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The Hidden 37-Cent Gas Tax (and How President Trump Can Immediately End It)

July 9, 2026 by Leave a Comment

President Trump wants gasoline prices to “IMMEDIATELY” fall.  Like the president, we all would like to see lower prices at the pump. With more tanker traffic flowing through the Strait of Hormuz (though that may change now that peace talks appear to be stalled), oil prices have fallen, which means gasoline prices have begun to decline as well. Historically, however, gasoline prices do not fall as quickly as crude prices, as most politicians (and motorists) would prefer. But there is something that the Trump administration can do to immediately impact high gasoline prices. 

A federal mandate, called the Renewable Fuels Standard (RFS), has been supported by every president, Democrat and Republican, since President George W. Bush. President Trump, also a supporter of the mandate, even increased it earlier this year when the Environmental Protection Agency (EPA) finalized a record-high biofuel quota. But there is a hidden cost to propping up ethanol: higher gasoline prices. And it’s not just a small increase. 

That mandate now amounts to a “tax” of about 37 cents per gallon of gasoline and diesel Americans buy. To put that number in perspective, it is more than double the 18.4-cent federal gasoline tax. The President has floated a federal gas-tax holiday for the summer driving season, a suspension Congress has not enacted. We support that. But suspending the 18.4-cent tax while leaving the 37-cent “RFS tax” in place is treating the symptom and ignoring the disease. If the President wants cheaper fuel, the federal gas tax is a small lever. The RFS is a big one. The good news is that his own administration can pull that lever at any time.

How we got here: Washington chose this number

Congress created the RFS in the Energy Policy Act of 2005 and expanded it in the Energy Independence and Security Act of 2007, forcing a rising volume of corn ethanol, biodiesel, and other biofuels into the fuel supply on a schedule that climbed to 36 billion gallons in 2022. Then the schedule ran out. For every year after 2022, Congress did not include any numbers in the statute. Instead, it handed the dial to the EPA to decide. The only floor Congress left standing is 1 billion gallons of biomass-based diesel; for conventional ethanol and advanced biofuel, the law sets no minimum at all. Therefore, as a matter of statute, the Trump EPA could set the mandate to zero.

But instead, the EPA did the opposite. A regulation called “Set 2,” finalized on March 27, 2026, covers 2026 and 2027. It is the most aggressive mandate in the program’s twenty-year history. EPA ordered refiners to blend a record 26.81 billion Renewable Identification Numbers (RINs) worth of biofuel in 2026, including a 61% one-year jump in biomass-based diesel, from 3.35 to 5.40 billion gallons, while keeping the conventional ethanol mandate at 15 billion gallons. With no legal obligation to require a single gallon beyond the biodiesel floor, the administration chose record-setting biofuel volumes instead. 

The Renewable Fuel Standard is a climate mandate 

The RFS is an especially strange policy for this administration. At its core, it is a greenhouse-gas program. The categories of biofuel credit are not defined by energy content, cost, or even by the crop involved. They are defined by how much each fuel is supposed to cut lifecycle carbon emissions compared with petroleum. Under the 2007 statute, conventional corn ethanol must show a 20% reduction, biomass-based diesel and advanced biofuel must show 50%, and cellulosic biofuel must show 60%. Take the climate accounting away, and the four credit categories have no reason to exist. In other words, the entire structure is designed to chase carbon dioxide reductions.

That is the same climate agenda this administration repeatedly and soundly rejected. The White House published a fact sheet titled “Ending the Green New Scam.” The President told the United Nations that climate change is “the greatest con job ever perpetrated on the world.” Yet the RFS acts as a carbon dioxide-reduction mandate, built entirely on greenhouse-gas math, that his EPA just expanded to the largest level in its history. And the program is working. The price of gasoline and diesel is higher because of it.

What happened this year and how it lands at the pump

Refiners and importers comply with the mandate by retiring credits called Renewable Identification Numbers (RINs). When the EPA raises the quota, RINs get scarce and their price climbs. According to the U.S. Energy Information Administration (EIA), RIN prices have doubled since the start of 2026. As of June 4, biomass-based diesel (D4) RINs traded at $2.41 and ethanol (D6) RINs at $2.37, near their all-time highs. EIA names the cause directly: EPA’s March 27 rule and its “significantly higher” mandates. Here’s EIA’s graphic:

That regulatory compliance is not absorbed by refiners; it is passed straight through to drivers. A definitive peer-reviewed study by MIT’s Christopher Knittel and Harvard’s James Stock found that RIN costs pass through to wholesale fuel prices at a coefficient of nearly 1.00—complete pass-through, within two business days (Journal of the Association of Environmental and Resource Economists, 2017). The EPA agrees. In its own analysis of RIN prices, the agency concluded that obligated parties “are generally able to recover the cost of the RINs they need for compliance… through the cost of the gasoline and diesel fuel they produce.” Translation: When the RIN price doubles, the consumer’s bill at the pump goes up by essentially the full amount. Thus, today’s 37-cent regulatory compliance tax on refiners is currently being paid at the pump.  

