Oil and natural gas executives are breathing a sigh of relief after the United States and Mexico reached a deal to avoid tariffs threatening to constrict a burgeoning flow of crude oil and refined fuels between the two countries.
But the agreement is hardly going to be the end of trade tensions. Trump has shown he is willing to disrupt relations with Mexico and China, two of the largest U.S. trading partners, to a degree that sends shivers through the spines of fellow Republicans on Capitol Hill, as well as many of corporate executives who normally cheer the administration for easing regulations on businesses.
And Trump's unpredictable behavior could still affect ratification by Congress of a renegotiated North American free-trade deal known as USMCA.
Frustrated by the flow of migrants at the southern border, Trump in a series of tweets late last month threatened tariffs on all Mexican imports, which would have started at 5 percent and could have risen to 25 percent.
That tweet sent representatives for refineries along the Gulf of Mexico into a lobbying overdrive.
"I feel like I've aged 20 years since last Thursday," said Joshua Zive, a counselor at the law and lobbying firm Bracewell, which representatives refiners and other energy companies.
Their ask: that the heavy crude oil making its way to Gulf refineries receive an exemption under the threatened tariffs. Mexico is the third largest supplier of crude oil to the United States behind Canada and Saudi Arabia, exporting 665,000 barrels per day on average in 2018, according to the U.S. Energy Information Administration.
Refinery representatives pressed their case, according to their offices, in a flurry of phone calls to officials in the White House and at various other offices, including the departments of Commerce, Energy, State and Treasury, and the Office of the U.S. Trade Representative — anyone who would listen.
It turned out they could stand down, for now. On Friday, the leaders of the two nations announced a deal in which the Mexican government will seek to curb migration at the southern border in exchange for averting the tariffs.
The tariffs would have arrived at a particularly bad time for Gulf refining companies using Mexican crude, which include Valero, Chevron, Shell and Premcor, with the market for heavy crude tight in recent months because of political turmoil in Venezuela and renewed sanctions on Iran, sapping oil from international supplies. The market would have also been squeezed right before the peak of the summer driving season.
Retaliatory measures from Mexico could have cut even deeper, because energy is one of the few economic sectors in which the United States has a trade surplus with Mexico — a fact oil lobbyists tried to emphasize with the Trump administration.
"Right now on the trade side, we're winning," said Chet Thompson, chief executive of the American Fuel and Petrochemical Manufacturers, a trade association representing U.S. refineries and petrochemical manufacturers. "It's a substantial surplus."
What Mexico could have targeted was the $30.5 billion in gasoline, jet fuel and other petroleum products the United States sold to Mexico last year, compared with the $15.8 billion of mainly crude oil and natural gas Mexico traded north.
"Where could Mexico cause the most pain if they wanted to? Ag, and oil and gas," said Christopher Guith, acting president of the U.S. Chamber of Commerce's Global Energy Institute.
But the longer-term goal of the oil and gas business — one complicated by this most recent trade impasse — is the ratification of the new trilateral trade agreement between Mexico, Canada and the United States.
Oil and gas companies convinced the Trump administration to carry over a number of protections for investments in Mexico from the North American Free Trade Agreement to the revised USMCA.
Energy companies have built up infrastructure in Mexico ever since it opened its borders to foreign drilling in 2013. Now, they are pressing Congress to ratify the treaty to protect those investments.
Over the weekend, Trump, too, pressed House Speaker Nancy Pelosi (D-Calif.) for not yet scheduling a vote on the new trade agreement over Democrats' concerns about labor and environmental provisions in it.
Nervous Nancy Pelosi & the Democrat House are getting nothing done. Perhaps they could lead the way with the USMCA, the spectacular & very popular new Trade Deal that replaces NAFTA, the worst Trade Deal in the history of the U.S.A. Great for our Farmers, Manufacturers & Unions!— Donald J. Trump (@realDonaldTrump) June 8, 2019
Pelosi fired back by accusing Trump of "recklessly threatening to impose tariffs on our close friend and neighbor to the south."
“Threats and temper tantrums are no way to negotiate foreign policy," she added in a statement.
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— White House suppressed congressional testimony on climate: The White House blocked an intelligence agency from submitting written testimony to the House Intelligence Committee meant to warn about the “possibly catastrophic” impact of human-driven climate change. The document said the agency sees “few plausible future scenarios where significant — possibly catastrophic — harm does not arise from the compounded effects of climate change” but the White House took issue with references to science, The Post’s Juliet Eilperin, Brady Dennis and Josh Dawsey report.
Document did not "jibe" with administration’s stance on climate change: “The effort to edit, and ultimately suppress, the prepared testimony by the State Department’s Bureau of Intelligence and Research comes as the Trump administration is debating how best to challenge the fact that burning fossil fuels is warming the planet and could pose serious risks unless the world makes deep cuts in greenhouse gas emissions over the next decade,” they add. “Senior military and intelligence officials have continued to warn climate change could undermine America’s national security — a position President Trump rejects.”
— Trump auto plan to move ahead: The Trump administration is set to relax mileage standards even after a last-minute plea from automakers, The Post’s Eilperin and Dennis report. That means the Environmental Protection Agency and Transportation Department are expected to finalize the proposal this summer to freeze federal fuel-efficiency requirements at about 37 miles per gallon rather than raise the standards to 51 miles per galleon for 2025 models. The plan would also end California’s existing waiver to set its own standards and creates a likely legal battle with the state.
After a group of 17 automakers sent a letter to the president and to California Gov. Gavin Newsom (D) calling on them to restart talks over the issue, the “White House officials rebuffed the automakers’ request Thursday, saying there was no prospect of further negotiation with the California Air Resources Board.”
