Oil Price
“American voters are watching.” This is what the president of the American Petroleum Institute had to tell the federal government at an API event this week. Voters are watching, and they are less than thrilled with the current administration’s energy policies.
The American Petroleum Institute is not known to sit back and shut up when the federal government pursues its transition-focused energy policies. Yet this is perhaps the bluntest warning from the lobby group yet as election year begins.
“Imagine if a president blocked development of farmland, disrupting our domestic food supply and making us more reliant on foreign countries to feed our families,” Sommers said, speaking at the State of American Energy event.
“American voters are watching. And as Americans head to the polls later this year, energy is very much on the ballot — and so is everything energy touches: Jobs, America’s security, manufacturing, inflation.”
The Biden administration had indeed been busy trying to curb oil and gas exploration as much as possible, with the culmination coming late last year when the federal government held the last oil and gas lease sale in the Gulf of Mexico for the next two years. Besides, it took place after the Biden administration failed to find a way to stop it, try as it might.
Lease sales are one major point of contention between the U.S. energy industry and the current administration. The latter has prioritized the switch to non-hydrocarbon energy sources and has been hard at work supporting those at the expense of oil and gas.
The landmark legislative success in this respect was the Inflation Reduction Act, which was the subject of months of negotiations. It was as part of these that the administration was obliged to hold lease sales on occasion. Even so, the Interior Department tried to cancel the 2023 lease sale, then it tried to reduce the acreage to be offered and only stopped trying after a federal judge ordered it to carry out the tender as originally planned.
At the same time, however, the White House gave the go-ahead to the Willow oil project in Alaska, which got a lot of Biden supporters in the green camp up in arms. The $8-billion project will tap reserves of up to 600 million barrels of crude and produce between 160,000 bpd and 180,000 bpd.
Environmentalist groups that have been vocal supporters of the Biden administration and its transition agenda had a lot to say about the Willow approval, suggesting certain potential voter alienation. Now, they are targeting liquefied natural gas.
Activist pressure recently prompted the federal government to start a review of the approval process for new LNG production capacity. That review, the energy industry fears, might result in fewer and slower approvals for new LNG plants.
API’s Sommers was succinct on that point: “Halting US LNG approvals would put our allies at risk. This should not be controversial,” he said at the lobby group’s event this week.
Indeed, U.S. LNG has been headed mostly to Europe, and demand will rise further as Europe tries to completely replace Russian gas with U.S. LNG. There are long-term deals in place already and active buying on the spot market. Yet if approvals slow down, that would be bad news for Europe.
Already, the length of the period for approving a new LNG export project is greater than it was under Trump, Reuters reported last October. Under Trump, the average period for getting an export license was just 49 days as befits an administration that is a fan of the oil and gas industry. Under Biden, this has gone up to 330 days—twice as long as the average approval period during the Obama administration.
Right now, all eyes are on Venture Pass’s Calcasieu Pass 2 project, which is awaiting the final greenlight from the federal government to begin construction.
Meanwhile, the energy industry is struggling with a pipeline shortage as approvals for new pipelines become harder to get than approvals for LNG plants. Pipelines are a favorite target for environmentalist protesters, and state and federal authorities tend to side with them.
“The industrial world that we enjoy now is severely compromised because of the lawsuits, the pushback and the movement to cancel energy infrastructures and modern society. We’ve run out of flexibility,” the chief executive of EQT, Toby Rice, told the FT last year in comments on the state of the U.S. gas pipeline network.
Lack of enough pipelines means a cap on gas production and, by extension, on LNG exports, not to mention domestic gas supply. Per the industry, this threatens the energy security of Americans.
Amid these controversial energy policies, Biden’s approval rating has plummeted, with the decline especially notable among groups that four years ago were firmly in the Democrat camp, such as Black Americans and Hispanics, per a recent poll from USA Today and Suffolk University. Energy policies are not the only reason, but they are a big reason.
It’s not because most people like oil and gas production. It’s because most people, especially in some traditional Democrat-voting demographics like the abovementioned, want affordable, available energy.
By Irina Slav for Oilprice.com