The math behind the 37-cent RFS tax 

The 37-cent figure is not an estimate or an advocacy number. It is the result of two things: EPA’s own mandate and the market price of a RIN.

First, the mandate. EPA does not simply set biofuel volumes; it converts them into a percentage that every refiner must hit. For 2026, the agency divided the 26.81 billion RINs of required renewable fuel by the roughly 173 billion gallons of gasoline and diesel it projects obligated parties will sell, arriving at a “total renewable fuel” standard of 15.50% (rising to 15.78% in 2027). In plain English, for every gallon of gasoline or diesel a refiner sells, it must hand the government RIN credits equal to 15.5% of a gallon. That 15.5% is the sum of four nested obligations, each tied to a credit type:

Obligation (Credit Type)2026 Standard× RIN Price≈ Cents/Gallon
Conventional ethanol (D6)9.08%$2.3721.5
Biomass-based diesel (D4)5.24%$2.4112.6
Cellulosic (D3)0.79%~$2.401.9
Other advanced (D5)0.39%~$2.410.9
Total renewable fuel15.50%≈ 37

Now the price. Each of those credits currently trades at about $2.40. The arithmetic: 15.5% of a gallon, at roughly $2.40 per credit, is about 37 cents per gallon. Run the same 15.5% across the entire obligated fuel supply, 26.81 billion RINs at about $2.40 each, and the RFS is a roughly $64-billion-a-year cost in 2026 alone, paid by everyone who fills their tank. At the start of this year, when RINs traded near $1.20, that same mandate cost only about 18 cents a gallon (roughly the same amount as the federal gasoline tax). By making RINs more scarce, EPA’s larger quota doubled the per-gallon cost in five months.

Conclusion

Like President Trump, we all want lower prices at the pump. The good news is that he can address it by instructing the EPA to reconsider its biofuel mandate. Ethanol interests will surely complain that this would hurt farmers, but the President is already doing plenty to help America’s farmers. For example, through the $12 billion Farmer Bridge Assistance payments, permanent tax relief on the One Big Beautiful Bill (including death tax elimination for family farms), enhanced crop insurance, new trade deals opening export markets for American agriculture, and a supplemental request to Congress (submitted in June) that includes $11.1 billion in additional agricultural assistance. 

With talks with Iran once again stalled, gasoline and diesel prices are likely to rise. But President Trump – and only President Trump – has the power to immediately lower gasoline and diesel prices by 37 cents a gallon. That would be a welcome relief for all of us.

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Subsidized Solar Facilities Destroying America’s Farmland

July 9, 2026 by Leave a Comment

Solar energy is depleting farmlands of their rich soils in the U.S. Midwest. The solar industry is moving into the U.S. Midwest, drawn by cheaper land rents, access to electric transmission, massive federal and state incentives, and the region’s wide-open fields. But Biden’s renewable energy boom risks damaging some of America’s richest soils in key farming states like Indiana. Reuters based the finding on an analysis of federal, state and local data, hundreds of pages of court records; and interviews with more than 100 energy and soil scientists, agricultural economists, farmers and farmland owners, and local, state and federal lawmakers.

According to some agricultural economists and agronomists, taking even small amounts of the best cropland out of production for solar development and damaging valuable topsoil impacts future crop potential in the United States. According to the U.S. Environmental Protection Agency and the Justice Department, common solar farm construction practices, including clearing and grading large sections of land, can lead to significant erosion and major runoff of sediment into waterways without proper remediation.

Solar leases in Indiana and surrounding states can offer $900 to $1,500 an acre per year in land rents, with annual rate increases. In comparison, farmland rent for top corn and soybean producers in Indiana, Illinois and Iowa averaged about $251 per acre in 2023, according to USDA data. Farmland Partners Inc, a publicly traded farmland real estate investment trust (REIT) leased about 9,000 acres nationwide to solar firms to obtain profits for its investors; much of that ground was highly productive for farm use.

Some solar project leases are being designed to make it possible to grow crops between panels, while others, like Doral Renewables LLC, are allowing livestock to graze around the panels as part of their land management. Some solar developers argue that in the Midwest, where more than one-third of the U.S. corn crop is used for ethanol production, solar energy is key for powering future electric vehicles.

Solar development comes amid increasing competition for land: In 2023, there were 76.2 million – or nearly 8 percent – fewer acres in farms than in 1997, USDA data shows, as farmland is converted for residential, commercial and industrial use. According to USDA, urban sprawl and development are currently bigger contributors to farmland loss than solar power, citing reports from the Department of Energy and agency-funded research. However, with Biden’s rush towards deploying solar energy and enormous subsidies under the Inflation Reduction Act and other laws, land losses to solar power are certain to grow.

