The Biden administration is finding itself between a rock and a hard place as its commitment to its climate agenda clashes with the need for more crude on the market to stabilize oil prices for consumers. On Wednesday, the White House is expected to announce a final release of crude oil from the U.S. strategic reserve for this year. The country is headed to the midterm election polls in less than three weeks against the backdrop of a global energy and inflation crisis fueled in large parts by Russia’s invasion of Ukraine and entailing sanctions.
The largest-ever release from the Strategic Petroleum Reserve – 180 million barrels since the spring – concludes as an argument with OPEC over the proposed Russian oil price cap has led to productions cuts by the alliance. Meanwhile, domestic oil production is still reeling from the coronavirus pandemic. A release from Norwegian energy data provider Rystad shows how oil and gas exploration remains on hold despite heightened energy needs – in the U.S., but also globally.
While oil and gas exploration are at odds with the Biden administration’s climate agenda and the Interior Department has raised drilling royalties and tightened regulations, an industry that has been burned by Covid-era price decay is also holding back new projects. Rystad expects only 44 oil and gas lease round globally this year, the fewest since 2000. August data by the company shows that only two blocks had been newly licensed for drilling in the U.S. in 2022. The world leaders in terms of new licenses were Brazil, Norway and India.
No new offers for oil and gas leases have originated under the current administration but some Trump-era sales have gone ahead under Biden (or bled into his presidency). Their success has been small to nonexistent. One lease sale in last days of the Trump presidency experienced a bidder shortage and canceled leases despite a coveted location in an Alaskan wildlife refuge. In May, the Interior Department canceled a second offshore drilling auction in Alaska over lack of interest. According to CNN, the canceled auction plot will be legally required to be offered again, as are two more offshore drilling locations in the Gulf of Mexico, whose sales were canceled over court delays concerning the raises to drilling royalties.