As of the time of this writing, gas prices at the pump have reached historic all-time highs of over $4 per gallon and are expected to continue to increase as the summer vacation season kicks into high gear.
In March, the U.S. banned Russian energy imports that, according to EIA, accounted for about 8 percent of U.S. imports of oil and refined products, or about 672,000 bpd.
Instead of taking deliberate measures to implement policies to support increased domestic oil and natural gas production, the Biden administration released more oil from the Strategic Petroleum Reserve, which accommodated a mere few days of demand and the president called on foreign adversaries to increase their countries' production. Neither of these approaches impacted the price at the pump.
Since taking office, the Biden administration has taken every step possible to block the development of domestic oil and natural gas, even while study after study demonstrates that the Gulf of Mexico has the lowest carbon intensity per barrel of oil and the most stringent environmental requirements as compared to other parts of the world. In January 2021, the Biden administration signed an executive order to pause lease sales on federal lands and waters. Subsequently, Louisiana's attorney general and 13 other states sued the Biden administration, resulting in a court issuing a preliminary injunction against the federal leasing pause. The Department of Interior (DOI) held one of two scheduled offshore lease sales in November 2021; however, before the leases were awarded to the offshore companies, another court determined the lease sale's environmental review was not sufficient and mandated DOI "vacate" the leases. In other words, the companies submitted bids, the bids were opened and the highest bids were announced, but DOI had not awarded the leases.
The second of the two Gulf of Mexico lease sales scheduled in 2021 should have also occurred; however, DOI slow-walked that process, resulting in the inability to meet the federal Outer Continental Shelf five-year leasing plan, which is set to expire on June 30, 2022. The reality is the United States of America may not have a lease sale on federal lands or waters for the entire duration of the Biden administration while consumers are facing exorbitant gas prices and 40-year high inflation.
Meanwhile, the administration continued its claims that oil companies have enough leases and permits to produce more oil without any action from the federal government. Unfortunately, the Biden administration's statements are misleading. Developing a lease takes years and substantial effort in order to determine whether the underlying geology holds commercial quantities of oil and/or gas. The lengthy process to develop them from a lease often is extended by administrative and legal challenges at every step along the way.
Furthermore, the federal government's regulatory restrictions around greenhouse gas emissions further hinder the development of American energy. The Gulf of Mexico's energy production is a declining curve and, now more than ever, the Biden administration needs to provide certainty for companies to invest in our energy future. Otherwise, American consumers will suffer for many years to come.
The Biden administration's flawed policies with the unrealistic goal to transition completely to renewable energy needs to be smart and strategic - not a "flip of the switch" on the backs of American energy consumers.
For more information about LMOGA and its work to protect and grow Louisiana's oil and gas industry, visit www.lmoga.com or call (225) 387-3205.
