Energy Tomorrow Blog
Posted September 2, 2021
As the administration looks to foreign nations to boost energy production, the House Natural Resources Committee’s baseline reconciliation bill, as unveiled, proposes a double-whammy of punitive policies to discourage U.S. energy development with new, targeted measures against the U.S. natural gas and oil industry. That combination could lower domestic production and boomerang the U.S. back to 1970s-era dependence upon foreign energy imports.
Most concerning, instead of advancing effective solutions that build on the nation’s progress in reducing emissions, the committee would inundate producers with a myriad of new taxes and fees to create a de facto natural gas and oil development ban on federal lands.
As the full committee works on the proposal, a course correction is urgent as the broader, multi-trillion dollar reconciliation package takes shape. Read on about why the committee’s proposal could harm the environment, weaken the economy and jeopardize America’s national security.
Posted August 27, 2021
The Biden administration’s plan to hold its first ever oil and natural gas lease sales this year is a positive sign after it paused new leasing on federal lands and waters for nearly seven months. The question is whether this is a significant policy shift for the administration, which will be determined by what actually happens and how swiftly it occurs.
It must be remembered that it has been more than two months since the administration was ordered to lift its leasing pause by a federal judge, and the administration is continuing its appeal of the court’s ruling. Again, it’s fair to ask whether this week’s announcement is a policy change – or something else while the legal case continues?
The answers to that question and others are critically important to future oil and gas development in federally controlled reserves, much of which requires sizeable investment and lengthy planning.
Posted August 24, 2021
The continuing story in Afghanistan is a reminder of how suddenly geopolitical events turn. Stability in the world is fleeting, and we know that global turbulence impacts energy, historically triggering oil price volatility. While the U.S. shale revolution helped keep global oil markets and costs stable, shielding American consumers from many of the impacts caused by destabilizing events in recent years, maintaining and increasing U.S. energy security should never cease to be a top national priority.
American energy security is strengthened by safe and responsible oil and natural gas production here at home. The two supplied nearly 70% of the energy Americans used in 2020, according to the U.S. Energy Information Administration (EIA). And natural gas was the leading fuel for generating electricity, EIA says, with a share nearly four times as large as wind and solar combined.Now, Afghanistan is raising concerns that could roil global trade, including oil markets.
Posted August 19, 2021
We’ve entered a different era in America, one in which this nation, rich in oil and natural gas reserves, publicly begs OPEC+ to increase its crude oil production to offset a U.S. supply-demand imbalance and the highest gasoline prices in years.
Let that sink in: Practically on bended knee, the American president and his administration – leading the world’s No. 1 producer of oil and natural gas – have pleaded with an oil cartel to solve their problem by producing more oil – as they bypass U.S. producers and pursue anti-oil policies here at home. …
Insult to injury: OPEC+ said, sorry, America, we see no reason to meet your request.
Posted August 16, 2021
Some observations follow on the Biden administration’s continued call for OPEC to increase its crude oil production – even as it curbs or discourages U.S. production – plus the president’s recent announcement that he wants the Federal Trade Commission (FTC) to investigate summer gasoline prices.
We’ll take the FTC first. Chair Lina Khan has been asked to look into any potential illegal conduct or anti-competitive practices that may have occurred during the summer driving season.
The U.S. Energy Information Administration (EIA) reported the national average for gasoline reached $3.172 per gallon Aug. 9, the highest point since October 2014. “[T]here have been divergences between oil prices and the cost of gasoline at the pump,” wrote National Economic Council Director Brian Deese. “While many factors can affect gas prices, the president wants to ensure that consumers are not paying more for gas because of anti-competitive or other illegal practices.”
Numerous federal and state agencies have investigated the causes of price spikes for decades and consistently have found that the markets and other factors are responsible for price fluctuations. If the White House truly believes “anti-competitive or other illegal practices” have elevated gasoline prices, it’s strange that it would look to a cartel of oil-exporting countries to help solve the problem. In fact, the administration is floating a false premise on what’s happened this summer with gasoline prices.
Posted August 11, 2021
The White House has big problems with its continued calls for more crude oil production from OPEC – even as it is discouraging U.S. production.
Rising domestic gasoline prices are a political problem for President Biden. … The administration’s political dilemma is that since April 2020, when EIA reported the per-gallon cost of gasoline was $1.938, prices rose to $3.231 last month. The safe assumption is that most Americans have noticed the 66.7% increase at the pump.
The White House response last month was to plead with OPEC to produce more crude oil – and that’s because the cost of crude oil is the No. 1 factor in the retail cost of gasoline. More supply means more downward pressure on crude costs and retail prices.
On Wednesday, President Biden doubled down on the approach, saying the administration wants OPEC to reverse production cuts made during the pandemic to lower prices for consumers. … Therein lies a big energy policy problem.
Posted August 5, 2021
This summer, Americans saw gasoline prices rise to their highest level since 2014 as Congress debated infrastructure policy and economies worldwide continued their recovery.
Gasoline prices primarily reflect the local balance between gasoline supply and demand. Notably, the cost of crude oil is the largest component in the price of regular gasoline, accounting for 55% of the per-gallon cost, according to the U.S. Energy Information Administration. Right now, demand for crude oil is outpacing supply across the U.S. ...
Given these conditions, it’s no time to restrict or discourage U.S. natural gas and oil production. Instead, government and industry should work together to expand the safe and responsible development of American energy resources. Unfortunately, while America’s natural gas and oil are in high demand, the Biden administration has advanced misguided policies that could exacerbate the crude imbalance and further affect consumers.
Posted August 4, 2021
President Biden’s announcement last week that more of a product must be made in the U.S. to conform to the federal Buy American Act – in support of American jobs – provides an opportunity to double down on a point we made in January, when the president advanced “Made in America” concepts via executive order.
In the same spirit, why not advance American-made natural gas and oil and American natural gas and oil jobs?
Natural gas and oil are the leading energy sources used by Americans – and the rest of the world – every day. You’d think that as the world’s leading producer of the world’s leading energy sources, the U.S. would capitalize on that leadership by fostering more safe and responsible development. Unfortunately, not.
Posted July 15, 2021
As we await the Biden administration’s report on the federal natural gas and oil leasing program, let’s note the welcome news that oil and gas permitting approvals this year are on track to reach their highest levels since George W. Bush was president.
Permitting at that pace is good for near-term U.S. production, no question. In January, when the administration suspended new oil and gas leasing on federal lands and waters, it said permitting would continue, and it has. The country benefits from safe, responsible and robust domestic natural gas and oil production.
Americans shouldn’t conflate permitting and leasing. Drilling permits are issued when companies are ready to develop from acreages, onshore and offshore, previously leased from the federal government. Put another way, leases typically are secured years before development occurs. We’re seeing permits go through at a significant rate because investment and planning have been completed and acreages are ready to go into production. Permitting is about production that’s imminent; leases represent energy in the future.
Posted July 8, 2021
The Biden administration says it is keeping a close eye on the OPEC+ talks on crude oil production because, as White House Press Secretary Jen Psaki said, it wants “Americans to have access to affordable and reliable energy at the pump.”
Unfortunately, the U.S. is mostly a spectator as OPEC+ debates crude oil supply, which continues to be outpaced by demand, putting upward pressure on crude costs. Because the cost of crude is the biggest factor in gasoline prices, U.S. pump prices have reflected this mismatch between demand and supply.