U.S. President Joe Biden started his term in office at the beginning of 2021 by canceling the presidential permit for the Keystone XL oil pipeline, clearly stating his goal to promote clean energy solutions at the expense of oil and gas.
By the autumn of 2021, the Biden Administration was already calling on the OPEC+ group to produce more oil than planned to help American households see some relief at the pump, where gasoline prices shot up to a seven-year high.
The apparent clash of energy policies highlighted once again the fact that the last pre-pandemic year 2019 was not the year of peak oil demand as some had suggested in early 2020, considering that global petroleum consumption came roaring back in 2021 as economies rebounded, lock downs were lifted, and the U.S. saw record-high demand.
Total implied petroleum consumption in the United States rose to a record 23.191 million bpd for the week ending December 10. The previous record was set during the week ending August 27 of last year, which had reached fresh highs of 22.820 million bpd.
While it was pushing to promote green energy and placing a moratorium on new oil and gas drilling on federal land, the US Administration has been contending with high gasoline prices as a result of the rebound in American and global oil demand and international crude oil prices.
The U.S. Administration’s struggle has been one of the best examples of the dilemma that most world leaders faced in 2021 and will continue to face for years, and possibly decades, ahead.
The need to ensure affordable energy, including from fossil fuels, while advances in the energy transition and technologies allow green energy to replace a material part of oil and gas demand.
The energy crisis in Europe, which has contributed to the higher prices of energy commodities in recent months, showed that oil and gas would continue to play a crucial role in meeting the growing global energy demand.
It also served to show that renewables cannot replace fossil fuels overnight because most products like plastics are massively used in common household items, so the transition and all net-zero aspirations will not happen for decades.
Administrations pushing for green energy sources in the long term is an admirable endeavor, but households/voters tend to appreciate short-term fixes to high gasoline prices and surging energy and heating bills.
The U.S. Administration has been looking to do what it can to lower the highest gasoline prices in America. It hasn’t had spectacular success since the summer of 2021.
That’s mostly because international oil prices are typically the major driver of U.S. gasoline prices, and oil enjoyed quite a run last year, with Brent Crude prices reaching an annual high of $86 per barrel at the end of October, before retreating to around $80 in recent days.
The theme continues into 2022, especially after the U.S. Administration pleaded with OPEC+ at the end of 2021 for help to curb high gasoline prices, instead of turning first to the industry at home, which sits on vast oil and gas reserves.
The U.S. shale sector, however, seems reluctant to reinvest too much in drilling new wells, seeking to reward shareholders after years of poor investor returns.
The American oil industry is also frustrated with the US Administration’s neglect and proposed policies burdening the sector and making domestic oil production more expensive while increasing reliance on foreign oil.
This objective of having affordable and reliable energy supply now while working for more renewable sources in the energy mix in the longer term.
This should give the Administration food for thought about how it has been treating its own oil and gas industry over the past year and from where the world’s single largest petroleum consumer, America, sources the oil to meet demand.
Oil Price.com / ABC Flash-Point Oil & Gas News 2022.