Example of Damages to Cropland

In 2019, one Indiana farmer leased about 445 acres of his 1200 acre farm near Whitfield to Dunns Bridge Solar LLC for one of the largest solar developments in the Midwest. According to the solar lease, Dunns Bridge would use “commercially reasonable efforts to minimize any damage to and disturbance of growing crops and crop land caused by its construction activities” outside the project site and “not remove topsoil” from the property itself. Sub-contractors, however, graded the fields to assist in the building of roads and installation of posts and panels, despite warnings that it could make the land more vulnerable to erosion. The crews spread fine sand across large stretches of rich topsoil. Much of the land beneath the panels is now covered in yellow-brown sand, where no plants grow. The Dunns Bridge Solar project is a subsidiary of NextEra Energy Resources LLC, the world’s largest generator of renewable energy from wind and solar. According to the company, it would review any remedial work needed to the land at the end of its contract in 2073, as per the terms of the lease agreement.

Land Needed for Solar Development

Because land deals are typically private transactions, the amount of cropland currently under solar panels or leased for possible future development is unknown. The United States Geological Survey and the U.S. Department of Energy’s Lawrence Berkeley National Laboratory are compiling a database of existing solar facilities across the country. Work on the U.S. Large-Scale Solar Photovoltaic Database began in 2020 and includes data on 3,699 facilities in 47 states and the District of Columbia. As of 2021, around 0.02 percent of all cropland in the continental U.S. intersected in some way with large-scale, ground-based solar panel sites. The total power capacity of the solar operations in the data set represents over 60 gigawatts of electric power capacity. But, between 2021 and 2023, solar capacity had nearly tripled.

Reuters reviewed land use in four Midwestern counties – Pulaski, Starke and Jasper counties in Indiana, and Columbia County in Wisconsin—and found far larger percentages. The counties, representing an area of land slightly bigger than the state of Delaware, are where some of the nation’s largest solar projects are being developed or built. Reuters found the percentage of these counties’ most productive cropland secured by solar and energy companies as of end of 2022 was: 12 percent in Pulaski, 9 percent in Starke, 4 percent in Jasper and 5 percent in Columbia. Doral Renewables, the developer behind the $1.5 billion Mammoth Solar project in Pulaski and Starke counties, does not consider corn or soybean yields in its siting decisions. The company looks at the land’s topography, zoning and closeness to an electrical grid or substation – and tries to avoid wooded areas, ditches and environmentally sensitive areas.  These are also areas typically avoided by farmers.

By 2050, to meet the Biden Administration’s decarbonization targets, the U.S. will need up to 1,570 gigawatts of capacity from solar. According to the Energy Department’s Solar Futures Study, published in 2021, the land needed is not expected to exceed 5 percent of any state’s land area, except the smallest state of Rhode Island, where it could reach 6.5 percent by 2050.

Researchers at American Farmland Trust, a non-profit farmland protection organization, however, found that 83 percent of new solar energy development in the United States will be on farm and ranchland, unless current government policies change. Nearly half would be on the nation’s best land for producing food, fiber, and other crops.

Conclusion

Farmers are leasing land in the Midwest for solar development as the industry moves there due to the government’s massive subsidies, and the area’s cheap rents, access to transmission and wide-open spaces. While the leases provide for damage control, the land is being depleted of its rich top soil as the solar developers build their roads and other infrastructure. Solar power is just one more industry that is removing important farmland from production by offering much higher rents for the land than farmers can afford to pay. Unless government policy lavishing benefits on solar power changes, a large amount of farmland will be converted to solar power to meet Biden’s climate goals, removing it from crop production. Despite the growing number of acres being converted to solar power use, the real issue is the quality of the land coming out of production, and what that means for local economies, state economies and the country’s future abilities to provide food for Americans.

*This article was adapted from content originally published by the The Institute for Energy Research in May, 2024.

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Europeans Suffering Under Climate Tyranny While Americans Crank Up The A.C.

July 7, 2026 by Leave a Comment

Visitors to the World Cup games in the United States are awed by the availability of ice for drinks and the air conditioning in most facilities, including homes. Media reports of this have surprised Americans because more than nine out of 10 households here have air conditioning, and in much of the southern United States, nearly all households do. In contrast, only about 20% of homes across Europe have air conditioning, and in the United Kingdom, the figure is less than 5%. In 1975, a larger percentage of American households had air conditioning than European households today – fifty years later. Even more Mexican homes have air conditioning than European homes. That is due in part to European policy discouraging the use of air conditioning to reduce electricity consumption and carbon dioxide emissions. European policymakers view air conditioning as environmentally undesirable.

However, it is the wealthy elites, those who often endorse limiting air conditioning use, who most often have air conditioning in Europe. The hypocrisy is evident in the European Commission, which, during a severe heatwave in Brussels, shut off the air conditioning for lower-level employees but kept it running on the upper floors where top executives work.

Europeans are currently experiencing a heat wave that began on June 20 and is progressing across Europe, prompting alcohol bans and the cancellation of mass gatherings in France, melting road surfaces in Germany, and twisting rail tracks in Sweden. Temperatures have peaked in France and Britain, with June records broken. Paris hit a June record high of 40.9°C (105.6°F). Tedros Adhanom Ghebreyesus, the director general of the World Health Organization, noted on social media that more than 1,300 excess deaths “linked to high temperatures in Europe” had been recorded since June 21. Across the continent, cultural landmarks have been forced to close, and farming has suffered. Asian air-conditioning manufacturers reported a boom in European sales. Air conditioning is common in major cities across Asia, but most of the housing stock in northern Europe, where temperatures are normally chilly to mild, was not built to withstand heat but rather to keep it in.

