Gas prices have been steadily rising for months now, but Russia’s invasion of Ukraine caused them to skyrocket even more. This unprovoked aggression prompted the Biden Administration to ban imports of Russian oil and liquefied natural gas while acknowledging that consumers will see even more pain at the pump.
President Biden has tapped the Strategic Petroleum Reserve twice in recent months to combat high prices and hasn’t ruled out a third release. However, at best, these actions are only short-term solutions.
What’s the long-term solution? U.S. oil and gas production, of course! Energy Secretary Jennifer Granholm called on domestic drillers to ramp up supplies to combat high prices at the pump.
“We are in an emergency, and we have to responsibly increase short-term supply where we can right now to stabilize the market and minimize harm to American families,” says Secretary Granholm.
The Biden Administration’s move is in stark contrast to its previous policies. Last August, we expressed our surprise that the Administration called on OPEC+, not U.S. drillers, to increase supply.
In retrospect, it shouldn’t have surprised us. Just look at one of the Biden Administration’s first actions after taking office. The Administration swiftly banned new federal oil and gas leases and revoked a crucial cross-border permit for the Keystone XL pipeline. The lease sales were eventually permitted to move forward after a federal judge struck down the ban. Yet environmental groups quickly sued, tying up the contracts in legal limbo. In a final decisive blow, Keystone Pipeline’s developer, TC Energy, eventually canceled its project altogether, with less than 10% of the pipeline built.
Looking to U.S. drillers to meet demand is positive news, but it’s not an overnight solution. It typically takes several months for oil producers to purchase new leases and establish new wells. Also, the oil and gas extraction industry is suffering from the same labor shortages plaguing the rest of the economy. Texas based Tall City Exploration has increased its wages by 20% to ramp up staffing. Other companies will likely follow suit. Of course, some of these problems could have been avoided if the Administration hadn’t spent so much time actively discouraging oil and gas investments.
What can we do to prevent this situation in the future?
Tall City Exploration CEO Michael Oestmann points to a lack of trust between U.S. drillers and the Biden Administration. Many drillers feel insulted by oil negotiations with Venezuela, feelings underscored by President Biden’s misleading claims that the industry is sitting on thousands of unused leases. The Administration has conveniently failed to acknowledge that most of them are tied up in litigation or still waiting for final approval. Publicly criticizing U.S. companies even while asking them for help isn’t a good look.
Showing support for our domestic drillers could rectify the feelings of mistrust. How? For starters, let’s restore U.S. energy independence with an all-of-the-above strategy. Also, federal lands need to be open for new leases. And showing support for energy infrastructure, such as pipelines, would increase our ability to transport supplies.
It’s encouraging that Secretary Granholm and the Administration are looking to domestic energy producers to help ease the pain at the pump. But, they need to do more to ensure that U.S. consumers have access to an affordable and reliable supply of energy. The U.S oil and gas industry is ready, willing, and able to step in and ramp up supply. But, it needs a strong vote of confidence from President Biden and his team to do so