Daily on Energy: Gas tax suspension, OPEC oil lows, and EPA tackles permitting

Plus, we have a bit of surprising science news for you at the bottom of today’s newsletter, as a new study found that a volcanic eruption actually helped lower methane emissions. 🌋💨

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.

LATEST ON IRAN: President Donald Trump in the Oval Office today said the ceasefire in Iran is “on life support.” 

Reuters reports that Iran asked for compensation for war damage, reaffirmed its control over the Strait of Hormuz, and called on the U.S. to end its blockade. It also asked for the U.S. to lift sanctions, remove the Iranian oil sales ban, and guarantee no further attacks. 

“Our demand is legitimate: demanding an end to the war, lifting the (U.S.) blockade and piracy, and releasing Iranian assets that have been unjustly frozen in banks due to U.S. pressure,” Foreign Ministry spokesperson Esmaeil Baghaei said.

“Yeah, I’m going to reduce,” Trump said Monday in the Oval Office in response to a question about suspending the tax. He added that he would pause the tax “until it’s appropriate. It’s a small percentage, but it’s still money.”

The president told CBS News this morning that he intends to phase the tax back once gas prices go down. 

It would require an act Congress to suspend the federal taxes of 18.4 cents per gallon on gas and 24.4 cents per gallon on diesel, which take in around $36 billion per year. The revenue primarily goes to federal highways and public transit programs. 

Republican Sen. Josh Hawley of Missouri said on X today that he plans to introduce a bill to suspend the tax. 

It is unclear whether suspending the gas tax will help ease prices at the pump for consumers. A report by the University of Pennsylvania in 2022 said about 80% of the tax burden falls on consumers. Consumers could see almost a 15-cent decrease per gallon.

ANALYST WARNS OF ANOTHER POTENTIAL SURGE FOR GAS PRICES: Over the last week, the national average price of gasoline rose by $0.05, sitting at just below $4.50 a gallon, according to GasBuddy. While at least six states saw their average prices at the pump fall over the last week – including Michigan, Ohio, and Indiana – petroleum analyst Patrick De Haan is now warning that the relief could be short-lived. 

“However, that optimism has since largely unraveled, with talks appearing to stall and President Trump signaling the latest proposal is unacceptable, helping push oil prices higher again in Sunday electronic trade,” he said this morning. 

Related…administration avoids predictions: Energy Secretary Chris Wright has learned his lesson about making forecasts for when gas prices will fall and breaking with Trump, who has promised fast relief. Yesterday, Wright told NBC’s Kristen Welker that he “can’t make any predictions” about the prices of oil or gasoline prices. 

In March, Wright said he thought it was “very good chance” that gas prices would fall by the summer. But, one month later, he suggested that prices might not reach that level until 2027. 

CEO OF WORLD’S LARGEST OIL COMPANY WARNS MARKETS MAY NOT RETURN TO NORMAL THIS YEAR: If the war in Iran does not end in a matter of weeks, it will likely take until 2027 for oil markets to stabilize, Saudi Aramco CEO Amin Nasser warned. 

The details: The warning came during an analyst call earlier today. Nasser said that even if the Strait of Hormuz were to open today – a highly unlikely outcome – it would take “months for the market to rebalance,” according to MarketWatch. If that opening is delayed by a few weeks, he said, it will take until 2027 for markets to return to pre-war trading levels. 

Some background: While oil and gas firms in neighboring countries of Kuwait and Qatar have been hit hard by the strait’s closure, with several companies declaring force majeure, Saudi Aramco saw its profits increase significantly in the first quarter of this year. 

Yesterday, the Saudi energy major told CNBC that it reported a 26% year-on-year increase in first quarter profits. This is primarily due to a crucial pipeline that has allowed the company to circumvent the Strait of Hormuz and continue exports. Amid the war, the East-West pipeline has hit its maximum capacity of 7 million barrels of oil per day. 

Where are oil prices now: Oil prices rose again today, as the prospects of a ceasefire deal between the U.S. and Iran fizzle out. Just before 3 p.m. EDT, both international and domestic benchmarks were up by more than 2.5%. 

