Dear friends,
As I write this missive, U.S. crude prices are at a seven-year high. Recognizing inflation and high prices are jeopardizing the recovery of our economy, the Biden administration has chosen to speak with OPEC about the importance of mitigating high oil prices to better support the U.S.
White House Press Secretary Jen Psaki said the administration's outreach regarding oil prices doesn't stop with OPEC: "We continue to speak to international partners, including OPEC, on the importance of competitive markets and setting prices and doing more to support the recovery."
For months, the White House has called on the Organization of Petroleum Exporting Countries and Russia (known as the OPEC+ group) to increase production. Last month, National Security Advisor Jake Sullivan was in Saudi Arabia to meet Crown Prince Mohammed bin Salman. "Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery," said Sullivan, adding that the OPEC+ timeline for easing the cuts is "simply not enough."
OPEC+ met in October for the regular monthly decision on how to proceed with the easing of the cuts. Despite any begging, cajoling or negotiations by Biden's representatives, OPEC+ elected not to accelerate production.
Is anyone really surprised that OPEC+ didn't choose action to intentionally devalue its own product in high demand? But there are winning cards we could play: America's production states. Biden could ask and encourage states like Texas, Oklahoma, Louisiana, North Dakota, Pennsylvania and Alaska to produce more. The U.S. leadership is choosing not to play these winning cards, however, and is instead drawing from the deck for unknown and unproven green energy cards.
I believe our current administration wants the price of oil and gas to remain high - high enough, at least, to facilitate a conversion to unproven technologies, but not so high as to cause enough pain to disrupt its political power.
This, in part, is why our government chooses to block a pipeline from Canada to the U.S., but approves one from Russia to Europe. This is why they are working to block offshore leasing while asking foreign nations to pump more. This is why they are pushing more regulation and higher taxes on traditional oil and gas, while funding and incentivizing other forms of energy.
My readers and followers know I am all for the development of green energies. But we must adopt an "all-of-the-above" approach. Green energies will never fully replace oil and gas in our lifetime.
It was only a few years ago, under the previous administration, when we had energy independence. We didn't have to beg OPEC for more oil. We produced more than enough with high-paying American jobs, and we exported excess to our allies at a profit.
In this issue of BIC, we feature interviews with LyondellBasell Chocolate Bayou Polymers Plant Manager Lawrence Moreaux; East Harris County Manufacturers Association Executive Director MaryJane Mudd; Sempra Infrastructure President Dan Brouillette; Specialized Waste Systems COO Steve Black; Clifford Power Systems Vice President of Sales Stephanie Benson; Vethan Law Firm President Charles Vethan; and Southern States Millwright Regional Council Executive Secretary Treasurer Wayne Jennings. We also have features on a variety of topics important to your business, including the power of mechanical insulation in conserving energy, how to be a dedicated safety leader, common gaps of facility siting and the importance of digital transformation.
U.S. crude oil production is set to rise by 800,000 bpd next year, the Financial Times reported recently. This is hardly surprising given U.S. oil prices now, making most shale wells profitable again. This rise in production won't be enough to counter OPEC+'s previous cuts, but it's a start. Interestingly, it will be private independent drillers that will lead the charge, not the major producers. These smaller businesses are far more focused on profit, and not the environmental, social and governance (ESG) criteria that "socially conscious" investors use to screen potential investments.
Again, much like I'm not anti-green energy, these independent drillers are not anti- ESG. I believe they want to operate in an environmentally friendly fashion and properly manage relationships with employees, suppliers, customers and the communities where they operate. They are taking an all-of-the-above approach of their own: profit with ESG. They are risking scarce capital in spite of the headwinds. May these seeds grow and become ever more fruitful, making American energy great again. America is a wonderful nation. God bless it.