Officials in France reported that the heat had already been responsible for roughly 1,000 excess deaths. Eighty-five percent of the dead were aged 65 or older, though increases were seen across all age groups. According to France’s interior minister, Laurent Nuñez, 74 people had died by drowning since June 18. The state-owned ‌power utility in France, ⁠EDF, pledged to spend €80 million ($90 million) on cooling systems for schools and day-care centers.

According to doctors in Britain, the hot weather was affecting critical medical equipment such as MRI scanners and cancer treatment machines in hospitals. A temperature of 36.9 C (98.4 F) broke the British record for the hottest June day on three successive days. Hundreds of schools were closed, and calls to London’s emergency services for help were up 50%. Electric fans were hard to find in Britain due to high demand. According to Anthony Watts’ climate realism article, British building regulations and planning guidance have long emphasized “passive cooling” while treating air conditioning as something to be avoided whenever possible. Many British homes, schools, offices, and even some hospitals were built or renovated without air conditioning.

The heatwave, which has pushed temperatures as much as 18 C above their seasonal average according to the Reuters Climate Monitor, is being driven by a weather pattern known as an Omega block that traps a ball of hot air over regions for extended periods, with cooler air on its fringes. The ​present heatwave moved up from the Iberian Peninsula towards ​Western Europe and is expected to begin shifting by the end ⁠of the month, hitting central Europe and the Balkans, according to the World Meteorological Organization.

Europeans want to blame the heat wave, or at least its severity, on climate change, but Europe has experienced devastating heat waves for centuries, including the notorious heat waves and accompanying droughts of 1473 and 1540.  There was a deadly 2003 European heat wave. During that heat wave, 15,000 people were estimated to have died in France. Heat waves occurred throughout the twentieth century. In 1976, the British Isles heatwave occurred when the Earth was cooling, and many scientists were warning that the next ice age could be coming. According to Anthony Watts’ climate realism article, Omega block heat domes develop because of atmospheric circulation patterns, persistent high-pressure systems, soil moisture conditions, and regional weather dynamics. They are short-term weather events that have existed for as long as humanity has existed and long before weather was studied.

Conclusion

The heat wave hitting Europe is causing deaths, as Europeans have nowhere to go: only about 20% of households have air conditioning, and most other facilities, including schools, are without it. European policymakers view air conditioning as environmentally undesirable because their goal is to reduce carbon dioxide emissions rather than to ensure affordable, reliable, and abundant electricity for the masses. The major hypocrisy is that those homes with air conditioning are most often owned by the elite, who are the ones who endorse limited air conditioning for others. Europe has lower air-conditioning adoption than even some third-world countries. According to the Harvard School of Engineering and Applied Sciences, air conditioning is one of the most significant public health interventions in history, averting hundreds of thousands of premature heat-related deaths annually.  And residential cooling has become a critical lifeline, especially for elderly and vulnerable populations.

*This article was adapted from content originally published by the The Institute for Energy Research.

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The Unregulated Podcast #278: Let Them Eat Cold Soup

July 1, 2026 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the leftward lurch of Democrat primaries across the country, Republican’s odds of keeping their majority after mid-terms, updates coming online to the electric grid, and more.

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Government Backed Solar & Wind Fail When Families Need Them Most

July 1, 2026 by Leave a Comment

When there is less sun and less wind, solar and wind power output will drop. The same is true of hydropower. If there is less rain and snow and the water behind dams falls, hydropower output will be lower. In February 2021 in Texas, a major storm reduced wind power output, prompting the state to rely on natural gas and coal, yet many consumers still lost power. In 2024, a major hailstorm outside of Houston dismantled a large solar panel facility. And studies show that output from solar, wind, and hydropower has fallen in certain regions during El Niño years, as cloud cover, wind patterns, and rainfall change. El Niño is a natural climate cycle, typically recurring every two to seven years and lasting for about a year.

Texas Storms

Texas leads the nation in wind-powered generation and was the first state to reach 10,000 megawatts of installed wind-generating capacity, subsidized by state mandates and federal tax credits. By the end of November 2020, installed wind capacity in Texas was 29,230 megawatts, and wind turbines at Mes had generated over half of the Texas power generation. When a storm hit in February 2021, wind generation dropped off, demand surged because of the cold, and fossil-fuel generation increased to cover the supply gap. Between the mornings of February 7 and February 11, wind as a share of the state’s electricity fell to 8% from 42%. Gas-fired plants produced 43,800 megawatts of power and coal plants produced 10,800 megawatts—about two to three times what they usually generate at their peak on any given winter day. Between 12 a.m. on February 8 and February 16, wind power plunged 93% while coal increased 47% and gas increased 450%.

