The global energy crisis is worsening.
The world's largest chemical company, BASF in Germany, just announced it would further cut ammonia production due to high and rising natural gas prices, which could result in shortages of the ingredient used in many items including fertilizers, plastics, and carbonated beverages.
Energy bills are expected to reach over £500 per month for consumers in the UK. “Huge swathes of the British public aren’t going to be able to afford their bills this winter,” said an energy expert. “Average families with two working parents will be in fuel poverty.”
And while global crude oil prices came down thanks to releases from the U.S. Strategic Petroleum Reserve (STR), Saudi Arabia will price its flagship crude oil to Asia at a record price for September “highlighting a potential turning point for the market,” according to Bloomberg.
And yet the leader of the free world, President Joe Biden, has no intention of significantly expanding American oil and gas production, and indeed has no energy plan beyond November, according to a senior oil and gas industry lobbyist who spoke on the condition of anonymity.
“There is no grand strategy,” the person said about Biden’s actions on oil and gas production.
It’s true that total petroleum and refined petroleum product exports hit a record high, rising to nearly 10.9 million barrels per day, but that’s because Biden has released 146 million barrels from the SPR over the last year.
Biden’s strategy to reduce gasoline prices has focused on SPR releases given his unwillingness to increase oil and gas production in the U.S. and the failure of his efforts to get the Saudis and other OPEC members to significantly increase oil production.
“It’s a six month strategy,” said the industry lobbyist. “First they wanted to get through the summer and now they want to get through the elections.”
What is the Biden Administration planning to do about oil and gas after the election? I asked. “They have no energy plan past November,” the person said, flatly.
US crude commercial inventories are 17 million barrels lower than they were in July 2021. “If the US doesn't extend the SPR releases beyond October,” warned Javier Blas of Bloomberg, “the winter is going to get interesting.”
The Biden Administration isn’t the only problem facing the American oil and gas industry. Supply chain bottlenecks of steel and sand have significantly increased costs, the person said.
But the Biden Administration’s refusal to expand oil and gas production on public lands is the main thing stifling domestic production. “Eighteen months into the Obama administration there were 47 onshore and offshore oil and gas lease sales held,” the lobbyist said. “Eighteen months into this one and there’s just one, some parcels in Wyoming. And they increased the royalty rate by 50%.”
It’s true that royalty rates on public lands are still lower than what companies pay on private lands, the person said. “But on federal land there are so many regulatory hurdles and risks. The process is complicated. And the Department of Interior only offered lease sales on 20% of the nominated acreage. That was new. The DOI unilaterally said, “You want to bid, but we’re only going to do 20%”
Much of what the oil and gas executive said shocked me because it is not being reported in the mainstream media. And it’s not being reported in the mainstream media, the person confirmed, because most journalists and editors are so biased against the oil and gas industry.