Brent Crude had increased by 2.76% and was priced at $104.09 per barrel. West Texas Intermediate was also up by 2.78% and was selling at $98.07 per barrel. 

PLUS…OPEC OIL OUTPUT HITS NEW LOW: The extended closure of the Strait of Hormuz has sent OPEC’s output of crude to the lowest it’s been in over 20 years, according to a new survey conducted by Reuters. 

The survey found that in April, oil output from OPEC fell by 830,000 barrels per day month-over-month. This left output for the month at around 20.04 million barrels per day. This is the lowest since 2000, far below levels seen during the coronavirus pandemic. 

The biggest drop in output was seen from Kuwait, with similar declines seen in Saudi Arabia and Iraq. The only OPEC member located in the Gulf region that increased production in April was the United Arab Emirates, as it has been able to circumvent the closure of the strait. 

In case you forgot, the UAE exited OPEC as of May 1. With this departure, OPEC’s oil output for May can be expected to fall even further. 

EPA LOOSENS PERMITTING RULES TO ACCELERATE DATA CENTER BUILDOUT: With permitting reform stalled in Congress, the Trump administration has taken another creative step to help data center developers build their facilities faster to win the race for artificial intelligence. 

The details: Earlier today, the Environmental Protection Agency took two actions to accelerate the permitting timeline for projects requiring approval from the agency. 

The EPA first said it was proposing redefining the phrase “begin actual construction,” which refers to preconstruction permitting requirements for energy and infrastructure projects. If approved, the new definition would allow project developers to start building non-emitting components or structures (such as wiring and piping) before obtaining a major New Source Review permit from EPA. 

Secondly, the agency has issued new guidance clarifying its permitting process as it relates to the Clean Air Act. The new guidance says states, local, and Tribal permitting authorities are allowed to submit title V permit applications to the EPA before opening public comment periods and then conduct those comment periods while the EPA reviews the applications. 

According to the China Passenger Car Association, Beijing exported 769,000 cars last month, with EVs and plug-ins accounting for 52.7% of the total exports. The export of new EVs more than doubled to 406,000 cars in April. 

ICYMI – VOLCANIC ERUPTION HELPS TACKLE CLIMATE CHANGE? In a bit of quirky science news for you to round out today’s newsletter, a recent study found that a volcanic eruption in 2022 unexpectedly removed methane from the atmosphere. 

The underwater Hunga Tonga-Hunga Ha’apai volcano erupted in 2022, marking the largest underwater explosion recorded with modern instruments. The incident sent massive amounts of water vapor and volcanic ash and gas into the sky. Inside this volcanic plume, European scientists found high levels of formaldehyde, which is typically produced in the atmosphere when methane is broken down. 

“It is known that volcanoes emit methane during eruptions, but until now it was not known that volcanic ash is also capable of partially cleaning up this pollution,” study author Dr. Maarten van Herpen said. 

The scientists were able to track a cloud with high levels of formaldehyde for 10 days, meaning that the plume was breaking down methane for more than a week after the eruption. The study authors believe their findings could aid others in the effort to slow the growth of methane emissions, as they were able to use satellite imaging to track methane breakdown over time. 

You can read the full study here. 

If you forgot: Methane is considered to be one of the largest contributors to increasing global temperatures, trapping roughly 80 times more heat than carbon dioxide. While more potent than CO2, methane does break down far faster, usually within 10 years. 

May 12 The United States Energy Association is holding an energy policy forum in Washington, D.C., featuring Interior Secretary Doug Burgum as a keynote speaker. 

May 12 The Global CCS Institute is holding its 2026 Americas Forum on Carbon Capture and Storage in Washington D.C. 

May 13 The Cato Institute is hosting a fireside chat with Energy Secretary Chris Wright.

May 13 The Senate Energy and Natural Resources Committee is holding a hearing to examine the fiscal year 2027 budget request for the U.S. Forest Service. 

May 13 The House Energy and Commerce Subcommittee on Energy is holding a hearing titled “Wires, rates, and States: Permitting Transmission for Reliable and Affordable Power.”  

May 14 Citizens for Responsible Energy Solutions to host an energy leadership summit on Capitol Hill, featuring Daily on Energy’s Callie Patteson as a panelist. 

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