Several weeks ago, the U.S. Energy Information Administration (EIA) released its annual energy outlook, concluding — unsurprisingly — that U.S. energy consumption will continue to increase until 2050. Although renewables are expected to be the fastest growing source of energy, oil and natural gas will continue to account for the lion’s share of energy consumption for at least the next 28 years. The EIA also predicts that gasoline and diesel fuel will remain the primary fuels consumed by the transportation sector for the foreseeable future.
Presumably, the EIA assessment preceded the outbreak of the Russian-Ukrainian conflict. If Europe and other parts of the world succeed in weaning themselves off Russian oil and natural gas, and America responds by boosting domestic production and exports, the latest EIA forecast for fuel production fossils will have to be revised upwards in the years to come.
At present, the outlook for strong domestic production remains cloudy. oil production in the United States, currently about 11.6 million barrels per dayis well below its Peak of 13 million per day in 2019. The number of active drilling rigs has risen sharply in recent months, but at 519 stay far behind historic high of 1,600 in 2014.
Like other sectors of the economy, the energy sector faces shortages in the supply chain. During the pandemic, many “thugs” have moved away from shale deposits such as the Permian Basin in West Texas and New Mexico and the Bakken in North Dakota and Montana, so mining companies drilling are finding skilled labor that is expensive and in short supply. the frac sand cost, critical for well completions, has jumped nearly 200% in the past year and steel casing for wellbores has become more expensive and harder to find. Even in the best-case scenario where the number of rigs continues to increase in response to high prices, a significant gain in onshore oil production could take up to a year.
To make matters worse, the Biden administration has “slowed down” federal land lease sales and imposed a de facto moratorium on offshore leasing activities. As a result, little new drilling takes place on federal lands and waters, which currently provide around 25% of US oil production and 11% natural gas. Moreover, the Ministry of the Interior five-year rental program for the outer continental shelf, including the Gulf of Mexico, expires in June, but the administration has unfortunately not yet presented a new plan.
The assertion of President BidenJoe BidenRussian rocket attacks left five people injured in the western Ukrainian city of Lviv. If we deregister the IRGC, what will the dictators think? Biden to propose minimum tax on billionaires in MORE budgetfrequently picked up by the White House Press Secretary Jen PsakiJen Psaki’s memo: Biden at an impasse as Ukraine crisis fails to lift polls North Korea’s latest missile tests prompt new UN sanctions Issa lays groundwork for probe the House GOP on the story of the Hunter Biden laptop MORE, that 9,000 approved leases on federal lands remain unused. In practice, obtaining a lease is only the first step in the development of an oil or gas production well. Seismic testing is required to determine the likelihood of finding hydrocarbons on the lease. Additional permits are required for rights of way to leased land and the construction of gathering pipelines to transport oil and gas to processing facilities. Then he can take up to 140 days to obtain an actual drilling permit on a federal lease. Contradicting the argument that industry has been lax in drafting leases, there are currently nearly 100,000 operating wells on federal lands. with two-thirds of current leases in productionthe highest percentage in 20 years.
The Home Office recently announced it was temporarily resuming oil and gas leasing after delays stemming from a court case over the social cost of carbon accounting. However, a few days later, a ministry spokesperson qualified the Interior’s position by stating that it was not yet engaged in new lease sales but that it was only at the planning stage.
The Biden administration needs a dose of political and energy reality if we are to maintain US energy dominance and provide a lifeline of oil and natural gas to countries eager to break away from dependence on Russia. Removing onerous regulations on oil and gas production, accelerating sales of federal onshore and offshore leases, accelerating approval of new pipelines and liquefied natural gas export facilities and softening the anti-fossil fuel rhetoric can help.
As the world’s largest producer of oil and gas, only America has the ability to provide global energy security. It won’t happen overnight, but we can take action today to improve our domestic energy industry while punishing Russia. In particular, the permanent lifting of the federal moratorium on leases and the renewal of the five-year offshore lease program will strengthen our ability to sell more American hydrocarbons to Europe. The result will also be good for the environment because we produce oil and gas with significantly lower greenhouse gas emissions than Russia. It’s time for the Biden administration to step back.
Bernard L. Weinstein is Emeritus Professor of Applied Economics at the University of North Texas, former Associate Director of the Maguire Energy Institute at Southern Methodist University, and Fellow of Goodenough College London.