The Biden Administration’s Irrational Desire To Limit U.S. Energy Exports

Energy The Biden Administration’s Irrational Desire To Limit U. S. Energy Exports David Blackmon Senior Contributor Opinions expressed by Forbes Contributors are their own.

David Blackmon is a Texas-based public policy analyst/consultant. Following New! Follow this author to stay notified about their latest stories. Got it! Oct 2, 2022, 08:50am EDT | New! Click on the conversation bubble to join the conversation Got it! Share to Facebook Share to Twitter Share to Linkedin Liquid Natural Gas tanker at port with LNG liquefaction plant in background.

getty Another active week in the energy space ended with the Wall Street Journal reporting that the CEO of ExxonMobil XOM , Darren Woods, was having to waste his time arguing with officials at the U. S. Department of Energy about their apparent ongoing desire to limit U.

S. exports of crude oil and other fuels, even liquefied natural gas (LNG). Quoting from a letter Mr.

Woods sent to DOE, the CEO said that “Continuing current Gulf Coast exports is essential to efficiently rebalance markets—particularly with diverted Russian supplies. Reducing global supply by limiting U. S.

exports to build region-specific inventory will only aggravate the global supply shortfall. ” The Journal quotes an Energy Department spokesperson as noting that supply levels of both oil and natural gas currently sit at unusually low levels. In fact, natural gas storage levels are near 5-year lows.

“The administration has impressed upon the oil and gas industry that it must do more to ensure fair prices and adequate supply for all Americans, while meeting the needs of our allies,” the spokesperson said. Regardless of these low storage levels, the very notion of the United States – currently the world’s largest producer of both oil and natural gas, and one of the handful of largest exporting nations – cutting exports of these critical fuels heading into this particular winter is completely irrational. Given the desperate situation related to these fuels that exists in Europe right now, a sudden reduction in U.

S. supply would in fact amount to an act of near-cruelty. From a purely sterile analysis, Mr.

Woods noted the key factor in his letter by noting that “Easing exports wouldn’t fill tanks in the Northeast—a region where U. S. officials said oil companies need to send more supplies—and instead would create a glut in the Gulf Coast that would lead refineries to cut output.

. ” Recommended For You 1 Here’s The List Of 317 Wind Energy Rejections The Sierra Club Doesn’t Want You To See More stories like this Fewer stories like this 2 Revisiting The Blame For High Gas Prices More stories like this Fewer stories like this 3 Why Do ‘Fracking’ Opponents Ignore Its Moral Benefits? More stories like this Fewer stories like this It is no secret that, due to a variety of intractable factors that have mounted over the last several decades, the U. S.

refining industry does not have the capacity to process all of the millions of barrels of light, sweet crude oil that is produced in the country’s prolific shale basins. We must remember that America has not permitted the building of a new, major greenfield refinery since the Jimmy Carter administration; thus, most U. S.

refining capacity is designed to process heavy grades of crude oil imported into the country from Canada, Brazil, Mexico and other exporting countries. Facing a looming crisis in 2015 in which volumes of new light, sweet production from the Permian Basin, Eagle Ford Shale and Bakken Shale regions would not be able to find a refining home, President Barack Obama agreed to an accommodation that enabled the drilling boom to continue. He signed the bill that repealed the archaic 1970s-era ban on U.

S. crude oil exports as a part of an omnibus spending bill, an act that then-Vice President Joe Biden was quite aware of. U.

S. shale production has boomed by more than three million additional barrels per day since that time, and American exports of crude oil have boomed along with it by necessity. A partial or full ban on U.

S. exports now would result in hundreds, perhaps thousands, of shale wells having to be shut-in because there would be no refining home for their production. This would create a shortage on the global crude market, and thus result in another round of price spikes for crude oil and gasoline at the pump.

In reality, of course, the Biden administration has a handy tool to use to alleviate any regional shortages of oil that might materialize over the winter. It’s called the Strategic Petroleum Reserve, and Mr. Biden has displayed no compunction at all about pouring millions of barrels of oil from it onto the open market in repeated efforts to control gasoline prices at the pump.

In fact, addressing real emergencies like regional fuel shortages is the actual reason why the SPR was created by congress in the first place. Thus, what we really have here in this dust-up with Mr. Woods and ExxonMobil is an administration looking for a convenient scapegoat to blame for problems its own policies have created, and landing, as usual, on the oil and gas industry.

On natural gas, New England’s problems with limited supplies exist for the simple reason that the governments of New York state and in Washington, D. C. have refused to allow the construction of adequate pipeline capacity to carry gas produced in the nearby Marcellus Shale region to supply the New England states.

Obviously, no new pipes can be built to deal with the looming supply issues this coming winter, but once again the Administration has a tool at its disposal to deal with the issue. Gas valves on a natural gas pipeline. getty President Biden, if he chose to do so, could simply suspend the absurd provisions of another archaic relic from another day in time, the Civil War-era Jones Act.

This law prohibits foreign-flagged ships staffed by non-U. S. crews from carrying products from one U.

S. port to another. Unfortunately, none of those big LNG tankers are U.

S. -flagged ships. As a result, the New England states aren’t able to bring in LNG from domestic ports along the U.

S. Gulf Coast and bear lower domestic prices for the gas. Instead, they are forced to pay high international market prices for LNG brought into Boston Harbor from other exporting countries, sometimes even from Russia.

In fact, the Biden administration suspended the terms of the Jones Act j ust three days ago to help facilitate relief efforts to Puerto Rico as it tries to recover from the impacts of Hurricane Fiona, another real emergency. But suspending the Jones Act is invariably opposed by a key Democratic Party support group, organized labor. Thus, again we see the Biden administration casting about for a convenient boogeyman to blame to avoid a political conflict and landing on the convenient face of Big Oil.

It all comes down to politics. That is why the CEO of ExxonMobil had to take time out from running the biggest of Big Oil companies last week to argue with the DOE about limiting U. S.

exports of oil and natural gas. It is all so incredibly tiresome. Follow me on Twitter or LinkedIn .

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