Now more than ever, American energy is critical for meeting demand for affordable energy and strengthening national security. If America was still importing 60 percent of its oil, the US likely couldn’t take such strong and necessary national security steps against Russia. American natural gas and oil producers are stepping up and doing everything they can to meet rising demand for affordable, reliable energy here in the U.S. and around the world. A steady rebound in the U.S. rig count, significant growth in the Permian and increasing capital investment show producers are responding. Still, production has not returned to pre-pandemic levels, and there’s an imbalance between supply and demand that’s exacerbated by Russia’s unprovoked war against Ukraine. Supply chain and workforce constraints are complicating factors, but policy matters, and there are a number of steps the administration could take right now to ensure more American natural gas and oil can reach the market as soon as possible:
Fully restore leasing on federal lands and waters.
Permit infrastructure so energy can get from where it’s produced to where it’s needed.
Act now on a 5-year offshore plan before the current program expires at the end of June.
Frequently Asked Questions and Answers:
Why haven’t recent declines in crude oil prices led to a decrease in gas prices?
First, prices at the pump do not tend to automatically drop with a decrease in the price of a barrel of crude oil. Traditionally there is a multi-week lag between global crude oil and domestic pump price changes. When recently lowered crude prices stay in place, U.S. gasoline prices historically follow.
Second, it often takes time for local competition among retail fuel stations to bring prices down at the pump. This is especially true in the case of diverse retail fuel sales, where more than 97% of stations are independently owned and not operated by the oil companies cited by President Biden.
Bottom line: Crude oil costs, local conditions and vendor competition all factor into prices at the pump.
What is your response to the request for oil company CEOs to testify before the House Energy and Commerce Committee?
The American people seek solutions from their elected leaders to help alleviate the pain they are feeling at the pump. Congress and the Biden administration should focus on policies that increase US supply and encourage investment when it is needed most, rather than political grandstanding.
The White House continues to say the industry is price gouging, and now some Democrats introduced legislation proposing a windfall tax on oil companies. What’s your response?
Repeated in-depth investigations by the FTC have shown that changes in gasoline prices are based on market factors and are not due to illegal behavior. The American people are looking for solutions, not finger pointing. The price at the pump that Americans are currently paying is a function of increased demand and lagging supply combined with the geopolitical turmoil resulting from Russia’s aggression in Ukraine.
Lawmakers should focus on policies that increase US supply to help mitigate the situation rather than political grandstanding that does nothing but discourage investment at a time when it’s needed the most.
How will the ban on Russian imports impact prices?
We support the US government and our allies in their collective efforts against Russia’s unprovoked invasion of Ukraine, and our industry is prepared to comply with the import ban in response to this aggression.
We don’t want Russian energy in the American market. Even before the import ban took effect, U.S. refiners ceased contracts with Russia and imports of Russia crude: Preliminary EIA data show imports of Russian crude oil dropped to zero in the last week in February.
With energy costs rising, the question becomes how we fill this void of supply – we don’t want to replace one dictator with another dictator. Instead of turning to Venezuela and Iran, we want to make sure we are supplying the world with American natural gas and oil during this crisis.
How do you respond to White House claims that the industry has 9,000 unused permits?
This is misleading and a distraction from the administration’s record of doing everything they can to block U.S. natural gas and oil production since Day One. Here are the facts:
Federal lands and waters are significant to U.S. energy production. Oil production from federal lands and waters provides approximately 24 percent of total U.S. oil production.
We are at a two-decade high for percentage of producing leases on federal lands. Nearly 2 out of 3 leases in effect are producing.
As far as permits, there are currently nearly 100,000 producing wells right now on federal lands. 9,000 permits that are still in a process to start production represent a relatively small fraction of well count.
Leases are issued prior to exploration, and not every acreage of leased land has resources to tap into, despite substantial investments by developers.
Could the industry do more to ramp up production? Are they more focused on returning value to shareholders?
Significant uncertainty in energy markets over past 3 years: Historic demand destruction. Mixed signals from Washington. Geopolitical volatility. Supply chain and workforce constraints.
Steady rebound in the US rig count combined with significant growth in the Permian and steadily increasing capital investment confirms that producers are responding. EIA projects that US crude oil production is on track to increase to 12.0 mb/d in 2022 and reach record-high levels in 2023.
Production has not returned to pre-pandemic levels and there is an imbalance between demand and supply. There are many factors at play behind today’s market challenges, but policy matters, and there is much more the administration could be doing to send a signal that America is open for energy investment.
Psaki claimed that Keystone XL would make no difference for rising gas prices. She referred to Keystone as “just a delivery mechanism” and “not an oil field.” Your response?
Energy supply and demand require forward thinking. Oil, natural gas and pipelines often take years of planning and investment to come online. Indeed, Keystone XL was proposed during the Obama administration – and if the pipeline had been properly evaluated only on its merits, it likely would have already been bringing significant volumes of oil to U.S. refiners and displaced other crudes imported from OPEC.
Keystone XL would have delivered an additional 830,000 barrels of oil from Canada, our neighbor and trusted ally. Instead, the administration is looking to Venezuela and Iran and asking these hostile regimes to increase production.