Source: IER

In mid-March, 2024, a massive hailstorm crippled a 3,000-acre solar panel facility 40 miles outside of Houston. The storm sheared hundreds of panels, prompting nearby residents to worry that toxic chemicals may be leaking from them and endangering local water tables. The hailstorm caused damage to the solar panels at the Fighting Jays Solar facility, a 350-megawatt project brought online in July 2022 in Fort Bend County, Texas. According to the Department of Energy, hailstones the size of baseballs can have sufficient kinetic energy to shatter solar panel glass completely. The hail ranged in size from quarters to golf balls and even baseballs.

Texas is not the only state that has been hit by hail. In June 2023, a massive hailstorm destroyed a PV solar facility in Nebraska. The solar panels at a 5.2-megawatt solar farm in Scottsbluff, Nebraska, were mostly destroyed by baseball-sized hail moving at 100 to 150 miles per hour. The system’s 25-year expected life was cut to less than 4 years, leaving a toxic mess to clean up.

El Niño Weather Effects

A 2024 study on renewables in Texas found that both solar and wind power supplies tend to decline during El Niño. Extreme El Niño-driven heat can increase solar generation but also drive electricity demand up and strain the grid. In parts of the Western United States, particularly California, as well as parts of South America, the Middle East, and eastern China, the researchers found that El Niño reduces solar radiation and causes solar energy to decline despite growing solar energy capacity. The study also found that the effects are strongest during ‘super El Niño’ events, which cause temperatures in the central and eastern Pacific Ocean to rise more than 2 degrees Celsius above their average levels. These events have only occurred three times since the early 1980s. Parts of Asia have seen declines in wind power during El Niño events. Based on past events, researchers estimate that the next super El Niño could reduce solar power output by about 5% in California and by 10% in parts of southeastern China.

For wind, El Niño can shift storm tracks and change wind speeds, sometimes leading to less consistent or weaker wind patterns in key Texas wind corridors. This can reduce the efficiency of wind farms, especially in the Panhandle and West Texas regions where Texas leads nationally. In Texas, the combination of reduced solar irradiance and altered wind patterns can create a dual hit to renewable generation. Lower solar and wind output during El Niño can increase reliance on natural gas and other dispatchable sources. Parts of Asia have also seen declines in wind power during El Niño events.

In some areas of South America and southern Africa, El Niño reduced hydropower output. In Colombia, where hydropower supplies up to 70% of the nation’s electricity, a strong El Niño in 2015 and 2016 caused water levels in the country’s dams to drop by 60 to 70%, according to a report from the World Energy Council. The 2015-2016 drought was the second-strongest in Colombia’s history. Rainfall was 40% below normal, resulting in a severe hydrological drought. Hydropower generation also dropped across other parts of the continent, including Brazil and Ecuador, as one of the worst droughts in decades affected the region. The Energy Information Administration reports that in the summer of 2015, a strong El Niño caused hydroelectric generation in Washington and Oregon, which provides the largest share of electricity generation in the Pacific Northwest, to be below normal, leading to increased reliance on natural gas and other fossil fuels to meet electricity demand.

Source: EIA

El Niño comes as some world leaders, particularly in Europe and China, are considering expanding their renewable energy portfolios due to higher oil and gas prices resulting from the conflict in Iran. If countries continue on the renewable path, utilities and policymakers may need to adjust forecasts and reserve capacity to account for El Niño’s dampening effect on renewables.

Conclusion

Wind and solar power are affected by weather conditions and must have back-up, which essentially means a secondary system, whether that power is provided by coal, natural gas, or nuclear, or by very expensive storage batteries that store power when there is excess wind and/or solar power and release it when these sources are in a lull. Adding system costs to wind and solar power no longer makes them the cheap energy sources the media and environmentalists tout. Further, intermittent renewable sources are even more expensive when they no longer get the massive subsidies that they have been receiving for decades. With a super El Niño expected, the likelihood of solar, wind, and hydro output dropping is highly likely, and utility planners need to be prepared. Significant policy-driven changes have led to more weather-dependent energy sources in the United States and around the world, and utility planners must recognize the increased challenges to the reliability and affordability of these policies.

*This article was adapted from content originally published by the The Institute for Energy Research.

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California Continues to Gouge Residents at the Pump to Pay for Poor Policies

July 1, 2026 by Leave a Comment

WASHINGTON DC (7/1/26) – The State of California’s excise tax on fuel is scheduled to increase today by an additional 2.2 cents per gallon of gasoline and 1.6 cents per gallon of diesel, adding yet another cost for motorists in a state that already has the highest average gas prices, as well as fuel taxes and fees, in the nation. The increase comes just ahead of one of the busiest travel weekends of the year.

Tom Pyle, President of the American Energy Alliance, issued the following statement:

“California families, who already pay the highest fuel prices in the nation, are about to pay even more thanks to a state government that treats their tax dollars as a slush fund for their reckless green agenda. This weekend, while we celebrate the 250th birthday of our great nation and the founders who rejected the idea of oppressive taxation, Californians will once again be hit with more burdensome taxes – you almost have to appreciate the irony. 

