EnergyWright

Why drilling now won’t lower fuel prices

After Republicans blamed Biden for increased fuel prices, I looked into it more. A lot of small operators went bankrupt due to the Covid pandemic causing a large drop in fuel consumption. Multiple sources in the industry have stated they won't be changing their production plans.

The Biden administration approved more than 3,500 oil and gas drilling permits in its first year, nearly 900 more than the Trump administration did in its first year.
�Last fall, Biden officials put 80 million acres in the Gulf of Mexico up for auction in the largest offshore oil and gas lease sale in U.S. history. But only about 1.7 million acres were bought. Oil companies only bought 2% of the offered drilling rights.

Oil and gas companies have 26 million acres of leases on federal public lands on their ledgers and baked into their long-term plans. Of these, 50 percent have never been drilled.

It’s possible prices will still climb, but that hasn’t changed oil companies’ calculations on production levels. “Whether it’s $150 oil, $200 oil, or $100 oil, we’re not going to change our growth plans,’’ Pioneer CEO Scott Sheffield told Bloomberg Television. “If the president wants us to grow, I just don’t think the industry can grow anyway.’’ The largest US fracking companies reiterated in earnings calls in February that they intend to keep output roughly flat, according to reporting from the Wall Street Journal.

In other words, now that companies are making handsome profits, they’re using that extra cash to reward investors and pay down debts, not invest in new production.

In 2015, Congress passed a law signed by President Obama that lifted the crude oil export ban in place since 1975, with the goal of reducing the glut of excess gas.

“The reason we’re experiencing higher natural gas prices right now is we’re exporting more,” Energy Finance Analyst Clark Williams-Derry said. “It’s not that we’re consuming more. It’s not that we’re producing less. It’s that we’re exporting.”

Excerpts from these sources:

https://www.vox.com/22959903/russia-ukraine-oil-gas-price-europe-us-exports-climate-change

https://www.washingtonpost.com/climate-environment/2022/01/27/oil-gas-leasing-biden-climate/

https://www.nrdc.org/experts/josh-axelrod/course-correction-federal-oil-and-gas-leasing-needs-fixing

Biden outpaces Trump in issuing drilling permits on public lands The Biden administration came into office promising to shift the country away from its dependence on fossil fuels. But faced with political and legal challenges, oil drilling and coal mining on public lands have continued unabated and Biden officials have even taken steps that benefit the industries...

https://www.washingtonpost.com/climate-solutions/2022/03/03/coal-mines-solar-farms-climate-change-video

In Virginia, abandoned coal mines are transformed into solar farms Six old mining sites owned by the Nature Conservancy will be some of the first utility-scale solar farms in the region — and the nonprofit group hopes the model can be replicated nationwide.

https://www.npr.org/2021/11/14/1054942590/solar-energy-colorado-garden-farm-land

This Colorado 'solar garden' is literally a farm under solar panels The newly passed infrastructure bill could lead to a boom in solar production requiring a lot more land, including farmland. But research is showing solar panels might actually help grow some crops.