Overnight Energy & Environment

Energy & Environment — Ukraine pauses electricity exports

by Rachel Frazin and Zack Budryk 10/10/22 06:58 PM ET

Ukraine cuts all electricity exports to preserve its grid. Meanwhile, two Congressional Democrats seek to cut off Saudi Arms sales, and California’s governor wants a windfall tax on gas companies.

This is Overnight Energy & Environment, your source for the latest news focused on energy, the environment and beyond. For The Hill, we’re Rachel Frazin and Zack Budryk. Someone forward you this newsletter? Subscribe here.

Ukraine halts electricity exports after grid strikes

Ukraine’s energy ministry said Russia’s strikes on Monday marked the largest attack on the country’s power grid since the start of the invasion, asking residents to conserve power use as officials halt electricity exports.

Russia earlier in the day launched dozens of missiles toward Kyiv and other cities, killing 11 in an escalatory barrage of attacks that Ukrainian officials said targeted the country’s energy infrastructure. The attacks left 15 regions with partially disrupted electricity supplies, officials said.

What does that mean? “The cynicism is that the entire supply chain has been hit — it’s both electricity distribution systems and generation,” Herman Galushchenko, Ukraine’s energy minister, said in a statement.

“The enemy’s goal is to make it difficult to reconnect electricity supplies from other sources,” he added.
Ukraine’s state emergency service urged residents to avoid using energy-consuming devices like electric heaters, electric stoves, microwaves, washing machines and coffee makers between 7 p.m. and 11 p.m. local time on Monday.

How is the rest of the continent affected? “Tonight, October 10, the Ukrainian energy system will undergo a stress test of strength,” the agency wrote on its Telegram channel. “And every Ukrainian is capable of helping to pass it. For this, it is necessary to minimize the consumption of electricity.”

Meanwhile, Galushchenko said Ukraine would stop exporting electricity to elsewhere in Europe beginning on Tuesday, noting that Ukraine had continued to meet its export commitments despite previous attacks on the Zaporizhzhia nuclear plant and other parts of the grid.
“It was the export of electricity from Ukraine that helped Europe reduce the consumption of Russian energy resources. And that is why Russia is destroying our energy system, killing the very possibility of exporting electricity from Ukraine,” said Galushchenko.

European countries, which for years have relied in part on Russian energy exports, have grappled with their energy sourcing ever since Russia invaded Ukraine in February.

Dems propose ban over OPEC cuts

A pair of Democratic lawmakers is proposing the U.S. halt arms sales to Saudi Arabia in response to oil production cuts from the Organization of the Petroleum Exporting Countries (OPEC).

Rep. Ro Khanna (D-Calif.) and Sen. Richard Blumenthal (D-Conn.) penned an op-ed in Politico Sunday calling on Congress to cut off arms sales to the leading OPEC country until it reverses its “embrace” of Russian President Vladimir Putin.

“Members of Congress are already talking about how best to respond. Some propose extending domestic antitrust laws to international commerce. Others propose reviving a GOP initiative to withdraw U.S. troops from Saudi Arabia. But that idea has failed previously given that the U.S. would rather have its own troops there than Russian or Chinese troops,” the lawmakers wrote.
“A simpler, far more urgent move to fortify U.S. national security would be to pause all U.S. military supplies, sales and other weapons aid to Saudi Arabia.”

How we got here: Democrats excoriated Saudi Arabia over the OPEC decision, coming less than three months after President Biden visited Saudi Arabia, where he asked the country’s leaders to increase oil production to help counter the impact of Russia’s war in Ukraine.

“We give Saudi Arabia 70% of their weapons,” Khanna said on Twitter Friday. “For them to drive up energy prices for the American people is outrageous. It’s simple. If the Saudi-led OPEC+ doesn’t reverse their decision, the US should stop sending them weapons.”

The OPEC+ coalition of 13 member nations and 11 non-members, including Russia, announced last week that it would bring down production by 2 million barrels, raising concerns about the move pushing up prices at the pump in the U.S.

Blumenthal told Politico earlier this week that there remains “an opportunity to persuade the Saudis that you’re making a gigantic mistake here,” adding that he hopes the Biden administration will “be aggressive” in using U.S. leverage.

President Biden said on Wednesday he was “disappointed” by the OPEC+ move, while the White House accused Riyadh of “aligning with Russia” with the move.
The Biden administration has said it is reviewing its options to respond, while renewing calls for oil companies to reduce prices.

Newsom to call special session over oil profits

California Gov. Gavin Newsom (D) announced Friday that he plans to call a special session of the state legislature in December to impose a tax on oil companies’ profits as gas prices remain at record levels in the state.

The governor’s press office said in a tweet that Newsom is calling for the session on Dec. 5 to “hold greedy oil companies accountable” with a windfall tax on their profits.

A windfall tax is a one-time additional tax placed on companies when economic conditions result in large profits, according to the Tax Foundation, a think tank.

After gas prices soared to record levels nationwide and the national average surpassed $5 per gallon, the average price dropped consistently for weeks, but prices remained high in California and some other western states.
The American Automobile Association (AAA) reports that the average cost of gas in California is about $6.36 per gallon.

Newsom at a press conference on Friday said that California’s major environmental regulations are not the cause of the high prices. He said all the environmental related costs do not equal the roughly $2.50 per gallon more that Californians are paying for gas than the average American.

AAA states that a gallon of gas costs an average of about $3.90 nationally.

Newsom said most states have gas taxes that average about 30 cents while California’s is 54 cents, which he said does not add up “anywhere close” to $2.50.