Biden puts energy wins at the centre of re-election bid

Welcome back to Energy Source, your final instalment of the year, coming to you from Houston.

The news from Texas: Charif Souki, the godfather of US liquefied natural gas, is out at Tellurian as the developer struggles to get its Louisiana export megaproject off ground. Souki’s exit bags him $8mn.

In today’s newsletter I look at US Democrats’ efforts to put energy policy — and in particular the Inflation Reduction Act — at the heart of the president’s re-election bid.

And in a lighter vein, I spoke to Scott Sheffield about his holiday plans as he retires for a second time after selling Pioneer Natural Resources to ExxonMobil.

From all the team at ES, we wish you a relaxing holiday season and a very happy new year. We will be back in your inbox on January 4 with a look ahead to what 2024 holds for the energy space.

Thank you, as ever, for reading. — Myles

Biden draws energy battle lines ahead of election

Energy policy is always a flashpoint in US elections — for better or worse.

For the latter, recall Jimmy Carter in a sweater urging Americans to cut back consumption amid surging oil prices ahead of his electoral trouncing by Ronald Reagan.

But Joe Biden is hoping energy policy will be an asset in his bid for four more years.

The White House launched a full-bore effort this week to promote the benefits of the Inflation Reduction Act, as the president struggles to convince voters that his administration has made them better off.

The IRA — the president’s most significant legislative achievement — will be at the heart of Biden’s re-election drive as he looks to hammer home a message that his administration is not only tackling emissions, but also spurring an industrial renaissance in America’s rustbelt: creating jobs and driving economic growth.

As Lael Brainard, Biden’s national economic adviser, told reporters:

“We’re on a path to cut emissions in half by 2030. And we’re doing so in the context of solid growth. A two-thirds decline in inflation, a surge in clean energy investment and a surge in associated good jobs.”

The administration’s pitch is as follows:

• Since Biden took office there has been $628bn of clean energy and manufacturing investments announced.

• The IRA has already created 210,000 clean energy jobs.

• And it has breathed new life into American industry: manufacturing construction investments account for 10 per cent of US gross domestic product growth this year — the largest proportion on record.

Should Republicans get their way, the White House argues, all of that is on the chopping block. Donald Trump is expected to gut the IRA if he wins back the White House in November. The spending associated with the $369bn bill, he argues, is excessive and a significant contributor to inflation.

Complicating that plan, though, is the fact that the bulk of the spending triggered by the IRA has flowed to Republican districts, according to Financial Times research.

John Podesta, the Democratic éminence grise tasked with rolling out the IRA, this week emphasised that point as he accused Republicans of hypocrisy over the legislation.

“The people who are out there at the ribbon cuttings have continued to try to repeal the provisions that are really producing this tremendous story for the US economy,” he said.

“Members seem to be very happy to applaud those investments . . . while they’re simultaneously ignoring the fact that the companies themselves are crediting the IRA with the reason for those investments.”

But the benefits have yet to hit home for many Americans.

An FT-Michigan Ross poll in November showed that just 14 per cent of respondents thought they were better off financially under Biden. That’s despite US workers enjoying a 2.8 per cent rise in real incomes between the third quarter of 2019 and the same quarter of this year.

Another win the White House is set to trumpet — despite its limited role in achieving them — is sliding prices at the pump. 

The average cost of a gallon of petrol (or gasoline) looks set to slip below $3 in the coming days. (In some places prices are much lower: at some stations here in Texas they are closer to $2 a gallon).

It is another good news story for Biden, who was blamed by many for prices soaring to record levels over $5 a gallon last year — prompting him to unleash record volumes of oil on to the market from America’s strategic reserves.

The recent drop-off, however, has had more to do with a weaker than expected Chinese economy and a surge in production from the US shale patch than Biden’s direct actions.

Nonetheless, given that pump prices play an outsized role in American’s perceptions on inflation — and voters’ views on the health of the economy — expect the White House to reference them often as Biden proclaims a win in the battle against inflation.

I’ll have more on this theme in a story written with my colleagues Claire Jones and Eva Xiao that will be out later this week.

Bison, black diamonds and bureaucrats: an oilman’s holiday plans

Scott Sheffield is departing the stage for a second time. The Pioneer Natural Resources boss is retiring again after securing a deal to sell Texas’s biggest oil producer to ExxonMobil.

But the 71-year-old oilman has a packed agenda ahead of him. As part of an FT Christmas special on chief executives’ holiday plans, we spoke about what comes next.

Christmas Day will see Sheffield grilling bison on the New Mexico ranch he bought from actress Jane Fonda.

“I’m a big griller. And we can get bison out of Santa Fe fairly easily. I probably do it every two weeks. It’s good. Very lean. No fat at all.”

To ring in the new year he hits up Taos Ski Valley, where he will be descending double black diamonds with his grandchildren. And then he flies to Namibia with his wife for a three-week safari in the Kalahari Desert.

After that, the focus will be on getting the Exxon deal over the line. The Federal Trade Commission is looking into the transaction, but he said that was to be expected — and anticipates a close by the middle of 2024.

While most analysts expect the deal to go through, congressional Democrats this week urged the FTC to block it on antitrust grounds.

“The only competition that Big Oil is interested in is who can profit the most from their climate pollution,” quipped Senator Ed Markey on Tuesday.

Sheffield was nonplussed. “I’m going to make sure this deal with Exxon gets closed. We expect it to close by mid-year. We know it’s political.”

Power Points

• The US and UK are stepping up enforcement of the Russian oil price cap, tightening the rules to make it more difficult for Moscow to dodge.

• In a rare piece of good news for the offshore wind sector, Ørsted is pressing ahead with development of the world’s biggest farm after a boost in financial support from the UK government.

• Billionaire Gina Rinehart is teaming up with Chile’s SQM in a $1.1bn deal for Azure Minerals amid a scramble for control of Australia’s lithium resources.

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and David Sheppard, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.