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BIG OIL MARKET EVENTS: OPEC and its allies agreed today to slash oil production by 2 million barrels per day after raising their collective monthly production targets consistently for more than a year.

Members of the OPEC+, which includes Saudi Arabia and Russia, agreed to the cuts, the largest since the start of the pandemic, at their meeting in Vienna. They are hoping to spur recovery and prevent volatility after months of declining oil prices, which have fallen to around $90, down from $120 just three months earlier.

Bad news for Biden: The decision is expected to increase gas prices again—this time, at an even more politically perilous time for Democrats in the run-up to the November midterm elections.

As we noted in Monday’s newsletter, President Joe Biden’s approval ratings have tracked gas prices this year. His ratings bottomed out as gas prices peaked. But now they’re rising again…

What’s the next move from the White House? The Biden administration said it might release additional oil from the Strategic Petroleum Reserve, if necessary—adding to the roughly 180 million barrels that Biden ordered to be made available back in March.

The White House said in a statement that Biden was “disappointed” by the OPEC+ cuts, and said he will “continue to direct SPR releases as appropriate to protect American consumers and promote energy security, and he is directing the secretary of energy to explore any additional responsible actions to continue increasing domestic production in the immediate term.”

SPR releases would be a reversal: Asked at a press briefing yesterday whether Biden would release more oil from the emergency stockpile, White House press secretary Karine Jean-Pierre said the administration is not considering doing so.

Oil prices jumped this week in anticipation of the news: Futures for international benchmark Brent crude rose as high as $92.00 per barrel early Wednesday, while futures for U..S-based West Texas Intermediate increased to $86.66.

The other big oil market news: The EU reached an agreement yesterday to participate in the G-7’s scheme to put a price cap on Russian oil under the bloc’s next sanctions package, overcoming wariness of member nations that worried about the economic hit they could take under a price cap.

EU ambassadors agreed to a prohibition of maritime transport of Russian oil to third countries “above the oil price cap” and a ban on related services, the Czech Presidency of the Council said in a tweet.

Text of the agreement is not yet public, but the prohibition would conform to the price cap set in place by the G-7 once it’s finalized, Euractiv reported.

Leaders were able to win conditional support for the price cap from Malta, Greece, and Cyprus, countries with sizable maritime industries, by making certain concessions, among which is an impact assessment that will be made before price caps are imposed.

If the assessment's finding is negative, it could lead to those countries vetoing the price cap, the outlet reported.

Europe hopes to use the price cap to starve Vladimir Putin of war funding. That goal, though, is undermined by OPEC+ decision, to the extent it props up oil prices.

“It's clear that OPEC+ is aligning with Russia with today's announcement,” Jean-Pierre said.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] 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.

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REFINERS BATTLE GRANHOLM ON EXPORTS: The oil industry is imploring Secretary Jennifer Granholm to stop entertaining limits on oil exports as a way to increase regional fuel inventories and bring down prices.

The administration is seeking to blunt rising retail fuel prices across much of the West. Granholm has not announced any plans to restrict exports of refined products like gasoline and diesel in pursuit of that, and she said just a few weeks ago that restrictions were not being considered.

But she has said in the past that export limits are an option, and after she and other White House officials met with refiners last Friday, the latter came out saying the Biden team “refuses to rule out limitations on exports.”

Leading trade groups are doing all they can to dissuade the administration from export limits, with the American Petroleum Institute and American Fuel & Petrochemical Manufacturers telling Granhom yesterday they could shake energy markets and discourage investment in the oil sector — the lack of which has contributed to existing constraints on refining capacity.

“Banning exports of refined petroleum products could lead to unpredictable results and potentially disparate impacts across regions as refineries adjust to the revised trade flows,” API’s Mike Sommers and AFPM’s Chet Thompson told Granholm in a letter yesterday.

Limiting exports would also betray the administration’s attempts to limit Russia’s strength as an oil exporter, as it would pull back the United States’ participation in the global market, they said.

Refiners exported record volumes of products in the first half of the year and have earned quite well thanks to higher fuel prices, frustrating the likes of Granholm and Democrats who say they’re padding profits at the expense of U.S. consumers.

