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A smooth transition to clean energy will require coordinating on oil prices — just not the way Scott Sheffield was doing it.
The Federal Trade Commission earlier this month threw sand in the gears of one of several big oil company deals currently in the works, the $60 billion acquisition of shale oil company Pioneer by Exxon. While the FTC didn’t block the sale, it said that Pioneer’s chief executive, Scott Sheffield, could not join Exxon’s board, as proposed in the merger agreement, because of his role in seeking to coordinate oil production and push up prices.
It was yet another Rorschach test of the mid-transition — oil folk saw regulator overreach or pettiness under a Democratic administration, while climate campaigners saw shameless profiteering by the oil industry. What it really reveals is more complex: The illusion of laissez-faire oil markets; the disingenuousness (if not hypocrisy) of the U.S. oil industry; and the need for U.S. policymakers to take a much more interventionist stance in oil markets.
First, the FTC complaint. Sheffield, fêted in the oil world as one of the key instigators of the U.S. shale oil boom, has called on peers in the sector to refrain from drilling when prices were low. The commission also quoted public remarks by Sheffield referring to U.S. oil companies “staying in line,” being disciplined in their production, and being punished by shareholders if they sought to grow production.
He went further than that, though, according to the FTC. In a heavily redacted section of the complaint, the Commission describes Sheffield meeting with OPEC officials and communicating with them by WhatsApp. “If Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi and Russia will follow. That was our plan,”he said in one text message cited by the Commission. He added: “I was using the tactics of OPEC+ to get a bigger OPEC+ done.” Pioneer issued a statement saying that circumventing competition rules was “neither the intent nor the effect” of Sheffield’s comments and pointing to Pioneer’s role in increasing U.S. production.
Coordinating on prices, however, is the norm in the history of oil markets — even in the U.S. It shouldn’t be so shocking that the purportedly free market-loving oil industry would engage in this kind of behavior.
A lot of Sheffield’s activity mentioned by the FTC took place from around 2020 to 2023, when oil demand was still uncertain thanks to Covid. Even before then, the U.S. shale industry, which had boomed through the late 2010s, was under pressure from institutional investors, frustrated as all the new supply undermined their profits. Exxon, whose antecedent Rockefeller famously took control of transport to manage the oil market, is so big and cash-rich that it can largely ride out market fluctuations; the smaller and newer shale oil producers, reliant on increasingly impatient investors, could not.
No wonder Sheffield was vocal about restricting supply: He had a large company and a high profile among a sea of smaller players that were fracking madly even as prices fell.
Oil prices are notoriously volatile, which serves neither producers nor consumers. If prices are too low, the industry logic goes, no-one invests. Too high, and there’s a risk that demand for the stuff falls — especially if it prompts a recession. To keep prices in a sweet spot, a good chunk of the market has to be prepared to refrain from pumping. Turning the taps on and off is a role that Saudi Arabia and fellow OPEC petrostates have taken for decades. The nature of shale oil means it is a “swing producer” that can switch up and down its output with relative ease compared to other producers.
The market dynamics changed quickly when Russia invaded Ukraine in early 2022. Since then, U.S. oil producers have been pumping more than ever, to the point where the country is now the world’s biggest producer. None of this has stopped the industry from continuing to loathe the Biden administration, of course. (Sheffield himself said in 2021 that the administration was trying “to slow down U.S. drilling in any way they can.”)
The U.S. government is the one actor with enough power to influence global oil demand that has largely sat on its hands. The oil industry often engages in a kind of collective delayed gratification to keep oil prices in a sweet spot: high enough to maximize profits, but not so high that households and businesses start cutting back on their fuel use. Far less effort has gone into a kind of reverse strategy. There have been few attempts to reduce supply without disruptive price volatility — the kind of government inaction that pits voters against lawmakers and hurts households that really feel the pinch from higher gasoline prices.
