Administration Policies Raise Concern from the Oil and Natural Gas Patch

Mark Green
Posted May 15, 2024

Energy policy from Washington matters. Just listen to Americans who work in the oil and natural gas patches of Texas and Pennsylvania.

A number of them spoke to the Financial Times (subscription required) recently and discussed the Biden administration’s mystifying approach to American oil and natural gas. Chief characteristics of that approach? Overregulation and restricted access to oil and natural gas that supplied nearly 70% of the nation’s energy in 2022.

Steve Pruett of Elevation Resources in Midland, Texas:

“It’s death by 1,000 cuts. It’s the worst presidency with regard to energy policy I’ve ever seen – and I’ve been involved in energy for 40 years, my entire career.”

There’s a good deal of uncertainty on the ground in energy-producing areas. The companies and employees who work 24/7 to keep America well-supplied too often are taken for granted. Oil and natural gas make modern life possible – fuels for transportation, energy for power generation, an endless list of consumer goods and more.

The Biden administration has run hot and cold – mostly cold, by a wide margin – in its treatment of oil and natural gas.

For example, most of the time the administration has worked to restrict access. It has canceled leases in Alaska and moved to put more than half the National Petroleum Reserve-Alaska off limits to new oil and natural gas development. The administration’s five-year program for offshore oil and natural gas leasing is the smallest in the program’s history. The actions raise serious questions about future supply and future American energy security in a world that will run on oil and natural gas deep in the future.

In addition, the administration has used a regulatory wave that threatens to make it more difficult and costly to develop and use American oil and natural gas. As the Financial Times article pointed out, these have included restrictive methane rules and fees, use of the Endangered Species Act, and curbs on new permitting for liquefied natural gas (LNG) that would be shipped to America’s allies.

Stephen Robinson of the Permian Basin Petroleum Association:

“In Biden’s campaign to become president, he said he was going to end the oil and gas industry – he is doing that. There have been over 200 actions taken by this administration opposed to the oil and gas industry. There’s not one of these that will be the end of the industry … but there’s going to be a straw that breaks the camel’s back.”

In addition, the administration canceled the Keystone XL crude oil pipeline and has done little to fix a broken federal permitting system that has stymied energy infrastructure projects of all kinds (not just oil and natural gas). The White House’s National Environmental Policy Act Phase II final rule took a federal review process that already is a cluster of red tape to infrastructure and tangled it further.

Policy from Washington has hit companies hard in places like Midland.

Jared Blong of Octane Energy:

“For the small guys, it’s even more of a daunting reality, because we don’t have the balance sheet to lean on like our publicly traded friends to go tackle some of these mandates that are slowly trickling out.”

There’s also the administration’s rhetoric. Again, President Biden signaled what was to come on the campaign trail in 2020, when he talked about ending the U.S. oil and natural gas industry. Since the administration took office there has been more unhelpful talk about the future of oil and natural gas, chilling investment and complicating project decisions.

Even when the White House has called for more American oil and natural gas production – typically, when responding to rising gasoline prices – it has used the opportunity to vilify the industry and company leaders. “It’s like being in the cattle business,” Kirk Edwards, an oil executive in Odessa, Texas, told Financial Times, “and [President Biden] saying they’re going to take away beef from the grocery stores.”

Administration policies and rhetoric have affected Pennsylvania as well, where jobs and economic prosperity are closely tied to natural gas production. Toby Rice, chief executive of EQT, the nation’s largest natural gas producer, told the newspaper that the administration’s LNG permitting pause has sent a clear message:

“When you look at the war on our industry, this has a chilling effect and it does threaten jobs. Voters know that when you pause LNG, you pause natural gas development, and you pause our ability to keep natural gas prices affordable for Americans.”

It all adds up to difficulty for energy providers, especially as they look to the future, which is the nature of the oil and natural gas business. The Biden administration has issued mixed messages for more than three years and navigating them has been hard on oil and natural gas workers.

Mike Sommers, API president and CEO, summed it up for Financial Times:

“We need predictability. And when governments change rules at the drop of a hat without much consultation that sends a signal that if you’re going to invest in that place your investment may be at risk.”

Also in a tough spot: the hundreds of millions of Americans who count on oil and natural gas for affordable, reliable energy.