“Gavin Newsom has continuously blamed the Trump administration for his state’s high gas prices in an attempt to deflect from his own failed ideological crusades. The fact is that Sacramento is deliberately imposing ever-increasing energy prices on its constituency through misguided, costly green mandates and ongoing tax hikes. Almost a third of Californians are living in poverty. It is unconscionable that their state government continues to make life even harder by piling on costs to those already struggling to make ends meet. This Independence Day, Californians should be celebrating our nation’s freedoms and looking for new representation as they consider their continued increasing taxation.”

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American Natural Gas Is Fueling The AI Revolution

June 30, 2026 by Leave a Comment

Chevron plans to reach a final investment decision later this year on a power plant that would use natural gas to supply Microsoft’s 2.7-gigawatt Project Kilby AI data center in Reeves County, Texas, under a 20-year agreement. The final investment decision will be made after the project receives all its permits, expected later this year. The Project Kilby data center would start receiving power in late 2028, and a fuller build-out would continue into the 2030s. Most of the electricity will come from large gas turbines supplied by Chevron’s partner, GE Vernova, with additional turbines provided by Caterpillar. The power will initially supply just the data center and will not be connected to the electric grid. Any excess power, however, will be provided to stabilize the grid when it connects to the grid at a later date, according to Jeff Gustavson, president of Chevron New Energies. Construction has not yet started on the data center.

Chevron is working with Joulent, an energy company launched by investment firm Engine No. 1, to build a power-generation complex to supply the data center with natural gas produced from Chevron’s fields in the area. The collaboration between Chevron and Joulent is their first big AI data center project. The 2.7 gigawatt center would be housed on more than 2,000 acres in the heart of the Permian Basin oil-and-gas field. The site is located about 20 miles south of Pecos, where Chevron has been producing oil and gas for years.

Wait times for grid-connected electric service can be five to seven years in many places. Because data centers need faster access to electricity, the concept of “Bring Your Own Power (BYOP)” provides faster access and avoids cost impacts on other ratepayers. About a quarter of all data center capacity under development plans to build their own power on-site. Data provider Cleanview is tracking 59 of those data centers with a combined capacity of about 90 gigawatts. The Trump Administration has encouraged companies to pursue this route where possible, to speed construction and deployment of infrastructure.

There are engineering challenges to building “behind-the-meter” projects. Without a grid connection, the Kilby project will require an overbuild of power equipment and a large battery storage system to maintain reliability. Because solar resources in West Texas are better than in other areas, and with the complex already planning a large battery storage system, the project developers may add solar power at a later date.

Microsoft plans to invest $190 billion in capital expenditures this year, up 61% from 2025. Because the rapid growth of AI requires energy infrastructure that can scale quickly and reliably, the partnership with Chevron makes sense, as Chevron can deliver natural gas from the Permian Basin, located in West Texas and southeastern New Mexico, to data centers at a competitive cost.

Microsoft needs power sources that can reliably meet the 24/7 demand of its data centers, which wind and solar power alone cannot provide due to their intermittency, despite the company having invested heavily in them earlier. To provide reliable power 24/7 and limit carbon dioxide emissions, Microsoft invested in the restart of the Three Mile Island nuclear plant in Pennsylvania in 2024. Constellation Energy plans to restart the nuclear plant on schedule in 2028, supplying power to Microsoft and helping stabilize the grid. The plant will be renamed the Crane Clean Energy Center; the restart will cost $1.6 billion, financed by the company’s funds. Microsoft agreed to purchase the plant’s Unit 1 electricity output for 20 years.

Other partnerships may be in the works. Late last year, Exxon Mobil partnered with NextEra Energy to develop a 1.2-gigawatt gas-fired power plant with carbon-capture technology. At the time, the companies were in talks with a potential data-center customer. NextEra and Google are developing three data center campuses and are seeking additional locations. In October, the companies announced a deal to restart a NextEra nuclear reactor in Iowa. NextEra’s goal is to have 15 gigawatts of new power generation for data center hubs operating by 2035.

How China Powers Its Data Centers

Last year, the International Energy Agency (IEA) reported that China’s data center electricity supply was dominated by coal, with a near-70 % share, followed by renewables with near 20%, nuclear power with near 10%, and natural gas accounting for the remainder. Between 2024 and 2030, coal is expected to remain the largest source of additional electricity for China’s data centers, with annual generation increasing by nearly 90 terawatt hours.

However, Oil Price reports that China has just launched the world’s first offshore wind-powered underwater data center, using seawater cooling and renewable electricity to reduce energy, water, and land requirements. The 24-megawatt-capacity Shanghai Lingang undersea data center demonstration project was made possible by an investment of around $238 million. It is located over 10 miles off Shanghai’s coast, submerged 10 meters below the water’s surface, and is mainly powered by an offshore wind farm.

Conclusion

Chevron and Microsoft are partnering to build a large data center in West Texas, fueled by natural gas turbines that will not initially be connected to the electric grid. The concept of “Bring Your Own Power” is becoming more widespread as data centers can obtain electricity more quickly by building their own power sources without affecting other consumers’ rates. A final investment decision on the Project Kilby data center power source is expected later this year, once permits have been obtained. If it is a go, the data center would start receiving power in late 2028, and a fuller build-out would continue into the 2030s. About a quarter of all data center capacity under development plans to build their own power on-site. The Trump Administration has encouraged companies to pursue this route where possible, to speed construction and deployment of infrastructure.

