Even before President Joe Biden announced on Tuesday that he would be banning imports of Russian energy — and at the same time warning Americans that they could expect prices to soar beyond what were already record levels as a result — energy producers had been eyeing the war in Ukraine as their moment to point out what they say is the folly of the restrictions that have been imposed on the industry.
Mr Biden has, since the start of Vladimir Putin’s campaign three weeks ago, described increases in energy prices as the cost of defending freedom as America seeks to lend its indirect support to Ukraine. Energy producers, however, say that need not to have been the case; that it could have had its fuel and supported Ukraine, too.
Prices, they rightly point out, have been rising steadily for several years now. True, the increase accelerated amid the uncertainty surrounding Mr Putin’s military build-up on Ukraine’s borders, and then they took a big leap when it became certain what he would use them for, but, since 2019, America’s output of oil has fallen by 1.2 million barrels a day, or about 10%, according to the US Energy Information Administration, and getting just half of that back would be enough to ease the war’s collateral damage now being done to America’s economy.
The energy industry’s list of reasons for how things ended up this way is long but includes things like cancelled pipelines, blocked projects and potential new taxes on fossil fuels that have scared off investors. The administration’s short-term solution is perhaps the worst offense of all: it has suggested that Opec step up production to increase supply and help ease America’s energy bill. Just this week, in a sign of just how desperate things have got, Mr Biden suggested America might consider buying oil from Venezuela and Iran. Doing so, however, would require Washington to lift the sanctions it has placed on those two countries. Such policies, according to, Mike Dunleavy, Alaska’s governor, said on Wednesday, amount to a “war on energy” whose biggest battle is going on in his home state.
It would come as no surprise that Mr Dunleavy, a Republican, would rather see America’s energy coming from Alaska rather from abroad: the industry already pays over $3.1 billion (€2.8 billion) in taxes to state and local authorities each year. And last year 8.3% of the state’s workforce worked in an energy-related job (compared with 2.3% nationally), making important among state voters, including some indigenous groups. But there is more energy in form of oil and gas to be had; the next big project was shaping up to be an area known as Section 1002. Located on the northern fringe of the Arctic National Wildlife Refuge and abutting the Arctic Ocean (see map below), Section 1002 may contain 16 billion barrels of oil, according to the US Geological Survey, a federal agency. (By comparison, the state’s second-largest oil field contains 2.5 billion barrels.)
As federal lands, however, it is Washington, not Juneau, that decides what happens in Section 1002, and Mr Biden, unlike his predecessor in the White House, is opposed to drilling in ANWR. During the campaigning in 2020, he pledged to protect ANWR from development, and, as part of a raft of measures approved last June that were aimed at preventing production of fossil fuels, he cancelled the sale of $14 billion in leases approved by the previous administration. The move resulted in Mr Biden and his administration being slapped with a lawsuit by the Alaska Industrial Development and Export Authority, which holds seven leases in ANWR and was planning on using $15 million this summer just to prepare for drilling.
Neither Mr Dunleavy nor other supporters of more drilling believe that reversing any of Mr Biden’s policies will help bring down prices in the short term, and they accept that both higher prices and increased imports are on the horizon. But neither are they convinced that this will be the last time America will be in a situation where it would have been better off had it been able to meet its own energy needs; not learning from it, warns Kevin O’Scannlain, of the American Petroleum Institute, a lobby group, will leave future Americans and their leaders in the same bind.
The Biden administration, on the other hand, places responsibility for today’s higher prices at the industry’s feet. According to the Bureau of Land Management, an agency that administers federal lands, 9,000 drilling permits issued since December have yet to be used. Applications for another 4,500 are being reviewed. That means is still plenty of oil and gas to be had here and now; that companies are choosing not to go after it, according to the administration, is a sign that they are more interested in restricting supply and keeping prices high. Seeking to increase their profits and keep their energy too, one might say.
Kevin McGwin, PolarJournal
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