President Joe Biden’s decision to ban all Russian oil imports has forced his administration to shift its posture toward domestic energy almost entirely in a matter of days, with the White House urging oil and gas companies to ramp up production after months of discouraging investments in fossil fuels and attempting to pass anti-drilling regulations.
Industry executives and analysts alike say that while they share the administration’s goal of boosting domestic supply, they see these remarks as incongruent with the administration’s earlier stance, which prioritized climate change-fighting measures and sought to limit the expansion of drilling.
“People are frustrated,” said Dan Eberhart, the CEO of drilling services company Canary. “But also, we can’t move on a dime as an industry. And the policies have been a wet blanket on us producing more oil — not encouraging it. So you can’t encourage us to do something for a week or two and expect massive results. It takes longer.”
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The administration’s 180-degree pivot on domestic production was described as jarring by some industry officials, not least because the administration itself has refused to acknowledge the shift.
In announcing the ban, Biden said it is “simply not true” that his administration is holding back domestic energy production. Later, White House press secretary Jen Psaki echoed that sentiment, telling reporters that it is “up to the oil companies to determine whether they are going to … reinvest these war profits from high prices back into the economy, raise production, and lower prices to American consumers.”
Current and former officials said the messaging is contradictory, seeking both to blame them for the squeezed supply and subsequent increase in gas prices while also calling on them for help.
“I think there’s definitely more the administration could do” to incentivize production, Dr. Ellen Wald, a senior fellow at the Atlantic Council’s Global Energy Center, said. “The first would be not to antagonize oil … by basically saying, hey, we give you permits, oil prices are high, go do your thing.”
Wald, a historian by trade, noted several examples when, during times of a national emergency, the federal government and oil companies cooperated on ways to bolster fuel supplies for U.S. consumers.
“There are historical precedents for this, for reaching out” to industry officials, she said. “I think in this case, it probably wouldn’t even take that much more than just some goodwill. Some face-to-face meetings, and perhaps just the promises that ‘look, we want you to produce, and we’re not going to go changing the regulations on you once you start doing this’ — because that seems to be a big fear of a lot of oil.”
Other former energy officials agreed.
“If the message [from the Biden administration] for the last year has been, ‘There’s no future for you in producing, we’re not going to make it easy for you either to produce or to get product to market,’ then companies are going to react to that narrative … and they’re going to make their decisions” accordingly, said Jeff Kupfer, formerly the acting deputy director of the Department of Energy under President George W. Bush.
Just because prices are up right now “doesn’t mean that companies are going to turn on a dime and all of a sudden make a decision to try to produce,” he added.
While the administration is correct in its repeated assertion that there are 9,000 oil and gas leases available for drilling, companies also need permits issued by the federal government, and those “have slowed down to a trickle in recent months,” said Eberhart.
In addition, oil production can’t be turned on overnight, and the industry has had little incentive to expand under a president who campaigned on regulatory policies and climate change-fighting initiatives that threatened to actively depress drilling.
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“People are frustrated,” Eberhart said of Biden’s messaging. “But also, we can’t move on a dime as an industry.” He described the administration’s policies as “a wet blanket on us producing more oil — not encouraging it.”
“You can’t, you know, encourage us to do something for a week or two, and expect massive results. It takes longer.”
Even if companies do move to scale up production, “that doesn’t [let] the administration off the hook, in terms of its policies over the last year,” said Kupfer. “The message that they’ve sent to the oil and gas industry about whether they should be investing in additional resources and spending the necessary capital to be able to produce.”
Asked how long it would take for U.S. producers to increase supply to the extent necessary to lessen the pain at the gas pump, Eberhart said, “I would say in three or four months, we could be back to the 13 million barrels a day that we produced pre-COVID.”
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But, he said, “that would require a massive lift from the industry — and that would require the administration to be a tailwind and not a headwind stress.”
At the end of the day, Wald said, companies “don’t know what to expect from the administration.”
“That’s kind of the worst thing for companies — just the uncertainty,” she said. “The regulatory uncertainty really kills any desire to expand.”