*This article was adapted from content originally published by the The Institute for Energy Research.

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Nothing Like Raising Your Taxes to Celebrate America’s Independence

June 30, 2026 by Leave a Comment

California has become one of the most expensive places to live in the United States. Whether it be the cost of housing, exorbitantly high income taxes, or especially the cost of energy, high costs have pushed many people and businesses to leave for more affordable states such as Nevada, Texas, or Florida.

Of the many famously high and onerous taxes that plague California, few come close to the celebrity of California’s fuel taxes, which are set to increase on Wednesday by an additional 2.2 cents to 63.4 cents per gallon of gasoline, and by 1.6 cents to 48.2 cents per gallon of diesel — just in time to celebrate Independence Day.

Terrible roads in exchange for the country’s fuel taxes

The cost of fuel in California has been high for many years due to a combination of environmental fees, totaling around 54 cents per gallon, self-imposed supply chain limitations that have led to refinery closures, and a progressively increasing state excise tax.

However, the abnormally high fuel cost has come under extra scrutiny recently due to price fluctuations of gas and diesel as a result of the Iran war and the chaotic closing and reopening, and then closing and reopening again, of the Strait of Hormuz. The strait serves as a transit corridor for upwards of 20% of the world’s global flow of energy, such as oil and natural gas, and California imports approximately 30% of its oil from the region.

Beyond the unnecessarily overextended fuel supply chain, much of which would be uncomplicated if in-state production were prioritized, let alone encouraged, lies the challenge of identifying how these high taxes and fees, upwards of $14.4 billion in 2025, are improving the transportation infrastructure of the state, given that it arguably has some of the worst roads in the nation.

Every state and the District of Columbia levies a fuel tax, in addition to the federal gas tax of 18.4 cents per gallon and the diesel tax of 24.4 cents per gallon, to fund transportation infrastructure, which is supposed to prioritize road maintenance. In California, even after collecting the highest fuel-related taxes and fees in the country, the transportation infrastructure remains abysmal.

The primary reasons are unsurprising given the notoriously poor management of the state’s political leadership. Bloated bureaucracy, high administrative costs, and excessive red tape have led to multiple years of backlogs and maintenance deferrals, increasing the cost of repairing and expanding California’s roads by billions of dollars. 

Compounding the problem of inconsistent maintenance is California’s umbrella-like disbursement of funds without clear intent and a lack of genuine transparency or accountability. Even with the promise of increased transparency and a better allocation of funds from the Road Repair and Accountability Act of 2017, the spending discretion of funds by local and state bureaucracy has led to further distrust in public leadership and a tangibly low return on public investment for better roads.

Another key factor behind rising fuel taxes and poor-quality roads is the present and projected future loss of revenue, upwards of $1 billion by 2027, due to the forced adoption of electric vehicles and the general adoption of more fuel-efficient vehicles, including hybrids, by Californians.

Those who have been able to afford EVs, which have historically come with economically unfair tax subsidies, haven’t had to pay the gas tax, and those who have opted for more fuel-efficient vehicles simply don’t have to fill up as often. For this reason, Sacramento has been experimenting with a road usage tax calculated per mile driven, but it is unlikely that fuel taxes would go away if, and when, this were to be passed, given the tax-glutinous nature of California’s leadership and the improbability that millions of residents would trade in older, likely paid off, vehicles, in exchange for an EV they might not want.

Two hundred fifty years of independence just to pay high taxes again

Saturday marks the 250th anniversary of the United States, a nation founded on the principles of individual liberty, freedom, and the pursuit of happiness. Contrary to these important concepts, Sacramento continues to demonstrate a lack of understanding of America’s founding principles by once again raising a burdensome tax that has historically yielded a poor return on investment for Californians and imposing limitations on many seeking to travel, let alone drive to work or visit loved ones.

The indifference, arrogance, and contempt that California’s political leadership holds for its residents are precisely the qualities that Americans fought against in the nation’s war for independence as they sought freedom from taxation without representation. As Californians prepare to pay higher taxes on gas and diesel yet again, and just three days before Independence Day, they should really start to question whether America’s founders would have wanted people to be seen by their representatives as nothing more than a source of tax revenue.

Caleb Jasso is a senior policy adviser at the Institute for Energy Research and a native of California.

*This article was originally published by the Washington Examiner.

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President Trump Cuts Even More Red Tape Further Unleashing American Energy

June 26, 2026 by Leave a Comment

The Department of the Interior proposed major changes to Bureau of Land Management (BLM) rules regarding onshore oil and gas leasing and waste prevention to promote energy dominance and encourage domestic energy production. It is proposing to loosen two major Biden-era regulations: one on methane releases and the other on plugging non-operating wells. Producing more domestic energy provides jobs and enhances security while making products more affordable.