Having intervened extensively in the preceding decades, during the 1980s, the U.S. government backed away from the complex price controls of the Nixon presidency and the demand-curtailing measures of Carter’s. With OPEC’s strategy being fairly straightforward, a couple of decades of relative stability followed, along with the assumption that the market would self-correct whenever prices went too high for consumers or too low for producers. Bassam Fattouh of Oxford Institute for Energy Studies argued that it was the perception of a self-correcting supply-demand dynamic that “stabilized long term expectations about oil prices”in that period.
The “mid-transition” idea, developed by academics Emily Grubert and Sara Hastings-Simon in a 2022 paper, asserts that the process of decarbonization involves a drawn-out, messy, liminal phase, during which changes to energy costs and supply will shape a society’s perception of clean energy so much that negative experiences like price spikes or supply interruptions will undermine political support for the transition.
In 2023, the Biden administration broke the U.S. government’s longstanding precedent and began intervening in oil prices with an eye beyond manipulating the immediate consumer price. It announced a target price for buying several hundred million barrels of oil to restock the Strategic Petroleum Reserve, which had been depleted after the invasion of Ukraine sent prices spiking. By pledging to buy crude whenever the price was between $67 and $72 a barrel, it would do what Employ America, a think tank, had proposed: Set a floor under prices that would help U.S. producers, as well as a ceiling that would avoid pain at the pump.
“Mid-transition” is a relatively new concept, but it harks back to a more established phrase in climate policy: “smooth transition,” which describes a pathway to decarbonization that is steady but not disruptive. Stimulating or restraining oil production in a way that stabilizes oil investment and prices — if done effectively and with the right intentions — is a necessary condition for such smoothness. Sheffield and other producers, including OPEC+ members, have for decades sought to manage oil supply to ensure that price spikes don’t disrupt oil’s future. For all that the U.S. oil industry castigates the Biden administration, they are actually pursuing the same goal, just with a different view of the end game.
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And why he might be underestimating the potential fallout of his actions.
In the month or so since Donald Trump took office, something new has happened: He has become an austerity president.
Trump, Elon Musk, and the rest of their team have frozen spending on hundreds of contracts. They’ve fired as many as 200,000 people across the federal government, delivering what is essentially a massive cutback in the provision of government services. Climate and energy programs have been particularly hard hit. The Energy Department is subjecting dozens of contracts meant to build new factories and industrial sites to a political review, and the Environmental Protection Agency has tried to claw back $20 billion from new green banks. Trump has talked about slashing the EPA’s budget by roughly two-thirds.
These changes have been quick, chaotic, and — frankly — a little surprising. They represent a big change from Trump’s first term. And as I survey the Trump administration, I’m not sure that Trump has realized quite what a transformation they represent. After all, he has a lot of the same people around him as he did last time — with one big exception. But now they are doing something different.
Russ Vought, the Project 2025 author who leads the White House Office of Management and Budget, has attracted a lot of attention during Trump’s second term. But he led the White House office during Trump’s first term, too.
Back then, Vought would publish budgets that defied belief. In his proposal for fiscal year 2017, for instance, he wanted to cut the EPA’s budget by nearly a third, resulting in its smallest inflation-adjusted budget in 40 years. He hoped to fire 20% of the EPA’s workforce. He tried to cut from a slew of programs at the National Oceanic and Atmospheric Administration, including its weather satellite office. And he slashed climate-friendly programs in the Energy Department, including the advanced energy-tech initiative called ARPA-E.
Sometimes Trump didn’t seem totally aware that his administration had proposed these cuts. In 2019, the White House offered a budget that would have zeroed out funding to the Special Olympics. After Democrats hammered the idea during a hearing with then-Education Secretary Betsy Devos, Trump ordered the proposal to be rescinded. But his White House had actually proposed identical cuts during the first three years of his term.
Even when they weren’t about the Special Olympics, these were enormously unpopular proposals, and they generated a flurry of bad press for Trump. But they also never took effect. Congress took one look at Trump’s proposals — which were really Vought’s proposals — and ignored them. Instead, it passed budgets that bumped up funding to many federal agencies, including NOAA and the Energy Department, and Trump signed them. Congress even abandoned the “sequester” — the strict limits on government spending that had prevailed during Obama’s second term.
