American Energy is the Meaningful, Realistic Answer to Higher Fuel Prices
Posted June 1, 2022
President Biden’s plan to whip inflation (Wall Street Journal op-ed) includes at least one point we can all agree on – the need to take “every practical step to make things more affordable for families during this moment of economic uncertainty …”
Rising inflation is impacting American families and businesses all across the country. Meaningful, realistic measures are needed to provide relief for millions of consumers. Let’s underline the words “meaningful” and “realistic,” because too much of what comes out of Washington lacks substance and/or is unworkable.
Especially on American energy. For months the White House has looked everywhere for answers on higher fuel prices – mostly propelled by global oil demand growth outpacing supply growth – instead of the obvious answer to be found in continued growth in American oil and natural gas production. Washington’s focus on short-term crises has been like a set of blinkers, blocking out policies and actions that could help increase production and signal to the global oil markets, which largely determine pump prices, that American energy is coming on strong.
Instead, OPEC and other foreign suppliers have been asked repeatedly to rapidly ramp up their oil production, bypassing American producers. Worse, new federal oil and natural gas leasing has been suspended, putting the administration on a path that could see nearly three years elapse without a successful offshore oil and gas lease sale. Infrastructure has been canceled, new industry taxes proposed and a steady stream of negative rhetoric toward American oil and gas has chilled new investment.
All of this has played into the fact that Americans have been pummeled by the highest pump prices since 2014. While the president’s op-ed largely blamed higher prices on the shunning of Russian oil after the invasion of Ukraine earlier this year, prices have been increasing a lot longer than that as economies restarted following the pandemic. U.S. Energy Information Administration data show the national average price for gasoline has risen from $2.20 per gallon the week of Nov. 16, 2020, to $4.69 last week, a 113% increase.
With these high prices, the difference versus 2019 is a stark one: Prices were demonstrably lower when U.S. crude oil and petroleum products were relatively abundant and were supported by domestic crude oil production that was more than 1 million barrels per day higher than it has been recently. The need to support domestic production and infrastructure in context with greater North American energy cooperation is urgent.
By contrast, the president’s actions – releases from the U.S. Strategic Petroleum Reserves and, separately, doubling down on his clean-energy agenda – do not offer meaningful solutions to the larger problem impacting Americans right now.
American production is under American control – versus the whims of foreign suppliers. Laying in the foundation for continued growth in the near and long-term future – oil and natural gas are projected to supply nearly 50% of the world’s energy for decades to come – is the smart way to help ensure American economic growth and energy security.
At crisis points like the one our country faces today, we need policies that support meaningful increases in American oil and natural gas production – not misguided, partisan price-gouging proposals and punitive taxes on energy company earnings. Both are unresponsive to the fundamental market forces and worse – they distract from real solutions that could help American families and businesses when they need help the most. API President and CEO Mike Sommers:
“As much as ever, we need to think hard about that basic economic truth, and we must act to stay in command of our energy future. That means recognizing energy from natural gas and oil as the critical strategic asset it is to America – and never taking it for granted again.”
About The Author
Frank Macchiarola became API senior vice president of policy, economics and regulatory affairs in 2019 after previously serving as vice president of downstream and industry operations since 2016. Macchiarola came to API from America’s Natural Gas Alliance, where he was the organization’s executive vice president. A Capitol Hill veteran, he held several senior staff positions in the U.S. Senate including with the Committee on Energy and Natural Resources and the Health Education Labor and Pensions Committee. Macchiarola is a graduate of the College of Holy Cross and earned his J.D. from New York University School of Law.