The Biden administration’s blueprint for fighting “Putin’s price hike at the pump” goes beyond the short-term fix of boosting the supply of oil supply. It also includes using the Defense Production Act to boost the U.S.’s capability to produce supplies needed to make electric vehicles.
The administration will release oil from the U.S. Strategic Petroleum Reserve as well as pressing domestic energy companies to increase production. Biden is proposing new fees on unused oil and gas leases.
The president is also calling on Congress to pass parts of his infrastructure plan that would provide incentives for purchase of electric vehicles and heat pumps.
Heat pumps are, essentially, air conditioners that can also run in reverse, heating a home in the winter. They run on electricity, rather than on gas or oil, like many home-heating systems. The pumps are more expensive to purchase, but cost less to run.
Then there is the DPA, a 1950 law that, among other things, gives the president the authority to provide financial assistance for the production of materials deemed critical for national defense.
“The DPA will be authorized to support the production and processing of minerals and materials used for large capacity batteries–such as lithium, nickel, cobalt, graphite, and manganese,” reads the White House briefing. “The President is also reviewing potential further uses of DPA – in addition to minerals and materials – to secure safer, cleaner, and more resilient energy for America.”
The DPA is the latest tool the president is using to support the EV industry. In August, he announced his vision to have 50% of U.S. new car purchases be electric by 2030. That event was attended by
Ford Motor (ticker: F),
General Motors (GM), and others.
Shortly after Thursday’s announcement, stock in
Tesla (TSLA), the EV leader, turned positive on the day. Shares were up 0.1%, while the
Dow Jones Industrial Average
were down 0.2% and 0.3%, respectively.
Shares of EV supply-chain companies are rising too, but most of the big moves came Wednesday, when reports surfaced that the DPA could be used. In midday trading Thursday, shares of lithium miner
Lithium Americas (LAC), rare-earth miner
MP Materials (MP) and battery-storage company
Freyr (FREY) were up about 2%, 2% and 4%, respectively. Wednesday, the respective gains were 12%, 3%, and 3%.
Stock in battery material recycler
Li-Cycle (LICY) rose 7% Wednesday. The shares were down 4.6% on Thursday.
Write to Al Root at [email protected]