WASHINGTON (AP) — House Democrats this week accused oil companies of "ripping off the American people” and putting profits before production as Americans suffer from ever-increasing gasoline prices during the war in Ukraine.
Oil executives, testifying before Congress for the second time in six months, responded that oil is a global market and that oil companies don’t dictate prices.
“We do not control the market price of crude oil or natural gas, nor of refined products like gasoline and diesel fuel, and we have no tolerance for price gouging,” said Chevron CEO Michael Wirth.
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The Reporter-Telegram put together reaction from the the American Exploration & Production Council, the Permian Basin Petroleum Association and Texas Independent Producers and Royalty Owners Association.
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Myth vs. Reality from the American Exploration & Production Council
As Congress holds hearings on the price of oil, it is important to set the record straight on the various factors causing high gasoline prices. Fact: Prices are not caused by energy companies. Also fact: It’s time for Congress and the administration to pass and implement effective policies that provide relief to American families and small businesses.
MYTH: Currently, gas prices are extraordinarily high because oil and gas producers are “gouging consumers” to reap massive profit for their companies and shareholders.
REALITY: Gas price hikes are largely the result of demand significantly outstripping supply as the economy recovered from the pandemic, coupled with misguided policies from the Biden administration. Shutting down energy pipelines, restricting development of oil and gas on federal lands, imposing burdensome and duplicative regulations, calling for punitive taxes and fees on our industry, and mobilizing the federal government to quickly end fossil fuel use—these actions are driving up costs that directly hurt American families and businesses. High energy prices have further been exacerbated by the significant impact on global energy markets due to Russia’s invasion of Ukraine. International conflict and harmful domestic regulatory policies are contributing directly to a significant spike in energy costs for the American people.
MYTH: Oil and gas producers are intentionally sitting on 9,000 federal leases and choosing to not produce.
REALITY: The reality is that vast majority of leases on federal lands are currently producing oil and gas. There are about 37,500 total oil and gas leases in effect, with about 75 percent of them producing, and the other 25 percent going through a complex regulatory process or being held up in litigation. This is the highest percentage of producing leases the industry has ever had.
MYTH: Oil and gas producers could immediately ramp up production to meet increased demand, which would lower energy prices.
REALITY: We are responsibly producing and providing energy to the market in a way that meets current demand and future projections. The oil and gas industry is heavily regulated by local, state, and federal agencies at each phase of the energy production process. It takes months, if not years, of planning, permitting, and preparation for one of our members to find producible reserves and then drill and complete a well before any oil or natural gas can reach the market. From the regulatory outlook to storage levels, to additional sanctions on Russia, to how OPEC nations will respond to increased American production – there is much still unknown about the current global oil market. Inflationary costs, labor shortages, and supply chain disruptions are just some of the many factors hindering increased domestic production. According to projections from the Institute for Energy Economics and Financial Analysis, inflationary pressures could lead to a 15 to 20 percent increase in capital costs for producers just to maintain current oil and natural gas production levels.
MYTH: The Biden administration has done all it can to lower energy prices for the American people.
REALITY: By not holding legally required lease sales, shutting down energy pipelines, not approving permit applications, and implementing regulatory roadblocks to production, the administration has taken several actions that stymie production, and hence negatively impact the price of oil for consumers. Our companies do not have the ability to set the price of oil or natural gas, only to make long-term assessments or investment based on, among other things, capital availability and the current regulatory environment. The best way for Congress and the administration to ensure Americans have a stable, abundant supply of oil and natural gas is by working with our industry to set sensible regulations and policies that enable us to meet demand domestically and abroad.
- Anne Bradbury, chief executive officer of the American Exploration & Production Council
PBPA: Government wants it both ways
Wednesday the U.S. House Committee on Energy and Commerce’s Subcommittee on Oversight held a “hearing” with American energy CEOs to discuss “gouging gas prices and pain at the pump.”
Over hours of questioning, certain committee members failed to recognize the impact that volatility in the global market and uncertainty with federal and state regulations across the country represent an incredibly substantive challenge for investment in the sector. While members of Congress are surely concerned about the impact of high gas prices on the people they serve, some, led by the Biden Administration, have only offered criticism of workers in the energy sector. These officials don’t recognize the part they play in restraining production growth. A Biden budget blueprint offered in the first days of the administration talked about ending fossil fuels…and now some are calling for greater production. These days the federal government wants it both ways.
Our industry has suffered challenges in working with the administration for nearly 18 months, including in August of 2021 when President Biden called on OPEC+, which includes Russia, to produce more oil and gas, instead of working to aid American producers who were ready to get back to work after a lengthy pandemic.
Because of Administration policies, the industry is experiencing permitting delays, supply chain constraints, and in gathering raw materials like steel and sand. We need a greater labor force and investment in the sector which have both been frozen by rhetoric out of D.C. that seeks to eliminate the industry and the jobs they create. We need the American government to choose places like Midland not Moscow and we need them to do it yesterday, not hold “hearings” in the halls of Congress where it surely seems like no one is listening.
- Ben Shepperd, president Permian Basin Petroleum Association
TIPRO: Oil & gas companies don’t set the market
“America’s oil and gas companies do not set the market but are subject to it like the rest of the world. Oil prices are determined through the complex web of commodity pricing, and in recent months, the market has undergone severe shocks including Russia’s invasion of Ukraine, and rising inflation, that have raised global oil prices. Instead of interrogating the energy industry, congressional leaders ought to focus on how we can support increased domestic oil and gas production, both for today and tomorrow. This includes expediting permits for U.S. LNG export facilities and pipeline infrastructure, lifting the ban on federal leasing and generally a more stable regulatory environment that provides certainty to producers and investors. Overburdensome regulations, increased taxes and anti-oil and natural gas rhetoric will only exacerbate high energy prices and raise costs for American consumers.”
- Ed Longanecker, president, Texas Independent Producers and Royalty Owners Association
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Industry offers fact vs. fiction about hearings, oil prices - Midland Reporter-Telegram
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