Daily on Energy, presented by Bipartisan Policy Center Action: Wirth emerges as a foil for Biden

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WIRTH V. BIDEN: President and CEO of Chevron Mike Wirth is emerging as a foil for the president Joe Biden ahead of the meeting of oil executives at the White House tomorrow, where they will discuss with the administration how to address the nation’s shortage of refining capacity.

Wirth, 61, who is an engineer by trade and has run Chevron since 2018, was one of seven recipients of letters Biden sent to executives last week criticizing their high refining margins. Chevron yesterday circulated a rebuttal from Wirth, who called for better cooperation and support from the administration to help boost oil production and drew attention to the company’s growth plans.

Chevron plans to increase production in the Permian Basin by more than 15% this year from last year and is spending $18 billion in capital expenditures in 2022, Wirth said.

“Despite these efforts, your administration has largely sought to criticize, and at times vilify, our industry,” Wirth also said, adding that the industry needs “clarity and consistency” on issues such as federal leasing of oil and gas and building new energy infrastructure.

Biden responds: Biden responded to Wirth’s letter calling him “mildly sensitive.”

“I had no idea they would be hurt so quickly,” he said of the oil executives.

The head-to-head reflects the mutual acrimony and continued back and forth between the parties, which has been characterized by accusations of price gouging and demands for increased production spending from the Biden administration, and calls for fewer regulations and more positive treatment. oil and gas from industry.

Biden has sometimes bragged that oil production is rising, while at other times he and Democrats have expressed frustration that production isn’t growing fast enough to rein in prices and accused companies of s rely on capital to maintain high profits.

A number have refused to increase spending on production, citing everything from market uncertainty and volatility to the time it would take for new investments to translate into increased production.

Biden has started calling oil majors by name to urge them to produce more oil, though the one he recently picked to “start investing,” ExxonMobil, is increasing Permian investment by 50% this year and expects production there to increase by 25%.

Learn more about Wirth: Wirth is also president of the American Petroleum Institute, which sent Biden a 10 point list of policy recommendations last week calling for lighter regulatory burdens and a new five-year offshore leasing scheme (the Home Office is targeting June 30 to propose a scheme).

He has personally donated to Republican election candidates, as well as some centrist Democrats, such as Sen. Kirsten Sinema from Arizona.

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BIDEN SUPPORTS FUEL TAX HOLIDAY: Biden has endorsed a temporary suspension of the federal gasoline and diesel excise tax as a way to lower fuel prices and will urge Congress to pass one during a speech this afternoon.

A White House aide describe the three-month tax holiday that Biden argues is particularly focused on price relief during the summer driving season. Taxes add 18 cents to each gallon of gasoline and 24 cents to diesel.

Biden also wants states to suspend their own fuel taxes in concert. A number of states have already done so, with the length of state-level suspensions ranging from 30 days to year-end, but officials in other states have objected to the tax suspension for its reduction in transport funding.

In supporting the tax exemption, Biden joins some of his fellow Senate Democrats, including Sens. Mark Kelly and Maggie Hassan, which in February proposed a bill to temporarily suspend the federal gasoline tax. Six other Democrats co-sponsored the bill.

Their proposal differs from Biden’s. It would continue until the end of the year and would not apply to diesel fuel.

Reaction: Support for the tax exemption among lawmakers is mixed, including among Democrats, who, like their state-level counterparts, objected to how it would affect transportation funding.

“Consumers won’t get any meaningful relief from this, it will only starve our highway trust fund,” the Democratic representative said. Jared Huffman from California said Politics of Biden’s proposal. Huffman said he prefers consumer discounts or vouchers for free public transit instead.

republican senator Kevin Cramer said drivers “want the return of Trump’s energy policies,” not a gas tax waiver.

Still other analysts have said tax holidays can actually drive up demand and worsen supply constraints because they don’t address underlying oil supply or refining capacity issues.

BIROL TO EUROPE: KEEP YOUR NUCLEAR POWER PLANTS OPEN: Director of the International Energy Agency Fatih Birol urged European countries considering or preparing to shut down nuclear power plants to hit the pause button due to Gazprom’s natural gas throttling.

Countries should postpone closures “as long as the security conditions are met”, Birol told the FinancialTimes in a interview filled with warnings to Europeans to prepare for a total stoppage of Russian gas imports.

Birol did not name any particular country, but his urge would apply more apparently to Germany, which is expected to pull out its three remaining factories by the end of the year.

The German government began to consider keeping the reactors online after the start of the war in Ukraine, but concluded that the gradual shutdown of the reactors was too advanced.

Vice Chancellor Robert Habeck also claimed in March that keeping them in operation “would help us in this foreign policy situation.”

The contingency plans announced so far instead involve burning more coal, along with guidelines and incentives for industry to save gas.

OIL DROPS NEARLY $100: Crude oil slipped again this morning to trade at some of its lowest prices in over a month.

West Texas Intermediate is trading around $102 a barrel, down nearly 16% from its recent high of $122 a barrel. Brent is trading at $108, down 12.5% ​​from the $123 a barrel level where it closed on June 8.

The fall appears to be driven largely by the threat of a recession. Many investors fear that the Federal Reserve’s efforts to reduce inflation by raising interest rates and slowing spending could tip the country into a recession. Citigroup economist Nathan leaves put all the chances of a 50% recession in a note to clients today, adding to a number high-profile warnings.

JERRY JONES RAISED BILLIONS ON THE GAS COMPANY: Dallas Cowboys owner jerry jones made billions by investing in natural gas producer Comstock Resources.

Thanks to skyrocketing natural gas prices, the value of his stake went from $1.1 billion in 2019 to $2.7 billion, according the the wall street journal.

Jones told the publication that he plans to stay in the natural gas business and expects greater returns in the future: “What we’ve done with natural gas at Comstock,” he said. he declared, “Value has left the Cowboys in the rearview mirror.”

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