CNN covers a timely topic with this headline (formatted to fit the blog):
“Biden is blamed for
downturn in new oil drilling, but fossil fuel companies are the ones hitting
pause”
There are several reasons oil and gas companies are
pulling back on new exploration, experts told CNN, but chief among them is the
financial landscape.
Short Intro: OPEC+’s decision this week to slash oil production and the Saudis ass-kissing of Putin over his war in Ukraine – and the looming threat of higher gas prices – has once again pushed Republican rhetoric and hype into familiar territory: “President Joe Biden’s green policies are making Americans pay more at the pump” they claim.
FYI: The U.S. is
the world's No. 1 oil natural gas producer, but also the top consumer (cite: The U.S. Energy Information Administration).
What Biden can do: White House and Congress are eyeing several responses to protect U.S. consumers, ranging from: (1) an effort to wrest market control away from OPEC, (2) limiting U.S. companies’ energy exports, and (3) easing sanctions on unfriendly oil-producing nations. However, each of which carries serious potential downsides for American interests.
Biden told reporters when the news broke: “There are a lot of alternatives and we haven’t made up our minds yet.”
Republicans in Congress have slammed Biden’s attempts since he took office to curb new oil drilling in the U.S and grow the country’s clean energy infrastructure. A fresh volley of criticism came after this week’s OPEC+ move.
Related steps for Biden to possibly follow.
For example:
· Sen. John
Barrasso (R-WY) said on Fox: “The Biden administration is attacking
American energy.”
· Sen. Lisa
Murkowski (R-AK) said in a statement: “The Biden administration must reverse course and
work with our energy producers, not against them to lower prices at the pump.”
However, energy experts
tell CNN recent attempts to open up new parts to oil drilling have failed
mainly because of the lack of interest from oil companies themselves, rather
than Biden’s green policies.
The Reality: It is
true that new exploration for oil and gas has fallen sharply worldwide this
year and that is because they are still being bruised by an oil-price crash prolonged by the CoVID pandemic.
Now the fossil fuel companies are focusing on areas they
know will make more money than less on exploring for new locations to drill.
Rachel Ziemba, an
energy expert and adjunct senior fellow at the Center for a New American Security said: “Fossil fuel companies and markets
are still reeling from the economic downturn during the CoVID pandemic and the
associated oil price crash. Now they are trying to limit their risk by sticking
to projects that are assured to generate oil. Investors are still somewhat wary
of green lighting new projects. People are mostly doing the most solid
projects.”
Ziemba also said countries are
scrambling to lock up energy supplies after Russia’s
invasion of Ukraine, and here hasn’t been a wave of new leasing activity adding:
“Overall, I think there has been a structural shift over five and six years. There’s
been a shift with financial backers, increasing concerns not only about
geopolitical risk, but also pressure about financing new fossil fuel projects.”
There is perhaps no better evidence of this shift than in
the Arctic National Wildlife Refuge (ANWR), which for decades had been a
Republican focus for new oil drilling.
Republicans successfully reopened ANWR to oil drilling in a
2017 bill, but when the lease sale happened in the final days of the Trump administration, only three
companies offered bids – one of which was Alaska’s state-owned energy
corporation. The other companies that bid ended up canceling their leases this
year.
Erik Grafe, attorney for the law firm Earthjustice said: “The ANWR sale was a total bust. There were no oil majors who bid on leases. Big banks and insurance companies warned that drilling in the Arctic could be seriously risky. Some refused funding for insurance.”
Grafe further said:
“There is a lot of recognition by financial institutions that it’s a bad bet to
be trying to get oil out of the Arctic in particular in part due social and
political pressure. The other part is that the permafrost is melting thus making the terrain more unstable
and more difficult to drill on.”
Robert McNally, president of Rapidan Energy Group consultants and a former energy adviser to President George W. Bush said: “I would say it’s 60% financial markets are telling them no. It’s 30% they’re still fearful of another bust, and then 10%, the politicians, they’re not going to make it easy for me.”
McNally says he sees a small but growing long-term shift
away from fossil fuels, and with traditional fossil fuel organizations like the International Energy Agency warning the world
needs to back away quickly from new oil, gas, and coal projects to stave off catastrophic climate change.
McNally also says that even as the clean energy transition is starting in earnest, he doesn’t believe the world is ready to give up fossil fuels, or even that demand for fossil fuel will peak by the end of the decade. McNally then told CNN he thinks the global oil market is at the very beginning of another multi-year boom cycle, which he predicts will bring about new leasing in Canada and the United States, as well as new exploration in South America and West Africa.
McNally concluded saying:
“We’re going to realize we need more investments in hydrocarbons. Anyone who’s
got opportunities, capital and political will, I think all of that is going to
come back into vogue.”
Continue the full and complete article here.
My 2 Cents: My focus today
was to address U.S. oil drilling, gas, and fuel prices, etc., and to emphasize
that is not President Biden’s fault nor government’s fault in general as outlined
in the fine detailed article above.
We also know that all the
hype is a GOP favorite pastime: The “blame game” with Joe Biden being falsely
blamed and never their side, right? This issue is a perfect example for their party slogan:
Shame on the GOP for being so realistic (smile).
Thanks for stopping by.
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