For this reason, federal government spending actually increased under Trump. Although Trump doesn’t control states or cities, the same trend happened at the local level, too: State and local government expenditures continued to rise throughout Trump’s first presidency after plateauing in the early 2010s.
The upshot was that press coverage under Trump diverged from what was actually happening. In the news, Vought and Trump kept proposing extreme budget and staffing cuts to popular agencies, such as the National Park Service, but in reality, Trump increased federal spending, helping to deliver the boost to demand that the economy needed in the late 2010s.
This dichotomy helps explain where we find ourselves now. Government spending is obviously not a perfect — or even a very good — proxy for government effectiveness. But during the pre-COVID phase of Trump’s presidency, public-facing services at most levels of government did not get worse — even though he kept talking about big cuts to agencies. (Administration of theagencies themselves got worse, but the public did not see this deterioration.)
Trump 2.0 has violently snapped this pattern. The new Trump administration has indiscriminately slashed staff across the federal government. It has effectively shuttered the U.S. Agency for International Development, likely illegally. It has terminated new hires as well asany worker who was promoted in the past year or two across the government, including within NOAA, the National Weather Service, and the National Park Service. (A federal judge ruled on Thursday that some of these firings are probably illegal, too.) And it has blocked farmers, companies and local governments from accessing the federal grants and loans that they had already been promised.
Unlike last time, Republicans in Congress have not yet blocked these cuts. Although some GOP lawmakers have privately begged Trump for some cuts to be reversed, they haven’t succeeded in freeing the money. Lawmakers are acting like Vought’s untested theory of impoundment — which says that the executive branch can treat Congress’s spending authorizations as a ceiling, but not as a floor — is going to protect them from voters’ irritation when popular federal programs get worse. (Some are also surely hoping that the Supreme Court will nix Trump and Vought’s untested theory.) During budget negotiations, this sleight of hand has let GOP negotiators claim that they’re holding appropriations at current levels even though Trump now seems to have no interest in spending that money — or administering the programs that it enables.
No matter what happens, Trump’s staffing cuts will not make a significant dent in the deficit. The government spends only 0.2% of GDP on its personnel, while the deficit is now more than 6% of GDP. (Medicaid spending, by comparison, is about 2% of GDP.) But the cuts will probably make the government worse at providing services to Americans, especially if Musk accomplishes his most ambitious plans, such as cutting half of Social Security Administration employees. The cuts are also unpopular: Musk is generally underwater with voters in recent polls.
This is a genuinely new political situation for Donald Trump, and I’m not sure that he realizes it because his administration’s stated goals have not changed significantly. During his first term, Vought kept trying to pull off painful staff and budget cuts — but they never materialized, meaning that they never resulted in a noticeable deterioration in public administration. Now Vought and Musk are actually making the cuts happen and changing the facts on the ground. Does Trump, floating as always on the surface of understanding, realize that his government’s effective policy has changed since 2017? If so, he’s not acting like it.
A new study from E3 shows big potential cost savings for utilities with smart chargers.
Ditching the combustion engine for an electric vehicle is a good first step for cutting transportation emissions. But it’s becoming increasingly clear that owning an electric car on its own is not enough. When and how you charge the car makes an enormous difference, not only for reducing CO2 emissions, but also for helping the power grid withstand the coming electrification wave.
We know that not all charging is created equal. Location, for example, is an obvious difference-maker. In places with ample renewable energy such as hydro-dominated Washington or solar California, electric vehicles produce vastly less climate pollution over their lifetimes than gasoline cars. In places with fossil-fuel-heavy grid, the climate benefit is still there, but much smaller.
The matter of when to charge is, similarly, about aligning EV charging with the supply of renewable energy. As Heatmap has noted before, it makes sense for solar-heavy states to encourage EV owners to charge at midday when clean energy generation peaks — that would help to level out California’s duck curve rather than make it worse. That’s easier said than done, though, since not everyone’s workplace has electric vehicle chargers. Besides, the simplest form of the EV lifestyle is to plug in upon returning home from work and errands in the evening, the very moment when electricity use spikes and solar energy is dropping off for the day.
