Oil: between ecology and energy, the US government on a tightrope

Between ecology and energy, the US government is walking a tightrope, as it urges the oil industry in the United States to produce more, after the US embargo on the import of Russian crude, while continuing the transition towards cleaner energy.

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“You can walk while chewing gum at the same time!”, launched the American Minister of Energy Jennifer Granholm on Wednesday in front of the industrialists gathered at the annual CERAWeek conference in Houston (Texas), calling for boosting the exploration and production without departing from environmental objectives.

The metaphor did not sit well with the oil lobby, which has been criticizing the Biden administration’s energy and environmental policy for months, long before Russia’s invasion of Ukraine which caused a new surge in prices.

“The Biden administration continues to blame everyone but itself for rising gas prices,” disputed Phil Flynn, oil market analyst for Price Futures Group.

“What they don’t blame is the cancellation of the Keystone pipeline and the drilling moratoriums on federal lands,” he protests, highlighting the government’s difficult position.

Yet, according to the Center for Biological Diversity, the Biden administration gave approval for 3,557 oil and gas permits on federal lands in 2021, “far exceeding the number of permits granted by the Trump administration during of his first year in office which was 2,658”.

Gasoline prices at the pump have been catapulted to heights not seen since the 2008 financial crisis, with a gallon of gasoline (3.8 litres) rising well above $4 on average, or one dollar more than before the invasion of Ukraine, a psychological threshold that displeases American motorists.

The critics fuse

Joe Biden’s minister assured that this new urgent need for fossil energy supply, in an attempt to bring down prices at the pump, did not call into question the government’s commitment to an energy transition.

“We are serious about the decarbonation” of the country’s economy, hammered the minister.

At the UN on Wednesday, US climate envoy John Kerry expressed concern that “more and more people are calling for increased drilling and production to meet the lack of supply due to the conflict”. .

“We need to work together to fund climate solutions,” he said. “Without money, no one will be able to make this transition properly, we need a safe and orderly transition, not chaotic”, further argued the former US Secretary of State.

But critics continue to fire against the government’s initiatives, whether it is the cancellation of the Keystone pipeline permit, one of Joe Biden’s first gestures upon his arrival at the White House or the new diplomatic calls for hitherto banned producers such as Venezuela or Iran.

“The administration wants to reinvigorate energy imports from Iran and Venezuela, respectively the largest state sponsor of terrorism and a rogue dictator in South America,” he said. denounced Senate Minority Leader Republican Mitch McConnell in a speech on Tuesday.

“They would rather buy from these people than from Texas, Alaska and Pennsylvania,” he added.

While the government’s environmental priorities fall at the wrong time, they do not fully explain the US oil industry’s difficulties in ramping up production.

The United States, the world’s largest oil producer thanks to the development of shale gas, has not yet returned to its level of production before the Covid-19 pandemic, when the fall in activity sharply reduced demand. . The restart at full speed, in particular the reopening of shale gas operations, “will take time”, underlines Andy Lipow, specialist in the oil market at Lipow Oil Associates.

Beyond what it sees as regulatory pitfalls on the part of the administration, the oil industry also faces supply difficulties and a shortage of skilled labour.

“We are in a very difficult situation,” explained the president of the oil exploration company Occidental Petroleum Corporation, Vicki Hollub, at the CERAWeek conference.

“With supply chain issues, any attempt to scale up production today at a rapid pace is extremely difficult,” she said.

Environmental activists for their part denounce the profits of the oil majors which swell with prices. “The leaders of these companies are profiting from the war,” said the non-governmental organization Friends of the Earth. This “clearly shows that, although they complain about Joe Biden’s environmental policies, their goal is to line their pockets,” the organization said in a statement Thursday.


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