— Watchdog will get peer review after "feel good" FEMA reports: The Department of Homeland Security’s internal watchdog will receive an external peer review of its performance after an internal investigation revealed the watchdog routinely concealed problems in audits of disaster responses by the Federal Emergency Management Agency, The Post’s Lisa Rein reports.
Following the internal probe, John V. Kelly, now the acting inspector general, “apologized to his staff of 600 auditors and investigators and took responsibility for failing to ‘set a tone that all of our products need to be fully objective.’” “The outside review will be done by another federal inspector general’s office to ensure that Homeland Security’s monitor has improved its overall operations and oversight of FEMA, officials said,” Rein adds.
— Flood insurance rates remain low: The rate of Americans with flood insurance is stagnant at well below the level from about a decade ago, the New York Times reports, even as extreme weather and flooding become part of the norm.
“In some of the states hardest-hit by the recent brutal flooding in the Midwest, the number of federal flood insurance policies has dropped by at least one-third since 2011. As a result, in Nebraska, Illinois and Missouri, the share of homes in floodplains that have flood insurance is now 15 percent or less,” per the report. A Trump administration push to get more people to acquire such insurance hasn’t taken off, and part of the hurdle is convincing people who are underestimating how vulnerable they are.
— “We will do the things necessary as the climate changes”: Secretary of State Mike Pompeo defended the administration’s efforts on climate policy in an interview with the Washington Times and also vowed that the United States would “do the things necessary as the climate changes.” He defended the presidents’ decision to withdraw from the Paris climate accord, calling it a “failure” because the “enforcement mechanisms were near-nonexistent — it was aspirational,” according to the report.
— 2020 watch: Some Democrats are not yet giving in after the Democratic National Committee chairman rejected a request from Washington Gov. Jay Inslee (D) to focus a presidential debate on climate change. Tina Podlodowski, the chairwoman of the Washington Democratic Party, told HuffPost she reached out to state party leaders and DNC members to put together a response. More than 50 voting DNC members submitted a resolution calling on DNC chairman Tom Perez to reconsider.
“The signers plan to collect more signatures and submit the resolution for official consideration at a DNC meeting in Pittsburgh at the end of the month,” per the report. “Perez would be free to reject it, even if it had majority support in the DNC. In the meantime, it is intended to function as an open letter and source of pressure on Perez.”
Here’s what the DNC chair told activists about his decision: When Florida activists questioned Perez over the weekend about his announcement, he said part of the issue was the precedent that would allow advocates for other causes to push for the same, according to the Tampa Bay Times.
He said the party “communicated this to everybody, that the 12 debates are going to focus on a range of issues, including but not limited to climate change. Because once you have one singleissue debate, then every debate leads to become a single issue debate in order to address the concerns,” he said. “And frankly, as someone who worked for Barack Obama, the most remarkable thing about him was his tenacity to multitask, and a president must be able to multitask.”
— Environmental group chief executive resigns: The chief executive of major environmental group the Nature Conservancy announced he would step down, Politico reports, the latest of numerous exits from the organization following an investigation into sexual harassment and misconduct. His exit “comes just one week after the resignation of President Brian McPeek amid swirling complaints about the culture at the environmental group that operates in 72 countries and had long enjoyed support from across the political spectrum" per the report.
— PG&E wildfire woes: Over the weekend, Pacific Gas and Electric proactively shut off power to about 22,000 customers in Northern California as part of measures it will take in the wildfire season to prevent wildfires from sparking. “The San Francisco-based company earlier this year announced its plan to become the first utility in the U.S. to intentionally shut off power to help prevent its transmission equipment from igniting a fire,” the Wall Street Journal reports. “PG&E previously warned that in such shutdowns, electricity wouldn’t be restored for at least 24 hours and possibly days longer until crews can inspect power lines for any damage.”
— Court lifts injunction blocking Keystone XL: A panel of judges of the Ninth Circuit Court of Appeals lifted an injunction that had blocked construction of the Keystone XL pipeline, dismissing a lawsuit by environmental and Native American groups. The judges ruled last week the injunction no longer applied because the Trump administration had revoked a 2017 permit for the pipeline and issued a new one, the Associated Press reports. “The ruling Thursday was a victory for TC Energy, a Calgary, Alberta-based company that wants to build the line, though company officials have said it already missed the 2019 construction season because of court delays,” per the report. “Attorney Stephan Volker, who represents the Indigenous Environmental Network and North Coast Rivers Alliance, said he would request another judge’s order to block the project if he thought there was a chance of construction beginning immediately.”
- The House Natural Resources Subcommittee on Energy and Mineral Resources holds a hearing on a 21st century offshore wind workforce on Tuesday.
- The House Energy and Commerce Subcommittee on Oversight and Investigations holds a hearing featuring former EPA administrators on Tuesday.
- The House Energy and Commerce Subcommittee on Energy holds a hearing on oversight of the Federal Energy Regulatory Commission on Wednesday.
- The Senate Energy and Natural Resources Committee holds a hearing on wildland fire and management programs on Thursday.
- The House Natural Resources Subcommittee on Water, Oceans and Wildlife holds a legislative hearing on Thursday.
- The House Energy and Commerce Subcommittee on Environment and Climate holds a hearing on safe storage and disposal of nuclear fuel on Thursday.
- BP’s chief economist presents the BP Statistical Review of World Energy 2019 at the Atlantic Council on Thursday.
— The Smithsonian National Museum of Natural History opened a revamped fossil hall to the public over the weekend, and The Post’s Sarah Kaplan said the scene was a party: