The Department of Energy recently announced that the United States achieved a record average oil production of 12.9 million barrels per day in 2023. To punctuate the point, the agency noted last year’s domestic output produced “more crude oil than any nation at any time” in history.
Many apologists for the Biden administration have seized on the report as proof that this White House is not trying to kill the oil and gas industry, arguing that any talk of an anti-fossil fuel climate agenda is just more fake news heading into this year’s presidential contest.
As the late Joan Rivers would say, “Oh, please.”
First off, taking four years to get back to the U.S. oil production level first achieved pre-COVID in late 2019 is nothing to celebrate. Second, most of the recent supply recovery is the result of one-off transitory factors, as the DOE itself acknowledged in its latest short-term energy outlook, which called for domestic oil supply to flatten out and trend sideways over the next year.
Despite the headline spin, U.S. energy companies remain in heightened defense mode due to the multi-pronged regulatory attack since President Joe Biden took office.
For those not keeping score, below is a short list of the greatest hits to the industry over the past three years.
Since Biden issued a moratorium on all federal oil and gas leasing activity right after Inauguration Day, his Interior Department has only conducted lease sales under court order. Its recently announced 2024-2029 offshore drilling plan calls for only three Gulf of Mexico auctions, the bare minimum and smallest leasing program in U.S. history.
The Environmental Protection Agency passed a methane tax in 2023 that fines fugitive industry emissions at a punitive rate starting at $900/ton in 2024 and rising to $1,500/ton by 2026. Embedded in the new regulation is a phased-in ban on the flaring of associated gas from new oil wells. In the absence of new natural gas pipelines, which the U.S. can’t seem to build anymore due to environmental opposition, this would effectively shut down new oil production.
And then there is the movement to starve fossil fuel companies of the capital needed for business growth by depriving them of financial market access, all under the guise of environmental, social, and corporate governance, or ESG investing, with its overriding focus on climate change and net zero goals.
Energy companies have attempted to mitigate such ESG defunding risk by living within cash flow and consolidating. How has the Biden administration responded to such positive financial moves by the industry? Mainly by having its Federal Trade Commission and Department of Justice slow-walk the approval for every energy merger announced over the past six months, despite crude oil being a global commodity and industry consolidation having no effect on consumers. A final decision on many of these transactions will likely be punted until after November.
In fact, the Biden White House would seem to be pushing many of its most extreme climate regulatory actions to a second term, much as former President Barack Obama did during his eight-year run. Recall that the final decision to cancel the Keystone XL pipeline project and the extra-legal approval of the Paris Agreement through executive order were both warehoused until late 2015.
But the hits keep on coming. Just this past January, the DOE announced a pause on liquefied natural gas export permit approvals to non-Free Trade Agreement countries, which, as a group, account for almost all current U.S. LNG exports. Reading between the lines of the DOE press release, there is a strong likelihood that the current LNG pause will morph into an official export moratorium if the Democrats retain control of the executive branch, justified on the grounds of “protecting Americans against climate change.”
And then there is the long-awaited court-mandated environmental ruling on the Dakota Access Pipeline, which has been dragged out for more than two years now by the Army Corps of Engineers and the DOJ. Even though the pipeline poses no environmental risk, there is every indication that an “environmental justice” argument will be used to ultimately cancel the project’s easement for the mile-and-a-quarter crossing of the Missouri River. Shutting in existing energy infrastructure like DAPL by revoking a legally issued government environmental permit would provide a powerful new weapon for climate activists looking to strand U.S. oil and gas assets.
The EPA also recently announced new greenhouse gas emissions standards for the automotive sector that will effectively force the phase-out of internal combustion cars, vans, and light trucks between now and 2032. Similar demand-destroying efficiency standards have been proposed by the DOE for natural gas stoves and furnaces since the beginning of the year.
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American energy and climate policy looks set to take another turn for the worse during a second Biden term, further highlighting the importance of the 2024 presidential election for both the industry and the country.
Voters heading to the ballot box this November should trust the evidence of their eyes and ears. A Democratic war on fossil fuels is not a conspiracy theory. Indeed, the only time that liberal progressives support fossil fuels is when they are gaslighting the American public.
Paul Tice is a senior fellow at the National Center for Energy Analytics, an adjunct professor of finance at New York University’s Stern School of Business, and author of The Race to Zero: How ESG Investing Will Crater the Global Financial System.