API to Washington: Turn the page and embrace American natural gas and oil

During World War II, 44 oilfield workers left their homes in rural Oklahoma to lend a hand abroad. Secretly summoned by Winston Churchill to Sherwood Forest in fuel-deprived England, these men worked to drill 100 oil wells in crisis. Historians say the fuel derived from the dig helped the right side win the war and underscored America’s energy leadership. 

Our European allies, long dependent on imported Russian natural gas, have again turned to America to meet a growing challenge. Two weeks before Russia’s invasion of Ukraine, the European Union’s leading energy official requested a meeting with the American Petroleum Institute and its members. She wanted American liquefied natural gas (LNG) – and fast. With a senseless war soon to come in Ukraine, no European diplomat wanted to depend on Russia’s Putin for energy. 

Much like the past, the American oil and gas industry is rising to meet the moment with increased LNG cargoes moving to Europe and others in need. But unlike the past, a politics-first and always vocal wing of Congress is demonizing our sector. Instead of enacting policies to spur domestic production to make up for Russian supplies, these lawmakers hauled energy company CEOs to Washington this week to determine whether our industry is "exploiting the war in Ukraine" for economic gain. 

That is false. It is important to get the facts right as people grapple with historic inflation, high energy costs and unprovoked war. Acknowledging reality is the first step to bringing relief at home and abroad.

First, global markets – not individual companies – set prices for crude oil, which is the main input into the price of retail gasoline. With markets already tight amid surging demand in the wake of the pandemic, the war in Eastern Europe has aggravated existing labor shortages and supply chain disruptions. Beyond that, most retail gasoline stations are not owned by energy companies. Instead, independent franchisees set prices based on local competition, inventories and other factors.

Historic production levels are being observed in the Marcellus, America’s most abundant gas basin. But you can’t flip a switch to get such output nationwide and fill the Russian void.

Second, oil companies are not holding back on energy development. Rig counts are up, and oil producers are projected to continue to produce at record levels in the plentiful Permian Basin. Equally historic production levels are being observed in the Marcellus, America’s most abundant gas basin. But you can’t flip a switch to get such output nationwide and fill the Russian void.

Instead, Congress should learn from President Joe Biden’s partial shift toward recognizing the benefits of U.S. energy leadership and enact policies that advance it. Investors react to signals from policymakers, so what is said and done in Washington makes a difference. Recently the administration has approved LNG export projects, established a plan to increase U.S. LNG exports to Europe, and announced resumed planning for federal oil and gas lease sales. 

Good first steps, but policymakers need to build on all of it to truly strengthen American energy leadership. If they need an incentive, here is a dose of reality: Independent studies say nearly half of all energy used globally in 2040 will come from natural gas and oil – even if all 196 nations party to the Paris Climate Agreement meet their emission reduction goals. 

Here’s the choice: Get oil and gas produced with stringent environmental standards in the U.S., or get it from unreliable regimes that weaponize their energy? Polling shows most voters wisely take the first option. Their leaders should stop grandstanding and listen. Thankfully, Washington can do four things fast.

First, we call on the administration to develop a new five-year offshore leasing program to replace the one that is scheduled to expire in June. This is a key tool for American producers to plan offshore development that can take seven or more years to come online. Delaying the program could result in lost production, lost jobs and lost revenues to government, a new analysis shows.

Second, the administration should hold onshore lease sales on federal property as required on a quarterly basis under the Mineral Leasing Act. To put things in perspective, President Obama issued 47 lease sales onshore and offshore in the first 14 months of his administration. President Biden has conducted one lease sale that a court invalidated and the administration failed to appeal. 

Third, the Department of Energy should approve all LNG export applications and seek congressional changes for swift approval of exports to non-free-trade-agreement nations.

Finally, the administration should reverse course on infrastructure decisions, specifically certain National Environmental Policy Act reforms and other permitting regulations that inhibit pipeline construction. Otherwise, it is increasingly difficult to transport energy where it is most needed.

It is clear energy is top of mind at the White House. The president last week made a historic release from the Strategic Petroleum Reserve in an attempt to raise supply and drop prices. While this release could provide some near-term relief, it is not a viable long-term solution.

Instead of managing from crisis to crisis, we should be focused on promoting policies that avoid emergencies altogether through more production.

America has a history of stepping up. It can do so again. The president has said his administration is using every tool to address the current energy crunch. He and some allies have belatedly acknowledged the need for ever-cleaner U.S. oil and gas production. But they must walk the talk, much like those Oklahoma roughnecks of World War II. That can happen if policymakers get out of their own way – and ours.