The last barrel

Over the past several months, the fallacy of green logic has become increasing apparent. While President Biden and the U.S. West Coast greenies have stressed the imperative of reducing the use of fossil fuels to slow GHG emissions, the hard push to convert has left the U.S. undersupplied, underpowered and vulnerable to weather-related events. In February, Texas experienced a major failure of its power grid, due mainly to decades of poor policy decisions that put climate change politics—which prioritized unreliable renewable energy sources—at the expense of reliable electricity.

Biden/Newsom at work. In a relatively short period of time, the Biden administration has crippled a once-thriving petroleum industry depriving Americans of good-paying jobs and making the U.S. less energy-independent. The Biden administration, and the radical left, were so intent on reversing President Trump’s policies without considering the consequences, that they left the country unprepared for surging post-Covid-19 demand, resulting in shortages and skyrocketing fuel prices. In California, inadequate green power generation, combined with a lack of modern infrastructure, has led to years of rolling backouts. The state, which touts the world’s fifth-largest economy, is unable to deliver enough electricity to keep the lights on and air conditioners running, much less charge the batteries of an entire fleet of electric vehicles.

Biden supports Middle Eastern producers, slams U.S. operators. Before Saudi Arabia and the UAE ended a bitter dispute, and agreed to gradually add more crude to the market, the Biden administration urged OPEC and its allies to find a compromise solution to increase oil production. Biden wants Americans to have access to affordable and reliable energy, including at the pump, White House officials said. As the U.S. economy recovers from Covid-19, it’s critical that energy supplies keep pace, which requires stable oil market conditions. The administration’s interest in increasing foreign oil production stands in stark contrast to its opposition to domestic output, kicked off on Biden’s first day in office with a moratorium on oil and gas exploration on Federal lands.

More anti-U.S. oil and gas legislation. In mid-July, the Biden administration released a blueprint for limiting sales of U.S. drilling rights, just as rising oil prices highlight the risks of curtailing domestic crude production. Recommendations include key changes to the government’s sale of oil and gas leases on federal lands and waters, including increasing royalty rates and changes to financial bond requirements. The Interior Department also is expected to limit new leases in sensitive coastal and Western areas, and begin a broad study of the climate effects of oil and gas development on federal property.

Representative Steve Scalise (R-La.), the second-ranking Republican in the House, has accused Biden and congressional Democrats of pushing a “radical agenda” that’s led to higher energy prices. Ohio Rep. Bill Johnson (R) highlighted the sharp rise in gasoline costs, asserting “the Biden administration is trying to stamp down and stop America’s energy development, here at home.” Republicans argue that significant leasing restrictions will harm U.S. national security, energy independence and the economy.

The National Ocean Industries Association has argued for resuming lease auctions in the GOM, which provided 17% of U.S. crude production in 2020. “There’s a lot at stake from an economic standpoint,” said NOIA President Erik Milito. “You’ve got increased demand, combined with constrained supply. If there are decisions that further constrain supply over the long term, it sends a terrible message about the administration’s efforts to provide affordable energy.”

API forecast absolutely accurate. Back in January, API’s Mike Sommers said restricting development on federal lands and waters is nothing more than an “import more oil” policy. Energy demand will continue to rise—especially as the economy recovers post Covid-19—and we can choose to produce that energy here in the U.S. or rely on foreign countries hostile to American interests. Biden’s move is leading us toward more reliance on foreign energy from countries with lower environmental standards. The agenda also risks hundreds of thousands of jobs and billions in government revenue for education and conservation programs.

Solar leaves California sweltering. California made an urgent request for additional power supplies to avoid blackouts this summer, an extraordinary step after suffering from last year’s rolling outages. State energy officials asked the California Independent System Operator, which runs most of the grid, to contract for additional power capacity for July and August, on concern it won’t be able to meet demand during the evening when unreliable solar production fades. According to the California Energy Commission, “California is using all available tools to increase electricity reliability this summer.” The commission cited unprecedented climate change-driven heat events, which are occurring throughout the West in combination with drought conditions that reduce hydroelectric capacity.

Part of the problem is the state’s aggressive push to cut carbon emissions by shifting to renewable energy. Many gas-burning plants have closed, which means electricity supplies tighten at sunset, as the production from solar generation fades around sundown.

Common sense in short supply. It’s become apparent that the U.S. is struggling to achieve GHG reduction goals. Our shortsighted “green” leaders need to acknowledge that hydrocarbons will be part of our energy mix for the foreseeable future. President Biden should be working with the U.S. energy industry to develop and use domestic supply instead of importing more foreign crude and supporting less environmental conscious Middle East producers.

About the Authors

Craig Fleming

World Oil

Craig Fleming Craig.Fleming@WorldOil.com