Even with Record Russian Imports and OPEC Confusion, Biden Administration Keeps New Oil & Gas Leasing Locked Up
During the 2020 presidential campaign, then-candidate Joe Biden said that if elected he would “phase out fossil fuels.” Just hours after being sworn in, his administration began to make good on that promise, issuing executive and secretarial orders to curtail domestic production. Today, the United States is importing increasing volumes of oil from Russia while also finding itself once again in the position of asking OPEC to ramp up output.
Just two years ago, the United States was the world’s largest oil producer and was even a net exporter. What happened?
A Look Back
The next day, the acting Interior Secretary transferred the authority to approve oil and natural gas permits on federal lands from career officials in the states to a handful of political personnel in Washington, DC.
And a week after being inaugurated, President Biden illegally banned federal oil and gas leasing while the Interior Department conducted a review of its leasing program. Despite a court order last month requiring Interior to resume leasing, it has yet to schedule any third quarter sales.
As International Energy Agency data show, global demand for oil and gas is increasing regardless of U.S. energy policy. While the Biden administration’s actions could have significant impacts on domestic supply, they won’t prevent fossil fuel use – in America or elsewhere, especially rapidly growing economies in Asia.
‘Gift to Russia and OPEC’
In a January Washington Examiner op-ed, Americans for Tax Reform’s Mike Palicz opined that restrictions on domestic production and pipeline development would be a “gift to Russia and OPEC,” stating that “it comes at the high cost of energy independence. Putin and OPEC must be smiling.”
And while that may sound like rhetorical flourish, it ended up being fairly accurate.
As EID has previously explained, there are certain kinds of crude oil that U.S. refineries need – namely heavy crude – that must be imported because they are not produced in large quantities in the United States. The cancellation and delay of projects like the Keystone XL limit the ability to import this crude from Canada.
“If Saudi Arabia increases its production in the next few months, as many expect, its barrels could potentially displace the Russian ones. So could oil from Kuwait and Iraq. Otherwise, American refiners would still need to find some dense crude to feed their cokers. Crude from Canada’s oil sands is an option; but U.S. refiners are probably already buying as much as is available.”
And as Bloomberg explains, even if the United States decreases its Russian imports, the next most likely supplier will be countries in OPEC.
Perhaps even more perplexing is that despite issuing policies to curtail U.S. oil production, over the weekend President Biden begged OPEC to increase its production to stabilize markets and keep gasoline prices affordable. As Bloomberg reported:
“Even though the U.S. isn’t a party to the talks, it’s ‘closely monitoring the OPEC+ negotiations and their impact on the global economic recovery from the Covid-19 pandemic,’ a White House spokesperson said Monday. ‘Administration officials have been engaged with relevant capitals to urge a compromise solution that will allow proposed production increases to move forward.’” (emphasis added)
It’s difficult not to notice the irony of calling for production increases abroad while federal leasing remains paused here in the United States. The article continued:
“Biden wants Americans to have access to affordable and reliable energy, including at the pump, the White House officials said. As the U.S. economy recovers from the Covid-19 pandemic, it’s critical that energy supplies keep pace, which requires stable oil market conditions, they said.
“Unless an agreement can be salvaged, OPEC and its allies won’t increase production for August. That will deprive the global economy of vital extra supplies as demand recovers rapidly from the coronavirus pandemic.” (emphasis added)
Under the Obama administration, prolific U.S. shale development helped keep oil prices low – the United States quite literally drilled its way to lower gasoline prices. But today, we’re limiting domestic production while asking other countries to pump more crude.