Domestic oil production is forecasted to reach an all-time high by the end of this year, even as President Biden’s climate change agenda seeks to blunt fossil fuel output and consumption.
While presidents largely lack control over short-term oil supply and costs at the pump, industry analysts say Mr. Biden has done long-term damage to production with regulatory uncertainty from “mixed signals” between his green energy policies and calls for more oil to blunt high gasoline prices.
“The administration is not totally to blame for a lot of this. There’s no doubt about it. But this administration has sent mixed signals from the beginning,” said Frank Maisano, a senior principal and energy expert at the law firm Bracewell. “The administration is caught between the consumers’ rock and the environmentalists’ hard place.”
Mr. Biden’s latest environmental regulation, unveiled last week, canceled all Trump-era oil and natural gas drilling leases in the remote Arctic National Wildlife Refuge. Combined with the administration’s past protections and a proposed rule to block new drilling across 13 million acres in a separate area of Alaska, no new oil and gas leases will be permitted anywhere in the U.S. portion of the Arctic Ocean.
Despite anti-oil policies that Republicans blame for inflating gasoline prices, the U.S. is expected to break pre-pandemic oil records by producing an average of 12.8 million barrels per day this year and 13.1 million in 2024, according to the U.S. Energy Information Administration.
The U.S. has been the world’s largest oil-producing nation since it surpassed Russia and Saudi Arabia in 2018. Global demand for fossil fuels — oil, natural gas and coal — is predicted to increase until it tops out around 2030, the International Energy Agency predicts.
But Mr. Biden has tried to appease competing interests. He’s got annoyed climate activists who say he’s failed to stop oil and natural gas production on federal lands and in waters. He’s also got average Americans who are frustrated with stubbornly high prices at the pump.
Mr. Biden and his top officials have prodded Big Oil to produce more to lower prices while at the same time promoting restrictive policies.
“The regulatory inconsistencies this administration has caused will create long-term damage,” Mr. Maisano said. “Across the board — oil and gas and renewables — all want policy certainty. They need policy certainty. It’s essential for them to have a long-term plan.”
The national average gasoline price stood at $3.84 per gallon as of Tuesday, according to AAA. That’s 12 cents higher than a year ago. Oil markets ticked higher and sat around $90 per barrel, roughly the same price as one year ago. The U.S. EIA expects higher oil prices through the remainder of the year — an average of $93 per barrel for Brent crude, the global benchmark — as a result of declining global inventories.
Recent elevated gasoline costs have been caused by higher crude oil prices, increased global demand, production cuts in the Middle East and heat waves limiting domestic refining capacity. Global oil demand in August was at 101.4 million barrels per day, slightly outpacing supply at 100.8 million barrels, according to the EIA.
Republicans have sought to draw a connection between the high prices and Mr. Biden’s latest anti-drilling policies in Alaska, underscoring the political challenges for the incumbent Democrat seeking reelection next year.
“Washington Democrats opened a new front in their war on affordable and abundant American energy,” said Senate Minority Leader Mitch McConnell, Kentucky Republican. “The president calls this move a necessary step to meet the urgency of the climate crisis, but any serious observer would call it bad news for families trying to make ends meet.”
About 15% of U.S. crude oil in 2021 was produced in federal waters of the Gulf of Mexico, according to the EIA. The American Petroleum Institute, the industry’s leading lobbying group, estimated that federal lands and waters provided roughly 24% of total U.S. oil production.
Republican presidential candidates say they would “unleash American energy” — a popular phrase among conservatives who criticize Mr. Biden’s climate policies — by allowing more drilling on federal lands and waters combined with slashing environmental permitting regulations that can delay new energy projects for years.
There are signs that relief at the pump could be on the horizon for drivers.
The busy summer driving season is over, and stations will begin switching to a cheaper winter blend of gasoline starting this weekend.
GasBuddy, the fuel-monitoring app, estimates that between decreased demand and the winter blend, prices at the pump will fall by 10 to 30 cents per gallon by late November.
But a single major hurricane could send regional prices soaring if refineries are knocked offline.
Georgia Gov. Brian Kemp issued an executive order Tuesday to halt the Peach State’s 31-cents-per-gallon gas tax starting Wednesday and lasting through Oct. 12. The move is reminiscent of gas tax breaks that Georgia and several other states implemented in the summer of 2022 when average prices reached a record $5 per gallon.
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