March 2022

First Oil: Poor U.S. energy policy clashes with global realities

As many in the upstream industry anticipated, military action in Ukraine has sent oil and gas prices to their highest levels since 2008, with crude peaking at well above $100/bbl, with no end in sight.
Kurt Abraham / World Oil

When we left you on this page in the February issue, military experts and government officials were trying to predict when Russia would invade Ukraine. Ironically, no sooner did we send that issue to you, the readers, then the Russians invaded Ukraine. We will leave the assessments of military action and human dislocation to the experts that know far more than we do. 

But we can speak to the energy implications. As many in the upstream industry anticipated, military action in Ukraine has sent oil and gas (O&G) prices to their highest levels since 2008, with crude peaking at well above $100/bbl, with no end in sight. In addition, the U.S. government, in solidarity with Ukraine, has banned the importation of Russian crude oil and refined products. 

One would hope that this invasion of Ukraine serves as a wake-up call on energy to all of Europe. However, maybe not. For instance, Germany had an opportunity to give itself some flexibility by extending the lifetimes of its remaining, operating nuclear power plants, with a capacity of 5.3 GW. But never mind, Vice Chancellor Robert Habeck (who runs the Economy Ministry) and Environment Minister Steffi Lemke declared that “the answer is negative. It would not help us.” Both are members of the oil/gas/nuclear-hating Green Party, so this was likely a decision of ideology. 

Meanwhile, the UK’s Oil & Gas Authority announced that it has changed its name to North Sea Transition Authority. This would indicate a move away from O&G. Considering the situation in Ukraine, haven’t they got better things to do? It’s rather ironic, given that Prime Minister Boris Johnson, just the week before, called for more development of North Sea O&G. 

Biden’s energy buffoonery continues. Meanwhile, Biden’s distortion of the U.S. energy sector continues unrestrained. Two of the President’s biggest buffoons, U.S. Special Presidential Envoy for Climate, John Kerry, and DOE Secretary Jennifer Granholm, served as visual reminders of Biden’s energy failings, when they swooped into Houston recently to appear at CERAWeek. We suspect that Kerry is behind much of Biden’s antagonism toward the industry. Of course, this is the individual who, when Putin invaded Ukraine, infamously expressed hope that Vladimir Putin would “stay on track” in the fight against climate change. Really? And who can forget that Granholm, when asked on the Bloomberg Surveillance program during early November what her plan was to increase U.S. oil production, threw back her head, laughed heartily, and said, “That is hilarious. Would that I had the magic wand on this.” 

Biden has chipped away at O&G for 14 months. He killed the Keystone XL pipeline; suspended lease sales on federal lands; sicced the EPA on the industry; and, just recently, pushed the SEC to issue a proposed climate disclosure rule “that would require registrants to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks…”, to their business, including GHGs. And then Biden turns around and tells the E&P industry that it needs to produce more O&G to bail him out of his self-inflicted high commodity prices and inflation. 

Biden’s distortion goes further. He refers to high oil/gasoline prices as “Putin’s price hike,” yet the inflation started way before Putin invaded Ukraine. His minions say that more U.S. oil production occurred in Biden’s first year than Trump’s first year. That’s statistical trickery—Trump was in the process of encouraging U.S. output to build higher, while Biden merely inherited what Trump built, albeit chopped back by Covid. Biden also likes to say that “they (operators) have 9,000 permits to drill now” on federal lands, but he conveniently leaves out the fact that many of those permits are exploratory, with no guarantee of finding commercial amounts of oil and/or gas. There’s more, but you get the picture. 

We have a message for Mr. Biden in wording that he can understand—“C’mon man, do the right thing!”  

About the Authors
Kurt Abraham
World Oil
Kurt Abraham
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