Biden sends mixed signals to oil industry
The Biden administration is sending mixed messaging to the oil and gas industry as it seeks to boost oil output while also keeping the industry at arm’s length.
The administration has asked U.S. oil and gas producers to drill more as Russia’s invasion of Ukraine has pushed gasoline prices higher. But it has also taken a somewhat hostile tone, blaming the industry for not bringing prices down quickly enough.
The tough rhetoric comes as the industry has faced scrutiny from progressives — a significant group within President Biden’s electoral base.
“The messaging has been all over the place,” said Morgan Bazilian, a public policy professor at the Colorado School of Mines.
“It’s really not very effective communications because they’re sending out all kinds of mixed messages to the industry because of the difficulty they have aligning this with their climate policy, but at the same time they know the political priority is to speak to voters about the price of gasoline.”
Earlier this month, Energy Secretary Jennifer Granholm called on oil companies to drill for more oil in the short term.
“We are on war footing, we are in an emergency, and we have to responsibly increase short-term supply where we can right now to stabilize the market,” she said during an energy conference in Texas.
“That means releases from the strategic reserves across the world like we’ve done and that means you producing more right now, where and if you can,” she added.
The administration has also said it would release 30 million barrels of oil from its Strategic Petroleum Reserve.
Last week, in an apparent effort to help Europe lessen its supply of Russian fuel, the Energy Department allowed two facilities to export additional natural gas.
And this week, the administration met with oil executives — in addition to clean energy executives and CEOs from other industries — about the conflict abroad.
Frank Macchiarola, senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute, called some of the administration’s recent actions “encouraging signs for the industry” in remarks last week.
“We recognize that the administration had in recent days changed their rhetoric to some extent about the need to produce more supply here in the United States,” Macchiarola said.
But he said that some of its other statements “continue to point fingers rather than work on solutions.”
Biden last week chastised the industry for not bringing down prices quickly enough.
“Oil prices are decreasing, gas prices should too. Last time oil was $96 a barrel, gas was $3.62 a gallon. Now it’s $4.31,” Biden tweeted. “Oil and gas companies shouldn’t pad their profits at the expense of hardworking Americans.”
Previously, he also warned that “American oil and gas companies should not exploit this moment to hike their prices to raise profits.”
While Democrats have sought to blame corporate greed for the high prices, analysts have said that it’s normal for gasoline prices to lag behind oil markets when prices fall.
But White House press secretary Jen Psaki said during a recent press briefing that Biden rejects this “so-called rockets-and-feathers phenomenon” — when gasoline prices shoot up quickly on oil price hikes but fall more slowly in response to lower prices.
“Americans deserve relief, and fast, as oil prices fall,” she said last week. “Retail gasoline prices are updated at least daily, and if gas retailers’ costs are going down, they need to immediately pass those savings on to consumers.”
Kathleen Sgamma, president of the Western Energy Alliance, which represents oil and gas companies, called the administration’s gasoline price rhetoric “not helpful.”
But at the same time, she said the administration’s move on natural gas exports was “really significant” and said she hopes it’s a sign of more pro-industry actions going forward.
On the environmental side, some see the administration’s rhetoric as an attempt to respond to false accusations that it is behind the gasoline price surge.
“What the administration is responding to is the allegation that somehow it’s the administration that is holding back more production,” said Mark Brownstein, senior vice president for the energy transition at the Environmental Defense Fund.
“The simple fact is that Wall Street has gotten tired of losing money on U.S. production and, at least up until this point, has not been willing to put money into increasing U.S. production,” Brownstein added.
But he also said that calls for increasing U.S. dependence on fossil fuels are wrong.
“Those who are calling for increased domestic production of oil are really offering the American people a false sense of security and a false sense of hope,” Brownstein said.
Some progressive voices are praising the administration’s messaging and policies amid the Russia-Ukraine crisis.
“The restraint that they’ve shown rhetorically as well as policy-wise has been really good,” said Collin Rees, senior campaigner at Oil Change International U.S., which advocates for a transition to clean energy.
But to Bazilian, of the Colorado School of Mines, the administration’s moves signal a de-prioritization of climate change at a time when other issues — the Russian invasion and skyrocketing gasoline prices — are taking center stage.
“They’re facing the realities that political priorities change and shift and that’s what we’re seeing,” he said of the Biden administration. “Climate change has now moved down the list and the sort of traditional concerns in the energy sector like energy security and gasoline prices have moved up the list.”
“It’s not good for the climate, but it’s sort of inevitable … that’s just how politics work,” he said.