Much of the rise in energy costs is beyond the control of the White House and was attributed to the recovery in demand as the economy recovered from the pandemic, as well as an increase in energy consumption in China, market analysts said. US oil production also declined from pre-pandemic record production, and oil companies hit hard by falling demand were then slow to drill new wells. The OPEC oil cartel is also careful to open its cones too loosely after oil prices fell during the pandemic.
The Biden government has asked OPEC to increase its exports, but has few other options for lowering prices. Energy Secretary Jennifer Granholm said last week that the government was considering releasing oil from the strategic petroleum reserve, a move normally reserved for supply disruptions.
Oil industry officials and experts said the White House team had experience in renewable energy markets but relatively few people with detailed knowledge of oil markets – the problem of the moment.
“Executives are busy finding options to lower oil prices that they believe will be the driving force [the] Rise in inflation, ”said Stephen Brown, a longtime energy lobbyist and current strategist at RBJ Strategies. “Some producers will talk to them, but it’s not that they have a lot of friends in the sector either.”
A lobby source described a Tuesday night meeting of White House officials that focused on rising oil and gasoline prices. A White House spokesman declined to comment on the meeting or contacting the oil industry. Another person said the meeting included senior officials, not necessarily cabinet members.
The White House is rushing to show that it is trying to curb high inflation, which has already led the Federal Reserve to slow its pace of bond purchases aimed at keeping longer-term interest rates low. Biden and his team target supply chain bottlenecks that have drained inventory levels and contributed to higher prices. On Wednesday, he announced that the Port of Los Angeles would be operating around the clock and that large companies like UPS and FedEx would also extend their working hours.
“I want to make it clear that this is a general obligation to work around the clock,” he said in a White House statement. “This is a big first step in accelerating the movement of materials and goods through our supply chain.” But now we also need to strengthen the rest of the private sector chain. “
Some in the oil industry are taking advantage of the rise in fuel prices to push back against Democratic promises to increase the cost of oil and gas drilling on public land.
“To ensure a stable and affordable energy supply here in the United States, the Biden administration should support domestic production of oil and natural gas, ensure continuous production in the state, and work with industry on sensible and intelligent methane controls.” And stop to demand higher taxes for the American oil and gas industry, “Anne Bradbury, executive director of the American Exploration and Production Council, said in a statement.
Biden took office, pledging to accelerate the adoption of electric vehicles and renewable energies such as solar and wind power. But the White House has made advances to the oil and gas industry, such as the meeting of White House climate adviser Gina McCarthy with members of the American Petroleum Institute. And despite the hiatus in oil and gas lease sales, the Home Office has overtaken the Trump administration in approving new permits for drilling on public land.
Still, the industry resents the government’s call for OPEC to increase oil production, saying it sounded hypocritical for drilling given its stance on the auctions for new plots of public land. Industry officials also complain that they haven’t received nearly the attention they received under President Donald Trump or even President Barack Obama.
Amid pandemic global supply chain problems, extreme weather events and China Because of the strong demand for oil and natural gas, administrative officials have turned to industry more often for advice, sources said.
A person from an oil company involved in offshore drilling said the government reached out to them last month with specific information on how to keep gasoline production on track after Hurricane Ida forced companies to Cease oil production in the Gulf of Mexico.
Despite the overtures, the federal government has little leverage to stave off higher oil prices, market analysts said. Companies need to reinstate the truck drivers and other employees they laid off when fuel demand collapsed last year as the pandemic kept people at home.
Andrew Lipow, head of Houston-based oil market consultancy Lipow Oil Associates, said the rise in pump prices was a direct result of oil companies finally responding to investor demands to slow production and reduce spending. Investors had fled the sector in the pre-pandemic years when companies piled up debt to produce ever-increasing numbers of barrels.
“Years ago they were boring like crazy and not making any money,” said Lipow. “This time, they have to show the inventors returns and they are increasing their dividends,” instead of sending more rigs to the oil fields.