Political grandstanding against Big Oil continues to grab headlines as the House Energy and Commerce Committee called on oil and gas company executives yesterday to testify on the latest unfounded claim alleging their companies are price gouging and taking advantage of the high gas prices to the detriment of the American people.
The hearing attempted to divert public attention away from the Biden administrations anti-fossil fuel policies, which threaten our countrys energy security and largely are responsible for rising energy prices.
The Biden administration seems wholly ignorant regarding how retail gas prices are determined. He revealed his ignorance in tweeting recently that Oil prices are decreasing, gas prices should too. Last time oil was $96 a barrel, gas was $3.62 a gallon. Now its $4.31. Oil and gas companies shouldnt pad their profits at the expense of hardworking Americans.
Prices in the global market for crude hover north of $100 per barrel. Even if those prices were to fall dramatically, it takes time for prices at the pump to adjust downward. Many factors, including transporting oil from the field to the refinery, from the refinery to distributors, and then on to the pump, must be taken into account.
The Biden administration created a bottleneck in the crude oil supply chain by canceling the Keystone XL pipeline that would have carried oil from fields in Canada and the Dakotas to refineries on the Gulf Coast. Its far too late in the current crisis for restarting that project to have any immediate effect. Nor will releasing 180 million barrels of crude oil from the Strategic Petroleum Reserve do much to lessen the pain caused by Bidens green energy policy agenda.
Soon after coming into office, the president paused the Interior Departments leasing program for energy exploration and drilling rights both onshore, on federal lands, and in the Gulf of Mexico. Although a federal court in Louisiana granted an injunction against the offshore leasing moratorium and leasing has continued while the administrations appeal is pending, Biden has not signaled when the five-year leasing program will resume.
Blocking access to known oil and gas reserves, onshore or off, contributes to reductions in supply and to higher wholesale and retail energy prices. Reality will bite wallets even more forcefully in June of this year when the Interior Departments current five-year offshore leasing plan is set to expire.
If not renewed, opportunities for securing any new offshore drilling leases will end abruptly. Combined with ongoing opposition from environmental groups and other possible legal challenges, large fractions of the domestic energy resources needed to power the U.S. economy for the foreseeable future will be placed out of reach. Americans will become more dependent on energy supplies from unreliable trading partners in the Middle East and other corners of the globe. And our ability to support western European allies by exporting energy supplies, especially liquefied natural gas, to counter Russian geopolitical hostility will be compromised.
Ironically, environmental interest groups also will feel the pinch. The economies of Gulf Coast states depend heavily on the tax revenue generated by oil exploration and recovery both onshore and off, which helps fund programs like the Land and Water Conservation Fund, which helps finance maintenance projects on public lands.
A recent study by Energy and Industrial Advisory Partners estimates that renewing Interiors five-year leasing program would allow Gulf Coast states to produce an average of 2.6 million barrels of oil and natural gas per day from 2022 to 2040. If the leasing program is canceled, or even if it is delayed, nearly a third of the energy now being recovered offshore will be lost. So, too, will be about $1.5 billion per year in governmental revenue and an estimated $5 billion in U.S. GDP.
Leasing is only the first step in recovering energy resources. Leases, which are acquired in competitive auctions, grant exploration rights to the highest bidder and, if oil and gas deposits are discovered underneath the leased ground, permits for drilling must be secured. Such investments are not sure things. So, the administrations attempt to blame high oil prices on 9,000 unused leases is not accurate. The number of producing wells on federal lands is at a two-decade high and the idle leases represent an extremely small fraction of the producing-well total.
Instead of shifting blame to energy companies and disingenuous attempts to distract with political grandstanding, the Biden administration should be finding long-term solutions by taking advantage of our robust energy resources here at home.