WHAT’S HAPPENING TODAY: Good afternoon and happy Wednesday, readers! Coming up this Friday is the grand opening of the National Geographic Museum of Exploration in Washington, D.C. The new museum will feature exhibitions celebrating National Geographic explorers, visual storytelling, and photographs showcasing the United States’ history and culture. 📸🐂🐒🏞️🌊 We can’t wait to check it out. Until then, today’s edition of Daily on Energy provides you with the latest on how much oil is getting through the Strait of Hormuz, as negotiations continue for a broader peace deal between the U.S. and Iran. 🇺🇲🇮🇷 If a deal falls through, however, Trump administration officials are confident they can take control of the strait and maintain oil flows. 🚢🛢️ Keep reading for more. Plus, President Donald Trump pointed blame at “big oil companies” for not lowering gasoline prices as oil markets have been on the decline. What do prices at the pump look like now and why are they falling slower than crude? ⛽📉 We have what you need to know below.
Welcome to Daily on Energy, written by Washington Examiner energy and environment writers Callie Patteson (@CalliePatteson) and Maydeen Merino (@MaydeenMerino). Email cpatteson@washingtonexaminer dot com or mmerino@washingtonexaminer dot com for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.WRIGHT SAYS U.S. CAN MAINTAIN OIL FLOWS THROUGH THE STRAIT OF HORMUZ EVEN WITHOUT A DEAL: Even if the Trump administration is unable to strike a final ceasefire deal with Iran, Energy Secretary Chris Wright is confident the U.S. can control the Strait of Hormuz and maintain normal energy flows. The details: Wright’s comments, which came during Reuters’ Global Energy Summit, add to recent assertions from Trump administration officials that Washington is able to control the strait by force to ensure global oil markets avoid another shock that would send prices back above $100 a barrel. “Iran will not have the ability to close the Strait of Hormuz going forward,” Wright said. “That’s a critical thing, that’s their key leverage, and we’re taking that leverage away from them.” In the last 24 hours, Wright said, roughly 72 ships carrying 20 million barrels of oil passed through the strait, up from 19 million barrels the day before. If sustained, this amount of oil transited through the waterway would be comparable with pre-war levels. However, the physical number of ships is still nowhere near pre-war traffic, where 120 to 140 vessels would cross each day. Wright admitted it will take some time to see an extended return of complete normalcy in the strait, saying it will come down to de-mining that may take a few weeks to complete. “But for energy flows and critical materials, they all have a pathway out right now,” the secretary said. “Critical for us is that even without an agreement with Iran, with the U.S. military, and some of the things we’ve developed, we can assure the flow of energy out of the Gulf, with or without an agreement with Iran.”Read more from Callie here. TRUMP BLASTS OIL COMPANIES FOR NOT LOWERING PRICES: Shortly after midnight today, President Donald Trump lambasted “big oil companies” for not lowering prices for consumers as oil futures have dropped. He accused oil companies of price gouging and called on the Department of Justice to investigate. “The big Oil Companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for Oil,” Trump said. “Those prices are dropping like a rock! In other words, customers are being ‘gouged.’ I have instructed the DOJ to immediately start looking into this. Gasoline prices better start going down a lot faster than what I’m seeing!”So where are prices now? As of Wednesday, the national average price of gasoline was at $3.928, according to AAA. This is down from averages seen above $4 last week, but does not directly track the significant decline in oil prices seen over the same period. Before 2:30 p.m. EDT today, domestic and international crude prices were in the low $70s, dropping by around 4%. Brent crude was trading at around $73.73 a barrel, while West Texas Intermediate was priced at $70.28 a barrel. Just over a week ago, prices were in the $80s. The Federal Reserve Bank of St. Louis has compared this relationship between oil and gasoline as “rockets and feathers.” “When oil prices have increased, gas prices have immediately risen to meet them. That’s the rocket effect,” the St. Louis Fed wrote in 2022. “When oil prices have decreased, though, the corresponding decrease in gas prices has often come after a short delay. That’s the feather effect.”The feather-like decline in gasoline prices is largely due to a lag seen from when refiners buy crude and when the refined product is sold. Meaning, oil purchased when prices are high is likely to be sold at a premium once put to market, even if overall prices have dropped. A PULSE CHECK ON DOMESTIC DRILLING: The Federal Reserve Bank of Dallas released its latest quarterly survey with oil and gas executives this morning, and price uncertainty continues to dominate their decisions. While oil and gas prices were predominantly elevated in the second quarter of this year, high prices did not result in significant increases in oil and gas drilling. Oil production grew “modestly,” the report found, with the crude production index increasing from zero to 15.0. Natural gas production saw minimal gains, with its index staying around 3.7.Several executives who submitted anonymous comments to the survey largely blamed uncertainty over how long the war in Iran will last, and how prices will react, for the lack of investment in new wells. “Golly. What could possibly be affecting our business other than a COVID-sized supply gap driven by a war being commandeered by an administration that just cannot tell the truth?” one exploration and production firm executive said. “They jawbone the price down basically every Sunday evening. If they know Hormuz reopening isn’t likely, it’ll make the medium-term supply issue ten times worse.”