In 2024, the Biden administration dramatically raised the cost of bonds that oil and gas companies must pay the government to ensure that their wells will be cleaned up. The Trump administration is proposing to drop those rates back to their pre-Biden levels, before they increased them 20-fold from $25,000 statewide to $500,000 statewide. The rule would revert to the system in place at the beginning of 2024, “while gathering public input on a fair long-term approach.” In 2021, an analysis by non-profit Resources for the Future estimated that it costs about $20,000 to plug a single oil ‌and gas well.

Also in 2024, the Biden administration clamped down on methane emissions from oil and gas produced on federal lands by requiring oil and gas firms to either certify that they will capture all of the oil and gas produced by their wells or produce a plan to reduce their methane releases. The Trump Interior Department is proposing to remove that requirement.

Oil drillers usually flare (burn-off) natural gas produced as a byproduct to oil when they lack pipelines to move it to market or when prices are too low to make transporting it worthwhile. Other reasons to flare natural gas include safety concerns and connectivity issues. However, it is always in the best interest of an oil and gas producer to capture and sell the supplemental natural gas on the marketplace whenever possible, and that is what oil companies do. A study of the flaring of natural gas from wells in the United States by consultant Rystad Energy for the Environmental Defense Fund determined that infrastructure capacity limits are the greatest reason for flaring gas that cannot be captured, but the Biden Administration had made it more difficult to build pipelines, lessening the alternatives for oil and gas companies.  The Trump Administration has pushed to streamline permitting for pipeline construction which would serve as a win for the government and companies by reducing the need for flaring.

Nevertheless, U.S. oil and gas companies have reduced their methane releases. ExxonMobil, for example, has cut its methane emissions intensity by more than 60% since 2016 and expects to achieve its planned reduction of 70-80% in 2026.

The Interior Department is also expected to revise definitions for when venting and flaring, which release methane, is authorized, according to its press release. The rule is also expected to establish clearer definitions for avoidable and unavoidable losses, and emergency situations and measurement standards. The revisions to the waste prevention rule are expected to reduce compliance costs for energy operators by nearly $17 million annually.

According to Interior, the proposed leasing rule would also authorize noncompetitive leasing following competitive auctions, eliminate the expression-of-interest leasing preference review process, shorten public participation periods from 90 days to 10 days, modernize filing fees and provide replacement lease sales when scheduled offerings are canceled or delayed. Additional provisions would limit lease suspension approvals to one year while establishing new timing requirements.

According to Interior’s press release, the reforms will eliminate unnecessary obstacles to domestic energy production, modernize resource management, and strengthen the nation’s long-term energy resilience. They will further accelerate development, enhance clarity for operators, expand economic opportunity, and reinforce the nation’s commitment to responsible stewardship and American energy leadership.

The changes will undergo a 60-day public comment period following their publication in the Federal Register.

Conclusion

To increase U.S. energy dominance, the Trump Interior Department is proposing major changes to Bureau of Land Management rules regarding onshore oil and gas leasing and waste prevention. It proposes loosening two major Biden-era regulations on methane emissions and on plugging non-operating wells, as well as cutting public comment periods from 90 to 10 days, among other changes. It would lower the statewide bonding minimum from $500,000 required by the Biden administration to the previous standard of $25,000. It would remove the Biden-era requirement for oil and gas firms to either certify that they will capture all of the oil and gas produced by their wells or produce a plan to reduce their methane releases, as U.S. oil and gas companies are already making progress. Oil and gas companies would prefer to sell their excess gas as long as they have the pipeline capacity to move it to market.

*This article was adapted from content originally published by the The Institute for Energy Research.

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AEA Leads Coalition Letter Urging Congressional Action on the Renewable Fuel Standard

June 25, 2026 by Leave a Comment

WASHINGTON DC (6/25/26) – Today, a broad coalition of prominent conservative, taxpayer, and energy policy organizations sent a letter to Senate Majority Leader John Thune and House Speaker Mike Johnson urging support for a Congressional Review Act (CRA) resolution of disapproval to overturn the Environmental Protection Agency’s (EPA) final Renewable Fuel Standard (RFS) volume mandates for 2026 and 2027.

The EPA finalized the rule on April 1, 2026, setting the highest renewable volume obligations (RVOs) in the program’s history: 25.82 billion renewable identification numbers (RINs) in 2026 and 25.98 billion RINs in 2027. This makes it the most expansive and expensive RFS mandate in history.

 AEA President Thomas Pyle issued the following statement: 

“The RFS program was designed for a different era when America was dependent on foreign oil. Today, the United States is a net exporter of energy. These bloated mandates no longer serve their original purpose and instead act as a hidden tax that drives up costs for refiners and American families at the pump.

“The EPA’s own analysis acknowledges massive costs of more than $20 billion annually, against just $400 million in claimed benefits. Independent estimates place the total burden on consumers and refineries closer to $106 billion over the next two years. For American workers, businesses, and families already strained by inflation and high gas prices, this is the last thing they need.”

AEA Experts Available For Interview On This Topic:

Additional Background Resources From AEA:

For media inquiries please contact:
THOMAS.PYLE@ENERGYDC.ORG

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