Ben Shepperd,
PBPA President
Lately we have become all too familiar with the Biden Administration launching attacks—not in defense of Ukrainians who are valiantly defending their homeland—but on American oil and gas workers and operators who are working through the challenges that his own administration has wrought. In the middle of last year, our members warned about the perilous path this administration was charting towards a scarcer, less reliable, and certainly less secure future. This started with the administration’s pleas for more production from Russian-included OPEC+ nations last summer and we implored the administration to choose Midland, not Moscow, for its energy needs—a decision that would support energy independence, geopolitical stability, improved environmental impacts, and the American worker.
Yet despite those efforts, the administration responsible for tight energy markets and inflation over the last year is “shocked” to find that those decisions have had very obvious consequences.
The mistakes have coalesced into a perfect storm of industry and consumer trauma. Beginning with new and onerous regulations and requirements for drilling on federal lands, the White House has progressed to re-evaluations of previously granted permits for drilling or building gathering systems. Added to that has been the administration’s “slow playing” of permits, causing hardships within the industry. And overlaying the whole affair has been the administration’s emphasis on discouraging investment in domestic energy—an emphasis that has frozen capital markets that otherwise would have invested in oil and gas. This administration has an energy crisis at its feet, and the American people can see it when they go to the pump.
More indicators come easily to hand. For example, the Biden Administration has recently unveiled, within the EPA’s strategic plan, 99 pages of proposed rules to further their climate agenda. And this is not new. Since the Biden Administration took office, including Biden’s Day 1 Climate Executive Order, the administration has raised taxes and fees, has slow played lease sales and permitting of drilling, gathering, and transport of hydrocarbons, and has enlisted every agency to develop a climate office. This has included efforts by the Securities and Exchange Commission to review ESG efforts by operators with unnecessary scrutiny.
However, despite causing unnecessary red tape that does not further help health and safety, the administration nonetheless holds the key to solve this economic and political disaster.
The United States holds large reserves of oil and gas that are produced with far better environmental focus than barrels anywhere else in the world. Rather than speak to Russian oligarchs or authoritarian regimes in other countries like Venezuela, we implore the administration to genuinely engage with operations domestically for a path forward. However, this would likely necessitate a dynamic move away from the most recent pushes by the administration to support unproven and unreliable sources of energy that have shifted the interest in investment away from abundant, affordable, domestic energy.
Before the invasion of Ukraine by Russian forces, ING estimated that $780 billion was invested in oil and gas production in 2014 worldwide, while by 2021 that number had been cut in half to $351 billion. With the demand destruction from the pandemic and the push to end domestic energy production, this administration has caused supply chain and labor issues, rampant inflation, and yes, nearly halted the level of investment that the energy manufacturing sector needs to aid America and her allies at this time.
The challenges for exploration and production operations have more to do with the White House’s impact on Wall Street than they do those decisions being made across the main streets in the Permian Basin and around the country.
Recent news of efforts by the Biden Administration to release large volumes of the Strategic Petroleum Reserve are a short term political solution to the long term political damage the administration has wrought with anti-energy rhetoric and actions.
In November of last year we noted that “[u]nfortunately, we have seen attempts to choke the industry with new federal rules, regulations, and multiple congressional proposals that would increase costs, decrease investment, and create perpetual energy scarcity in the United States. The path forward does not have to be one where we decrease the quality of life for Americans with a false choice of energy or environmental progress.”
And this remains the case, President Biden and his administration should view American oil and gas producers as partners in solving his energy crisis and support places like Carlsbad, New Mexico, instead of the Kremlin. Our nation faces great challenges in the days ahead and we encourage the President to reach out to Permian Basin producers for an American path forward and for success and prosperity.
