Overnight Energy & Environment — US to release 30M barrels from oil reserve

by Rachel Frazin and Zack Budryk - 03/01/22 7:04 PM ET

Welcome to Tuesday’s Overnight Energy & Environment, your source for the latest news focused on energy, the environment and beyond. Subscribe here: digital-staging.thehill.com/newsletter-signup.

Today we’re looking at the administration’s decision to tap into oil reserves amid high prices and Russia’s attack on Ukraine, bipartisan calls for the end of Russian oil imports and tonight’s State of the Union address.

For The Hill, we’re Rachel Frazin and Zack Budryk. Write to us with tips: rfrazin@digital-staging.thehill.com and zbudryk@digital-staging.thehill.com. Follow us on Twitter: @RachelFrazin and @BudrykZack.

Let’s jump in.

US joins allies in oil reserve release

The U.S. and its allies will release 60 million barrels of oil from their strategic reserves as the Russian invasion of Ukraine sends shockwaves through the energy market.

That will include 30 million barrels from the U.S. Strategic Petroleum Reserve, according to White House press secretary Jen Psaki and the Department of Energy. The rest will come from the remaining 30 countries of the International Energy Agency (IEA).

“Today’s announcement is another example of partners around the world condemning Russia’s unprovoked and unjustified invasion of Ukraine and working together to address the impact of President Putin’s war of choice,” Psaki said. “President Biden was clear from the beginning that all tools are on the table to protect American businesses and consumers, including from rising prices at the pump.”

And what about everyone else? In a separate announcement, the IEA backed international sanctions against Russia and said it made the decision to release oil from its reserves amid volatile oil prices and an eight-year low for commercial inventories, as well as constraints on producers that prevent making up the supply shortfall in the near term.

IEA Executive Director Fatih Birol presented the release as an extension of international cooperation in opposition to the invasion.

“I am pleased that the IEA has also come together today to take action. The situation in energy markets is very serious and demands our full attention,” Birol said. “Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery.”

Some stats: Russia is the world’s largest oil exporter, exporting some 5 million barrels of crude per day. About 60 percent of exports are to Europe, with another 20 percent to China. The IEA’s secretariat is set to release guidance on Thursday for European nations on how to reduce dependence on Russian energy over the course of the year, according to the organization.

Read more about the decision here.

Calls grow for end to Russian oil imports

A bipartisan push for the U.S. to stop importing oil from Russia is gaining steam with the introduction of two bills amid Moscow’s bloody invasion of Ukraine.

On Tuesday, a group of nine Republicans put forward legislation seeking to ban imports of Russian oil, as did Green New Deal champion Sen. Ed Markey (D-Mass.).

While both were in agreement that the U.S. should stop bringing in Russian oil, Republicans are pushing for increased U.S. drilling while Markey is advocating a switch to clean energy.

Both the Markey bill and the separate Republican version, led by Sen. Roger Marshall (R-Kan.), would make it illegal to import oil from Russia.

“First and foremost, President Biden needs to restart America’s energy production and quit financing Vladimir Putin’s war on Ukraine by continuing to purchase crude oil from Russia,” Marshall said in a statement.

Markey’s legislation would also require a report identifying entities involved in importing Russian oil into the U.S., their links to Russian President Vladimir Putin and the formation of a strategy to prioritize clean energy instead of Russian oil. And it would require the Biden administration to issue sanctions based on the findings.

“Our global addiction to oil keeps us locked into dangerous cycles of conflict and corruption, but we can choose a cleaner path to peace. By eliminating our addiction to Russian oil, we can build a pathway to a more prosperous and peaceful future, free from reliance on dirty oil and natural gas,” the Democrat said in a statement.

But wait, there’s more! Swing vote Sen. Joe Manchin (D-W.Va.) on Monday night similarly called for the end of imports of Russian oil.

“If there was ever a time to be energy independent, it is now. I am calling on the Administration and industry partners to take action immediately, up to and including banning crude oil imports from Russia,” Manchin said in a statement.

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SOTU PREVIEW

Tonight, President Biden is set to deliver his first State of the Union Address. While he’s expected to touch on a number of topics, he’s particularly expected to push for his stalled climate agenda.

The White House indicated that the President is expected to highlight clean energy investments made under his tenure and also advocate for the parts of his climate agenda that froze when Sen. Joe Manchin (D-W.Va.) announced opposition to his climate and social spending bill.

In particular, the president is slated to call for investments in and tax credits for clean energy manufacturing and deployment — a piece of the package that Manchin has shown support for.

NOT VERY APPEALING

The Biden administration on Monday declined to appeal a January court decision that invalidated oil and gas leases it sold last year.

In a new court filing, the administration said it would not appeal the ruling. The decision was not a surprise, since the administration has argued that it was compelled to sell the leases in the first place by a different court order.

Other parties, namely the state of Louisiana and oil and gas lobbying group the American Petroleum Institute, have indicated that they would appeal. But they won’t have the federal government behind them.

In its new filing, the Biden administration also argued that if the decision to vacate the leases sold in Lease Sale 257 is reversed, it had discretion on whether to dole out the leases that would enable companies to drill in the Gulf of Mexico.

“Interior agrees with the other parties that, in the event this Court reverses the district court’s vacatur, the expiration of the five year program on June 30, 2022, does not prevent Interior from awarding leases pursuant to Lease Sale 257 after that date—although, as discussed herein … Interior has the authority to decline to award the leases at that juncture,” it said in the filing.