July 15, 2022

Biden pursues more foreign oil despite invite from U.S. producers


By Bethany Blankley 

Prior to heading to Saudi Arabia, the U.S. energy industry invited President Joe Biden to visit American energy sites.

The Texas Oil and Gas Association, Texas Independent Producers & Royalty Owners Association, and over 25 U.S. energy associations invited Biden and his cabinet members to visit U.S. energy facilities throughout the U.S.

The Texas groups represent high-skilled workers in a state that if it were its own country would be the world’s third largest producer of natural gas and fourth largest producer of oil. Texas producers are leading the U.S. in crude production in the Permian Basin and Eagle Ford Shale, recognizing that “energy is the cornerstone of security and prosperity,” Todd Staples, president of TXOGA, said.

Nationwide, the groups represent 11 million workers in an industry that propelled the U.S. to lead the world in crude production in 2019. Under the Trump administration, the U.S. became the largest producer of crude oil in the world, led by Texas. Under the Biden administration, within months of implementing a range of restrictive policies, gas prices reached a seven-year-high and inflation reached a 40-year high. Last month, the average price of a gallon of regular gas in the U.S. surpassed $5 for this first time ever.

From cancelling federal land and offshore leasing permits, to increased regulation and proposed taxes, to depleting the Strategic Oil Reserves, to turning to foreign oil production, Biden has done everything to hamper domestic oil production, those in the industry contend.

While in Saudi Arabia, Biden is continuing his efforts to encourage members of the Organization of the Petroleum Exporting Countries (OPEC) to expand output.

Still, TIPRO President Ed Longanecker said, "There are continued efforts to work with the Biden Administration to prioritize and support domestic oil and natural gas production to address global supply shortages, inflation and an escalating energy crisis in Europe.”

The groups wrote Biden a letter, urging him to “consider taking another look at made-in-America energy” before he left for the Middle East. They said they’d “be honored to show you how our industry is involved in every step of the energy process, from fuel pumps to critical product delivery infrastructure to production zones across our vast nation.”

But they didn’t hear back.

Instead, Biden wrote an op-ed published by The Washington Post justifying his trip. "As president, it is my job to keep our country strong and secure,” he wrote. “We have to counter Russia's aggression, put ourselves in the best possible position to outcompete China, and work for greater stability in a consequential region of the world.

"To do these things, we have to engage directly with countries that can impact those outcomes. Saudi Arabia is one of them, and when I meet with Saudi leaders on Friday, my aim will be to strengthen a strategic partnership going forward that's based on mutual interests and responsibilities, while also holding true to fundamental American values.”

But Staples said, “American consumers suffer” when U.S. energy policies don’t “recognize and promote the long-term domestic development of oil and natural gas, indispensable commodities that are literally essential to modern life.

“Oil and natural gas produced in the United States, and largely right here in Texas, are leading the way in production and offer continued environmental progress. Oil demand is forecasted to continue growing in 2022 and into 2023, further suggesting that the Administration must provide certainty and consistent opportunities for domestic production, pipelines and processing of these products that our world depend upon.”

Instead of prioritizing domestic production, “Unfortunately, we are witnessing a concerted effort to significantly expand federal regulations that target American businesses, which will undoubtedly increase our reliance on foreign sources of energy,” Longanecker said. “Bolstering domestic oil and gas output, developed under the highest environmental standards in the world, is a key answer to addressing these challenges, enhancing America's national security and expanding U.S. competitiveness, and should be the top priority of this administration.”

OPEC announced Tuesday that it expected to increase crude output by nearly 1 million barrels a day next year. “In 2023, expectations for healthy global economic growth amidst improvements in geopolitical developments … are expected to boost consumption of oil,” it said in its monthly report released July 12.

But Ben Cahill, a senior fellow at the Center for Strategic and International Studies, told Reuters “a surge in Saudi production seems unlikely.” Bloomberg News reported that OPEC producers would need to “pump crude at the fastest pace in five years in 2023 if they are to balance oil supply and demand,” which is unlikely for a number of reasons.

Longanecker adds that “global energy demand will continue to outpace supply for the foreseeable future, even with the easing of production quotas from OPEC members, many of which simply cannot increase capacity and output in the short term."

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