quality in the summer while families and communities hope to spend more time outdoors is not only wrong, it is dangerous too,” Holly Bender, Sierra Club senior director of energy campaigns, said in a statement.

Read more about the move here.

ON TAP NEXT WEEK

Wednesday:

  • Subcommittees of the Senate Budget Committee on Interior, Environment and Related Agencies and Energy and Water Development will hold hearings to consider proposed fiscal 2023 budget estimates and rationales for the Forest Service and Department of Energy.

Thursday:

  • The Senate Energy Committee will hold a hearing to consider proposed fiscal 2023 budget estimates and rationale for the Department of Energy. Secretary of Energy Jennifer Granholm is to testify.

WHAT WE READ

  • Despite sanctions, Russia has sold over $66 billion worth of fossil fuels since invasion (Newsweek)
  • California promised to shut down its last nuclear power plant. Now Newsom is reconsidering (The Los Angeles Times)
  • Europe wants American natural gas. That could push US prices higher. (The Washington Post)
  • Gov. Kim Reynolds, 7 other Midwest governors ask EPA for permanent, year-round sale of E15 gas (Des Moines Register)
  • Is Gina McCarthy really a climate ruler? (E&E News)

And finally, something fancy and offbeat: Jumped up and ready to go.

That’s it for today, thanks for reading. Visit The Hill’s energy and environment page for the latest news and reports. See you monday.

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