Earlier this month, OPEC announced it would cut production by more than 2 million barrels of crude oil per day starting in November, a move that will increase gas prices when much of the world is already experiencing pain at the pump. The Biden Administration responded by saying there would be “consequences” for Saudi Arabia, but did not elaborate on what those consequences could be. While the U.S. does have a few options available to counter the Saudis, we have to wonder (again!), why aren’t we doing more to incentivize U.S. drillers to pump more oil?
While many lawmakers claim that gas prices have little to do with who’s in office, the fact is that President Biden made his feelings about the domestic oil and gas industry known from day one.
For example, the Biden Administration immediately banned new oil and gas leases on federal lands after taking office. A federal judge later struck down the ban, forcing the Administration to open new lands for lease. However, the President made his feelings about the sale known by offering significantly fewer land parcels than previous lease sales and increasing royalty rates by 50%. Another judge eventually issued a ruling invalidating the lease offering.
The recently signed Inflation Reduction Act requires the reinstatement of the oil and gas lease sales, but no one at this point should blame companies for losing interest. After all, what’s the point of bidding on lease offerings that may get canceled at any moment? Add to that the higher royalty rates and reasonable businesses can’t be blamed for deferring.
The president’s day-one cancellation of the Keystone Pipeline was also a clear signal that the administration wouldn’t be doing any favors for the oil and gas industry. While the pipeline was less than 10% complete, its cancellation sent a powerful message to America’s energy industry and its counterparts in Canada. How can anyone expect the U.S. government to support the oil and gas industry when we don’t honor our existing commitments? Clearly there would be little support in the coming years from the White House for new energy transportation infrastructure.
American consumers need a strong domestic oil and gas industry, but for that to happen, the Biden Administration must get on board or at least get out of the way. Pumping more oil isn’t just a simple matter of turning on a tap. New drilling operations require millions of dollars, investments the industry isn’t likely to make without assurance that the administration isn’t bent on sabotaging American production. Keep in mind, as well, that the Biden Administration has repeatedly begged OPEC for more oil as it criticizes and hamstrings U.S. drillers.
Getting into a political battle of wills with Saudi Arabia and OPEC isn’t the answer to our energy woes. Neither is handcuffing our domestic energy industries. The only way forward is committing to develop our supplies here at home to ensure the U.S. and its allies have access to affordable, reliable energy for years to come.