Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley
As the world enters the third week of Russia’s continued attempt to invade Ukraine, energy markets and related policy discussion continue to be dominated by the implications of this unprecedented turn of events. The price of oil has been on a true roller coaster ride, crossing the $120 threshold before retreating a bit this week due to fears of demand disruptions due to renewed COVID fears in China and Europe. Global leaders continue to scramble to find stable sources of energy outside of Russia, as it becomes increasingly clear that a short-term solution to the crisis and a return to the status quo may not be possible any time soon.
The Russians appear to be escalating the violence as they attempt to encircle the capital city of Kyiv. However, Russian movement appears stalled and the prospect of a Ukrainian victory (full or partial), which seemed a longshot three weeks ago, now appears more likely than not. President Volodymyr Zelensky addressed the U.S. Congress on Wednesday morning and again urged lawmakers to take additional steps to help Ukraine continue the battle.
President Biden asked the U.S. Congress to again consider a no-fly zone over Ukraine, additional sanctions on all members of the Russian government who do not speak out against the war, increased pressure on U.S. companies to leave the Russian market, and closure of U.S. ports to any Russian goods. Of these requests, the enforcement of a no-fly zone appears to be the most unlikely, but reactions to the speech are still ongoing on the Hill and from the Administration.
The Russian economy continues to falter, with some commentators speculating they could only be a week or two away from a 1998-level economic collapse. Of particular interest to U.S. companies still operating in Russia, the Russian government over the weekend began to seize U.S. assets in the country, starting with U.S.-owned aircraft. So far, over $10 billion dollars worth of foreign-owned aircraft have been seized by the Russian government in order to ensure that Russia is able to maintain its domestic aviation system. President Vladimir Putin has also stated publicly that U.S. companies attempting to leave the market could face additional seizures.
Back home, the energy policy discussion has turned towards two main questions — how can the U.S. shore up its own domestic energy supply and how fast can this be achieved? With Russian oil and gas suddenly the hot potato that neither the U.S. or our allies want to rely on, debate has revolved around just how much oil and gas the U.S. can produce and can we help supply our allies as they move to shore up their supply?
Speaking to BBC News, Toby Rice, who runs the largest U.S. natural gas producer EQT, said in his opinion, the U.S. could easily replace Russian supply. “We’ve got the ability to do more, the desire to do more,” Rice said. He estimated the U.S. has the potential to quadruple its gas output by 2030. This kind of drastic uptick will certainly be necessary if the U.S. would even come close to being able to replace Russian gas from the market.
Back home, policymakers continue to scramble to come up with options to secure domestic energy. Policymakers on both sides of the political spectrum are calling on President Biden to take emergency steps to secure energy. Reports indicate that House progressives are planning to call on President Biden this week to use his executive power to declare climate change a national emergency and to ban fossil fuel drilling on public lands.
A draft of the climate portion of the plan shared by a House Democratic office included a request for a national emergency declaration, along with requests for President Biden to declare a ban on oil and gas drilling on federal lands, end domestic and international government support for fossil fuel projects, and to issue executive orders related to environmental justice and clean air and water. It is reported that the group is also calling for a national emergency declaration to trigger the Defense Production Act as a mechanism to build more renewable energy technologies. A similar plan was floated last week by Sen. Joe Manchin to use the Defense Production Act to help expedite pipeline construction to increase the volume of gas able to be transported to the east coast. Evocation of the Defense Production Act still appears to be lacking enough support to become a reality at this point, however it is something to watch if the idea continues to attract support.
On the Domestic Front
The nomination of Sarah Bloom Raskin for the Federal Reserve’s vice chair for supervision has been withdrawn. Raskin’s nomination had been stuck in the Senate Banking Committee amid a GOP boycott of a committee vote on her nomination, effectively blocking her confirmation from advancing to the Senate floor.
The nomination was held back by public statements Raskin had made regarding her support for blocking financing for fossil fuel companies. The timing of the Russian invasion could not have come at a worse time for her nomination, and although it appeared the writing had been on the wall for weeks, a recent statement opposing her confirmation by Sen. Manchin was the final straw. The Council has strongly opposed this nomination and coordinated a multi trade association letter opposing the nomination.
The House Natural Resources Committee Republicans will hold a hearing on rising energy prices and the policy steps needed in order to bolster domestic energy sources on March 18. I will be representing the Council at the hearing, and Council Member Chris Wright, CEO, Liberty Oilfield Services, will also be testifying. The hearing can be watched here, and the testimony is here.
If you would like to get involved with the Council’s advocacy efforts or the Government Affairs Committee, contact SVP Government Affairs Tim Tarpley.
Tim Tarpley, SVP Government Affairs & Counsel, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.