Illustration: Aïda Amer/Axios

A Texas carbon capture project hailed as a key solution to climate change has been "mothballed" over low oil prices, E&E News reported on Tuesday evening. 

Our thought bubble: The news is unsurprising but nonetheless emblematic of the complex relationship between climate policies and oil prices, which collapsed along with oil demand in the wake of the pandemic.

How it works: The Petra Nova project, which I visited in 2018 for this column, captured a small share of the carbon dioxide emissions from an adjoining coal plant, which were then used to extract oil out of the ground through a process called enhanced oil recovery.

  • That process is expensive, so oil prices need to be higher than where they are now (around $40 a barrel) to sustain it financially.

Between the lines: Two schools of thought persist about the relationship between climate policies and oil prices. 

  • Oil (and natural gas) prices need to be high to force behavior change on behalf of businesses and consumers.
  • Oil and gas prices should be low to allow the political room for all sides to compromise on big policy. 

But, but, but: The problems with those two schools of thought, in order: 

  • High oil prices often compels politicians into imminent crisis mode (price manipulation! Investigate OPEC!), so they're not thinking about longer-term climate policies.
  • If prices are too low, it makes it harder for more expensive technology — whether that's carbon capture or electric cars — to compete with fossil fuels. We're seeing this play out now with Petra Nova.

What we're watching: A spokesman for the company behind the project, NRG Energy, says it will come back online when "economics improve" (code for when oil prices go back up, which is not a given any time soon).

Go deeper: The oily path to combating climate change

Go deeper

Shale's struggles will persist despite a rise in oil prices

Illustration: Sarah Grillo/Axios

WTI, the benchmark U.S. oil future, traded Wednesday morning at its highest since early March — highlighting how the worst of shale's crisis is seemingly over, though more bankruptcies likely lie ahead.

Why it matters: Its price at the time — $43 — is still too low for many producers to do well, though it varies from company to company.

U.S. oil production saw biggest decline since 1980 in May

Data: EIA; Chart: Axios Visuals

U.S. oil production's nearly 2 million barrel per day decline in May was the steepest monthly drop since at least 1980, the federal Energy Information Administration said in a short report.

Why it matters: The agency's monthly production data, which is more robust than weekly snapshots but arrives with a lag, starkly shows the toll the pandemic took on U.S. output after the price collapse caused a major pullback. Some of the lost output has recently returned as prices improved, but production is expected to remain depressed.

2 hours ago - World

Macron visits Beirut promising a "new political pact" for Lebanon

Macron visits the hard-hit Gemmayzeh neighborhood. Photo: AFP via Getty Images

French President Emmanuel Macron walked through the blast-damaged streets of Beirut on Thursday, swarmed by people chanting for the fall of Lebanon's government and pleading for international aid.

Why it matters: Lebanon is at a breaking point. Its economy was collapsing and its government hardly functioning — all before a massive explosion destroyed swathes of the capital city, including its vital port.