Charging’s place and time are both important for maximizing the climate good EVs can do. They are also matters of growing importance for electric utilities that must learn how to balance the coming acceleration in electricity demand without seeing their costs spiral out of control. According to new research by the group Energy and Environmental Economics, smarter ways to optimize the when and the how of EV charging could save them an enormous amount in upgrade costs.
E3’s researchers ran case studies, including one that modeled the EV-heavy territory of Southern California Edison, to find out how different approaches to widespread EV charging affected how much extra costs the utilities incurred. The researchers considered three approaches to charging. In the first, “unmanaged,” drivers plug in as soon as they get home and the vehicle charges until full. In the second, a “passive managed" scenario, the EV doesn’t necessarily charge to full immediately, but instead waits until off-peak hours when the price of electricity drops. The third, “optimized,” used Rhythmos.io’s software to imagine a system wherein a car can detect the exact moments to charge to place the least strain on the grid.
The differences were stark. E3 used California’s official Avoided Cost Calendar to measure the added costs to SCE under each scenario. Whereas unmanaged charging cost the utility $984 per EV added to the system, optimized charging dropped that figure to just $407, a 60% reduction. (The middle-ground scenario came in at $686.)
Much of these savings are attributable to avoiding the wear and tear and possible overloads that electrical transformers would suffer in a world where everyone tries to charge their EVs all at once. (The transformers that form that backbone of the power grid are rated to specific currents and voltages they cannot safely exceed, which is one of the limiting factors on how much the system can handle.) It’s a particularly pressing matter in this age of transformer shortages, when it can take years to get a replacement for a broken or outdated one.
Although the financial and resilience benefits of optimized EV charging are clear in E3’s findings, they’re far from simple to achieve in the complex moment-to-moment reality of the grid. E3 study coauthor Eric Cutter told me it starts with communication — utilities could give EV drivers a forecast a day in advance, for example, telling them when clean energy will be in good supply and prices will be low.
“They could say, ‘Tomorrow is a sunny day, so please charge during the day,’ or, ‘Tomorrow is a cloudy day, and it happens to be very hot and humid, so the air conditioners are going to be ringing, so please don't charge in the evening and charge late at night,’” he says. “And they could make that determination each day as to what's going to be the most beneficial for the system.”
But much of this work will be automatic and algorithmic. For optimized charging to work, all drivers have to do is leave their EV plugged in and be okay with whenever the system decides to send them electricity. The software will decide which cars get which levels of charge, and when, to minimize strain on grid infrastructure.
That raises another question about trust. People who don’t like the local power company — and there’s a lot of them — might not want to allow that entity to decide when their EV gets to charge. They also might not trust that they’ll have enough battery range when they need it. To combat the first issue, Cutter said, perhaps drivers will sign up for a charging management system run through their car’s manufacturer, since drivers often have a better opinion of Honda or Ford than they do of their utility. And to fight the range anxiety problem, he says, some pilot programs have given customers a button to opt out of optimized charging.
“What the programs have found out is that customers want the button, but they never use it. It's very, very rare,” he says.
The number of EVs in America, especially in markets outside California, has yet to reach a point where a smarter way to charge has become a necessity. Although their sales share is rising, EVs accounted for just 8.1% of cars sold in 2024; only California has seen the energy demand from electric vehicles exceed 1 million megawatt-hours, though the numbers are rising fast. Even with EVs and electrification facing stiff political headwinds, utilities across the nation are already at work on plans to handle the influx of EV demand.
“Ten years ago when we were talking to utilities, a lot of them would say, ‘We're not worried about EVs. Come back to me when that's 5% of adoption or 10% of load.’ But not anymore. I don't think utilities anymore are waiting until that level of adoption to start thinking about how they need to plan for them.”
Widespread federal layoffs bring even more uncertainty to the DAC hubs program.
