On the day when President Joe Biden’s plan to release 50 million barrels of crude oil from the nation’s emergency stockpiles—in concert with other oil-consuming nations—U.S. Energy Secretary has said that the Build Back Better agenda will help save Americans from these energy price shocks in the future.
Granholm, speaking at a White House press briefing on Tuesday afternoon, pointed out that oil prices haven’t been this high in seven years—but that oil prices have fallen 10% over the last couple of weeks—a testament to the President’s leadership in working with other countries to release barrels of oil from emergency stockpiles. Meanwhile, Granholm distanced the President from gasoline prices by saying definitively that the President does not control the price of gasoline.
The reason for today’s high oil prices, according to Secretary Granholm, is oil production, which is lagging behind as the “economy roars back to life after the shutdown”.
OPEC+ has been ramping up production for months but has cautioned against ramping up production too quickly, because the group sees the market swinging back to a surplus next year.
Secretary Granholm also sees a similar scenario. According to Granholm, they are predicting that “we are going to turn the corner in 2022.”
U.S. shale has also not yet ramped up production to pre-pandemic levels, with crude oil inventories 7% below the five-year average. For U.S. shale producers, investment rates hit an all-time low in Q3—resulting in a record cash flow. And Rystad is predicting even lower investments by year-end. This reality of reluctant investments—although contrary to the President’s green agenda, is worrisome for the administration in the short term, which finds high gasoline prices unpalatable.
But long term, the Biden Administration has a solution to energy price shocks: The Build Back Better agenda, which will diversify energy sources by focusing on solar, wind, hydrogen, geothermal, and advanced nuclear; and reducing reliance on foreign sources of oil.
The Biden Administration has been begging those foreign sources of oil for additional oil over the last few weeks to solve its short-term gasoline problem but has gotten nowhere.
But the President seems to have more up his sleeve.
The Secretary stressed that the President still has more tools at his disposal and is still prepared to use every appropriate tool to address not just the high cost of gasoline but the high cost of energy for Americans in general.
By Julianne Geiger forOilprice.com