“Rapid changes in international geopolitics make for a cloudy windshield view of the future direction of oil price and demand,” another executive said. “We want to choose drilling prospects that are profitable at $50 per barrel.”You can read their full comments here. STRAIT OF HORMUZ TRAFFIC INCREASES: Traffic in the Strait of Hormuz is gradually increasing as the Trump administration continues to negotiate the end of the war. Vessels are reportedly moving out of the Strait of Hormuz. Kpler said on X that traffic “stayed active” yesterday, with 31 verified crossings across commercial and energy-linked vessels. Reuters reported this morning that three stranded tankers carrying 5 million barrels of crude oil exited the waterway yesterday, with two heading to Asia. As of today, Windward said that transits in the strait have increased by 48%, with 31 vessels confirmed.However, the amount of ships crossing through the strait is still nowhere near pre-war traffic, where 120 to 140 vessels would cross every day. Wright was pressed on the ship count not matching the pre-war numbers but he argued that there are “bigger ships now.” Wright noted that Iranian mines have caused some delays, causing vessels not to go through the central ship channel and instead go through either the northern route by the Iranian islands or the southern route, with U.S. military escort, through the Omani waters. He said the strait needs to be de-mined, which could take several weeks. ENERGY AND COMMERCE MARKS UP DATA CENTER BILL: House lawmakers are debating a bill aimed at ensuring that utility customers do not bear the high energy costs associated with data centers. The House Energy and Commerce Committee’s subcommittee on energy is holding a mark-up on the Ratepayer Protection Act, which is sponsored by Democratic Rep. Kathy Castor of Florida and Republican Rep. Gabe Evans of Colorado. The bill would require state regulators to create standards for large-load customers to cover the costs related to new generation, transmission lines, and other upgrades. Tech giants such as Microsoft and Google have expressed support for the bill. Google described the legislation as an “important step” to ensure that customers do not bear the cost as energy demand continues to increase. The legislation mirrors the White House’s ratepayer protection pledge in March, through which several big tech companies such as Google, Microsoft, and Amazon vowed to secure their own power. Stay tuned for more by Maydeen. TRUMP ADMIN UPS PRESSURE ON EUROPE TO SOFTEN CLIMATE RULES: The Trump administration is escalating its pressure on the European Union to weaken its rules on methane emissions, joining forces with Qatar, Nigeria, and Algeria in a new letter. Quick reminder: The EU currently requires oil and gas importers to monitor and report their methane emissions. Starting in 2027, the EU will require foreign producers to comply with methane rules equivalent to those in Europe. The EU has said it plans to soften the rules and won’t begin penalizing exporters until 2030. But fossil fuel giants say the changes don’t go far enough. In the letter, sent to leaders of the European Commission, European Council and EU member states this morning, Energy Secretary Wright and his counterparts from the other countries warned that the EU only has a “narrow window” to make changes to the rules, as importers have already begun the process of purchasing oil and natural gas that will be stored for delivery in 2027. “[A]nd as of now there is no viable path to compliance with the regulation,” the letter reads. The U.S., Qatar, Nigeria, and Algeria are asking the EU to water down the methane emission reporting rules by providing exporters with time to develop necessary methodologies and compliance pathways, grandfather in new contracts signed while legislative changes are made, and remove penalties for noncompliance during the transition period. Without the adjustments, the four countries warned, exporters and importers are unlikely to enter any new agreements, threatening oil and gas supply to Europe. Other countries, including the Czech Republic and Slovakia, are also calling on the rules to be pushed back by at least three years, according to the Financial Times. Some background: This is not the first time the U.S. has pushed back on European climate rules. In December, the Trump administration demanded that the EU exempt U.S. oil and gas exports from the rules until October 2035. Administration officials have described the reporting regulations as “regulatory overreach,” saying it will make it too legally risky to sell fossil fuel products in Europe. NUCLEAR OUTPUT DROPS AMID HEATWAVE IN FRANCE: The intense heatwave in Europe has caused France to curb its nuclear output due to a reduction in water access needed to cool reactors, Reuters reports. Reuters said that nuclear output was decreased by 4.1 gigawatts, or 7% of total power demand, at midday. France is also a significant exporter of electricity to nearby countries, but Reuters said exports from France dropped to 3 GW during Wednesday afternoon, compared to 10 GW to 12 GW recorded last week. Much of Europe is experiencing an extreme heatwave, placing many cities under heat advisory warnings. France, in particular, has faced record-breaking heat this week, with temperatures reaching 104 degrees Fahrenheit in some areas. “Climate change is demonstrating how extreme heat can be as disruptive as the (price spikes from cold weather and low renewables) witnessed during winter,” Kpler analyst Alessandro Armenia told Reuters.“We are surprised now, but we should expect next summer to exhibit similar dynamics, as climate change is undeniable,” he said.RUNDOWN Associated Press In visit to Capitol, Jessie Diggins and other Olympians push for climate change solutionsThe Guardian Farm workers at higher risk amid screwworm outbreak in US south-westInside Climate News Elected Democrats Have Embraced ‘Climate Hushing.’ Are They Making a Mistake as the Midterms Loom?
