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THE IMPORTANCE OF OIL AND GAS: Revenues gleaned from oil and gas are enriching energy companies, but they’re also enriching energy-producing states and, in some cases, prop up state budgets, showing what’s at stake with federal policies designed to slow or decrease new production.
The financial benefits are especially evident in New Mexico, as Bloomberg notes this morning, which is among the poorest performing states economically but where billions of dollars raised from energy production help make up for it.
Democrat-led New Mexico just this year has rolled out both a publicly-funded free college program and a free childcare program, as revenues from oil and gas royalties, rents, and taxes are expected to raise the state’s balance sheet by several hundred million dollars over the next year.
Some numbers: New Mexico was the no. 2 oil-producing state last year, behind neighboring Texas, with which it shares the unrivaled and rich Permian Basin (the Permian accounts for nearly half of all daily crude oil production.)
The state accounted for 11.3% of total crude oil production last year, according to EIA data, and it was the no. 8 natural gas producer in 2020.
New Mexico also has abundant federal lands where operators drill oil and gas, and it’s especially reliant on the industry as a funding source.
Federal disbursements to the state from oil and natural gas leases made up 10.95% of the state’s budget for the year period July 2019 to June 2020.
By comparison, for Wyoming, that number was 7.78%. For all other states with operative leases in their jurisdictions, it was less than 1%.
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SENATE COMMERCE DEADLOCKS ON PRICE GOUGING BILL: Members of the Senate Commerce Committee deadlocked on passing their own version of anti-price gouging legislation similar to an effort that cleared the House last week. Members of the panel voted 14-14 on the legislation, dubbed the ‘Transportation Fuel Market Transparency Act,” which like the House effort would seek to create greater pricing transparency and grant the FTC additional authority to crack down on allegations of price gouging by energy companies.
The effort is all but certain to stall in the evenly divided Senate, since it would need the votes of at least 10 Republicans to clear the chamber. Still, Senate Majority Leader Chuck Schumer has vowed to force a vote on the bill as a means of putting Republicans on record and tie them to the high prices.
EPA MOVES TO PERMANENTLY BLOCK MINING PROJECTS IN BRISTOL BAY: The Biden administration issued a proposed determination that would permanently block mining projects in Alaska’s Bristol Bay—making good on one of President Joe Biden’s campaign pledges and delivering an almost assuredly fatal blow to development of the gold and copper Pebble Mine project.
In a statement, EPA said it used its powers under Clean Water Act Section 404 (c) that allows it to protect wetland areas from mining waste or other dredged materials.
In issuing its proposed determination, EPA said it evaluated nearly two decades’ worth of scientific and technical information, and concluded that the project could result in “unacceptable adverse effects on salmon fishery areas” in certain waters within Bristol Bay.
“The Bristol Bay watershed is a shining example of how our nation’s waters are essential to healthy communities, vibrant ecosystems, and a thriving economy,” EPA Administrator Michael Regan said.
The news comes as the Biden administration has long sought to block development of the mine, including through court order last fall.
The Pebble Mine project also sparked opposition from some high-profile Republicans and right-leaning activists during the Trump administration—including from Donald Trump Jr. and Fox News host Tucker Carlson, who in August 2020 were part of a small group urging the former president to block further action on Pebble Mine.
ATLANTIC TO SEE ANOTHER RECORD-SHATTERING HURRICANE SEASON, NOAA FORECASTS: The National Oceanic and Atmospheric Administration issued its annual hurricane season outlook this week, which predicted another highly active season ahead. In total, forecasters said they expect to see between 14 and 21 named storms formed this summer. As many as 10 of those will become hurricanes, forecasters said, while three to six are at risk of becoming “major hurricanes” with winds surpassing 110 mph.
The report also marks NOAA’s seventh straight year forecasting a busier-than-usual hurricane season, more than doubling the second-longest stretch of just three years.
DOE ANNOUNCES NEW NOTICE OF SALE FROM ITS EMERGENCY RESERVES: The Department of Energy issued another notice of sale this week of up to 40.1 million barrels of crude oil from its Strategic Petroleum Reserves. The announcement is in keeping with Biden’s announcement earlier this year to release one million barrels of crude per day for up to six months, as part of his administration’s effort to lower gas prices amid soaring demand and Russia’s war in Ukraine. In its notice yesterday, DOE said this sale will include 1.1 million barrels of sweet crude from June 21 through June 30, and 39 million barrels of sour crude from July 1 to Aug. 15.
NATURAL GAS FUTURES BREAK $9: Natural gas prices breached $9 per MMBtu this morning, continuing bullish momentum not seen in the market since 2008.
Government and private sector analysts have said demand associated with filling historically lower storage levels, driven by higher-than-normal withdrawals due to extended cold temperatures, is a factor driving up prices, as well as higher demand for feedgas to support LNG exports.
Richard Meyer, vice president of energy analysis for the American Gas Association, noted in a recent briefing another factor at play: rising coal prices.
“There is a good connection between the two commodities in the electricity market,” Meyer said. “The higher coal prices are not necessarily predictive of higher natural gas prices, but it may be indicative of the levels of natural gas pricing that may be required to make an economical decision to switch from gas to coal for electricity generation.”
EPA AIR NOMINEE GETS WIDE SUPPORT: Joseph Goffman, Biden’s nominee for assistant administrator of EPA’s Office of Air and Radiation, had a wide backing from various interest groups going into his nomination hearing before Environment and Public Works this morning.
Goffman, who is currently principal deputy assistant administrator for the office and formerly worked as Democratic chief counsel on EPW, scored an endorsement from the Truck and Engine Manufacturers Association yesterday.
EMA, which has been pressing EPA to avoid finalizing the more rigorous “Option 1” of its proposed rule regulating nitrogen oxide emissions form medium and heavy-duty commercial vehicles, said it is committed to a zero-emission vehicle future and that Goffman’s leadership could help with “setting the framework to transition the commercial trucking industry to ZEVs.”
Environmental group Evergreen Action called him the “right person to lead OAR,” while the United Mine Workers of America and Renewable Fuels Association have backed him, too.
BANK OF AMERICA SUBSIDIZING EMPLOYEE ELECTRIC VEHICLES: Bank of America will help employees shoulder the costs of buying or leasing an electric vehicle as part of a new compensation package, Bloomberg reported.
Employees who buy an EV will get a $4,000 reimbursement from the company, or $2,000 for leases.
The Rundown
Wall Street Journal TotalEnergies to buy stake in US wind and solar company in green-energy push
Bloomberg Europe’s Russian-oil snub appears to be gathering momentum
New York Times A heat wave’s lamented victim: The mango, India’s king of fruits
Reuters Stellantis, Samsung SDI to build new JV battery plant in Indiana
Calendar
CALENDAR
THURSDAY | MAY 26
10:00 a.m. 216 Hart The Senate Agriculture, Nutrition and Forestry Committee will hold a hearing on the challenges and opportunities facing U.S. farmers, families and rural communities.
4:00 p.m. The Baker Institute Center for Energy Studies will host a webinar to answer the question, “What’s up with prices at the pump?”
Source: washingtonexaminer.com
