Weekly Brief: Green Strife in Oil Crisis as Uber Makes Peace

US President Joe Biden announced the largest release of oil reserves in history last week, putting one million additional barrels of crude on the market every day for the next six months in an attempt to bring down record prices at the pump.

The oil comes from the US Strategic Petroleum Reserve, a vast stockpile of crude nestled in salt caverns underneath Louisiana and Texas. The SPR was created in the 1970s in response to the Arab oil embargo, when all Arab members of the Organization of Petroleum Exporting Countries (OPEC) stopped the flow of oil to the US in response to America’s support of Israel in the Yom Kippur War. Although US presidents have tapped into the reserve at various points over the last half century, the scale of release from the SPR that Biden is calling for is unprecedented.

His hope is that it will provide a bridge until the end of 2022, when domestic production of crude catches up with increased demand. Some American oil companies have already ramped up production. Others have said that they will not do so, given that the oil crisis is benefiting them with record profits. In response, President Biden is calling on Congress to make companies pay fees on wells from their leases that aren’t in use and on acres of public lands that they are hoarding without producing.

If this sounds like a battle cry for the green revolution, you’ve got cotton in your ears. One could imagine a political reality in which record fuel prices would produce an argument in favor of whole sale electrification, where in place of drilling for more oil we build more battery factories and electric vehicles and clean energy solutions that don’t require oil from Russia or elsewhere. However, as I reported several weeks ago, the fact is that carmakers are not ready for their EV moment, nor is the broader infrastructure ready to support it. So, for now, the reality is Drill Baby Drill.

That’s a dangerous slogan for a Democratic president to own. Biden was careful to couch the directive in the language of a clean energy future. Biden invoked the Defense Production Act to support the production and processing of minerals and materials used for large capacity batteries, such as lithium, nickel, cobalt, graphite and manganese, so that America can power its EVs without being beholden to China and other foreign countries.

In other news last week, Uber did the once unthinkable: reached an agreement with the New York City Taxi and Limousine Authority to list all New York City taxis on the Uber app. Moving forward Uber users will be able to see traditional yellow cabs alongside UberX cars and be able to summon both to their location for a ride. The move comes in the midst of driver shortages and historically high rates for the ride sharing platform, which continues to struggle to deliver profitable returns for investors. For years Uber undercut the taxi industry with artificially low rates, losing billions while seizing market share. A war between the two sides broke out, with open hostility between medallioned drivers and the new wave of gig economy workers. Now, it seems the two sides have come to a detente.

Uber will integrate existing taxi software platforms into its app, adding a fleet of 14,000 New York City taxis overnight. Taxi drivers will receive standard Uber rates for rides and passengers should expect to pay similar fees whether in a yellow cab or an UberX.

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