Grant Faber suspected his short tenure as the program manager for the Department of Energy’s direct air capture hubs initiative was up when he saw an article circulating that the department was set to terminate up to 2,000 employees — generally those who were new to their jobs. When he hadn’t received any news by the end of the day on Thursday, February 13, he told me he felt a sense of “anticipatory survivor’s guilt.” But it wouldn’t last long.
“I woke up Friday morning and I was locked out of all my systems, and I had to get my termination letter emailed to my personal email address,” Faber told me. “It more or less just said it’s in the public interest to do away with your job.”
President Trump's campaign to fire federal workers has hollowed out the DOE's nascent Carbon Dioxide Removal team, which sits within the Office of Fossil Energy and Carbon Management. When Trump first took office there were five employees on the CDR team, which helps to oversee implementation of the $3.5 billion Regional Direct Air Capture Hubs program, Faber told me. Now, he said, there’s only one left.
Trump’s layoffs targeted probationary employees, i.e. those who had been hired, promoted, demoted, or reassigned within the past one to two years, who enjoy fewer job protections than those with longer tenures. Faber had been at his job for 11 months. His former boss, Rory Jacobson, was also terminated a few weeks ago, as he’d recently been promoted to a new role as director of carbon removal at the DOE. “To my knowledge, this was not about terminating people that were doing DAC work, or climate work, or even CDR work,” Jacobson told me. “This was just a gross termination of federal employees, career federal employees across the federal government that were on probation.”
But the cumulative effect of these layoffs certainly increases the air of uncertainty around the DAC hubs program, which thus far include two large-scale projects — the South Texas DAC Hub and Louisiana’s Project Cypress — as well as 19 smaller hubs in earlier stages of feasibility and design development.
The various hubs’ commercial partners, which include universities, oil giants, and DAC startups themselves, were already mired in the limbo created by Trump’s Day One executive order, which froze funding from the Inflation Reduction Act and the Bipartisan Infrastructure Law. That order also led to an effective communications embargo, which prohibits the DOE from discussing or taking action on things such as contract negotiations or personnel decisions with its external partners. These recent terminations just add to the confusion.
“We’ve had no communications with DOE for three to four weeks now,” the lead of one DAC hub in the feasibility study stage told me. “So we’re kind of just waiting to see what they tell us to do.”
In the meantime, awardees are frustrated and unsure where to turn, Jacobson told me. “Should they reach out to their congressperson and try to get them to advocate on their behalf? Do they send a letter to the White House? What is the next step to try and make things move for their projects?” These doubts pose a big problem for startups with novel technologies trying to build out large infrastructure projects, as they generally have smaller margins, less patient investors, and thus less room for error than industrial stalwarts with proven strategies. “Especially for these first-of-a-kinds, they are working on pretty dire timelines for project finance,” Jacobson said.
The DAC hubs were already off to a slow start, according to Jacobson, who told me that the $1.2 billion from the initial funding opportunity issued at the end of 2022 took much longer to get out the door than anyone hoped for. Project Cypress didn’t see any of its initial $50 million award until March of last year, and the South Texas hub had to wait until September for the same funding. Jacobson chalked up the delays to the fact that the awardees are generally relatively early-stage startups that have yet to build significant infrastructure projects, and that the DOE is unfamiliar with negotiating such large-scale proposals.
Thankfully the DOE’s small CDR division isn’t the only government entity interfacing with the DAC hubs. The Office of Clean Energy Demonstrations is overseeing the buildout of the larger South Texas and Project Cypress hubs. And the National Energy Technology Laboratory is overseeing the implementation of the smaller DAC hubs, which are in the feasibility study and design planning stages. They’ve received a combined total of $121 million so far, though some are still negotiating the size of their awards.
OCED and NETL have also been impacted by the government-wide staffing cuts, however, potentially affecting their ability to pick up the slack from the decimated CDR team, which helped to provide top-level oversight and expertise. As Jacobson told me, his job was to “make a theory of change” that united the DOE’s various carbon removal initiatives, aligning them with the administration’s overall energy strategy, whatever it was. Absent this broader vision and explicit strategic direction, coordination among the various government agencies and implementation partners could suffer.