Tyson Slocum, director of the Energy Program at liberal consumer watchdog group Public Citizen, said the conversation around export limits needlessly gets reduced to a binary option, where the choice is framed between completely unregulated exports or zero exports.

“That's not the debate that I'm having,” said Slocum, who favors export restrictions. “The debate I'm having is, is it appropriate and in the national interest to subject exports to some sort of regulatory treatment, to some sort of regulatory process?”

For him, the answer is yes, so that the government has some discretion to mark for domestic consumption volumes of refined products that may otherwise be exported when supplies are tight and prices high.

“There needs to be a prioritization of directing those resources to where they are needed domestically before they can be exported out of the United States,” he told Jeremy.

The Energy Department is looking into the potential impacts of an export ban at the White House’s behest, Bloomberg reported yesterday.

Bonus: The export ban issue has died and been reborn multiple times over the last year. Granholm was pretty clear last December when she told industry leaders that “we are not considering reinstating the ban on exports.”

Since then, Granholm has been more ambiguous about the extent to which administration officials support an export ban, saying things like it’s among the “tools” the administration has available but that it isn’t under consideration at a given moment.

Notably, in June, when retail prices were at their peak, Granhom said “there may be consequences that have to be considered on doing something like [an export ban], that would have adverse impacts on everyday citizens.”

GREENS COUNTER GOP WITH DEMAND FOR NO NEW LEASES: Nearly 200 community and environmental groups are demanding the Biden administration include no new lease sales in its 2028-2028 offshore leasing program.

In a “unified demand” addressed to Biden, Secretary Deb Haaland, and other officials overseeing the leasing program, the groups said Interior’s proposed program “turns its back” on those living in proximity to offshore drilling sites and violates Biden’s promises to restrict leasing on federal lands and in federal waters.

The groups also dismissed clear language in the Inflation Reduction Act, which passed without any Republican votes, ordering Interior to carry out canceled lease sales and adding new conditions to encourage consistent leasing.

The IRA’s oil and gas provisions “do not reflect public sentiment or the will of the people, who predominantly oppose continued offshore drilling,” said the groups.

Interior published its proposed program in July, which contemplates the lease of tens of millions of acres across up to 11 sales in the Gulf of Mexico and Alaska’s Cook Inlet.

Republicans in Congress, as well as a handful of Democrats, have demanded the Biden administration quickly finalize a final offshore program and make more acreage available.

BIDEN TRAVELS TO FLORIDA: Biden traveled to Florida today to meet with state and local officials as they begin the long recovery process from Hurricane Ian.

Ian is tied for the fifth-strongest hurricane ever to make landfall in the U.S., causing damage that Biden said will likely be among the “worst in the nation’s history.” At least 105 Florida residents have been reported dead from Ian so far.

While in Florida, Biden will meet with Gov. Ron DeSantis, an outspoken Republican critic with whom he has publicly sparred in the past. Both the president and DeSantis have pledged to put politics aside this time in the interest of disaster assistance.

“This is not about anything having to do with our disagreements politically,” Biden said before his trip. “This is about saving people’s homes, lives and businesses.”

SOLAR COMPANY FOUNDER HAILS POTENTIAL OF A BOOMING INDUSTRY: In the 10-plus years since Yuri Horwitz founded Sol Systems, a U.S.-based solar power company, the landscape has changed dramatically for renewable energy, leading to incredible opportunity and growth—so long as it doesn’t happen overnight.

Speaking to former FERC chairman Neil Chatterjee and Breanne Deppisch on this week’s “Plugged In” podcast, Horwitz hailed the developments and new access to funding in the solar industry—but noted that transitioning to a domestic supply chain will take years, not months.

“I think we need to all be open in the next three to five years to what we should think of as a transition period,” he said as one solution, “where we move from securing the vast majority of our solar globally from China to securing it from a more robust array of different countries.” Listen to the full episode here.

The Rundown

E&E News How fight over states’ rights may upend permitting overhaul

Financial Times Charles Michel: The EU needs a genuine energy union now

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Calendar

THURSDAY | OCTOBER 6 

1:00 p.m. The Nuclear Regulatory Commission will convene virtually for its meeting of the Advisory Committee on Advanced Nuclear Reactor Safeguards, or ACRS.