Day-to-day organizational details also stand to falter, Faber told me. In his role, he primarily provided oversight for the 19 smaller, earlier stage DAC hubs. “A lot of times, progress can come down to literally just things like getting signatures, getting approvals, communicating things to leadership back and forth,” he said. “If you don’t have a team in place coordinating those things at headquarters, everything’s just going to be more difficult.”
All that’s to say that further hold-ups could hit the hubs hard, especially the two large projects, which could eventually receive federal funding of up to $500 million to $600 million, provided the hubs can match that with funding from other sources. “If the DOE tries to back out or withholds funding and there’s uncertainty, then yes, it could severely delay or even kill some of those projects, or just result in massive reductions in their scope,” Faber told me. Perhaps other investors, such as climate tech VCs, would be willing to step in if this were to happen, he added.
Faber noted that one proof point that could give investors and other industry leaders confidence in this tech is the forthcoming large-scale DAC facility called Stratos from developer 1PointFive, a subsidiary of Occidental Petroleum, which is designed to remove up to 500,000 metric tons of CO2 annually and set to come online later this year. While Stratos is not a part of the hubs program, Occidental is using the same technology for its South Texas hub — tech that the oil giant brought in-house when it acquired DAC startup Carbon Engineering in 2023. And Heirloom, a DAC company that’s helping to lead Project Cypress, also recently raised a huge $150 million Series B round, showing continued investor confidence in this technology.
The DAC hubs program also still has billions of dollars yet to be awarded. A few months ago, the DOE announced a new $1.8 billion funding opportunity for mid- and large-scale DAC projects. Interested parties have already submitted their required concept papers and pre-applications, with full applications due at the end of July. But the current chaos puts applicants in a tricky spot, as the new administration’s commitment to the program overall is now somewhat of a question mark.
That being said, Jacobson told me there’s no indication that either Trump or Secretary of Energy Chris Wright is necessarily opposed to DAC, or carbon dioxide removal overall. “I still don’t think that we’ve seen a clear signal that this administration is not excited about CDR,” Jacobson said. “I have not heard Secretary Wright say — or other leadership at DOE say — that we are not still very enthusiastic about DAC hubs.”
DAC buildout also has an array of bipartisan benefits, both Jacobson and Faber noted, and hasn’t been a target of right-wing ire in the way that electric vehicles and offshore wind have. On the contrary, Republicans (and oil and gas companies) often argue for it as a way to continue fossil fuel production in a world that’s moving towards lower-emissions sources of energy. Not to mention the fact that these DAC facilities are mainly being built in red states, thus adding jobs and GDP in these regions.
“I thought these kinds of projects would get to keep going,” the DAC hub leader, whose project has had elements halted, told me. “They’re creating jobs, they’re investing in technology. I think they could be well aligned with unleashing America’s energy dominance.”
But these days, few Biden-era initiatives are safe. As Faber told me, if the Trump administration chooses to take a hard line stance against “any and all government funding and regulation, and anything that even has a tinge of being associated with climate,” then DAC is going to have a target on its back, even if some congressional Republicans have previously expressed support for it.
The budget reconciliation process will give us more insight into the specific IRA and BIL funding provisions Trump and other Republicans are looking to axe. That same process will also determine the fate of tax credits such as 45Q, which encourages carbon capture and sequestration. In the near term, Democrats are pushing to get language into the government funding bill (which is separate from the reconciliation bill and must pass in some form by mid-March) that would require Trump to deliver congressionally appropriated money. If that happens, funds would start flowing to the DAC hubs — but don’t bet on it. Republicans are adamant that they won’t stand for such limitations on presidential authority.
DAC grantees, government employees, and implementation partners alike will have to do the wait-and-see thing for a while longer. “I do believe that when we get out of this fog of the first 100 days of the new administration, when they’re just trying to move fast and break things and get big headlines and try to make it seem like they’re keeping campaign promises, maybe things will slow down,” Faber told me. “Maybe they’ll get distracted or just move on to a new issue other than dismantling the federal government.”