What is the Appropriate Role for the U.S. O&G Industry in the Response to the Russian Invasion?
March 11, 2022
Very little was written about this subject until most folks went to their local gas station and experienced a big surprise. The “Big Picture” is that our gasoline prices are driven by global forces and it is virtually impossible to insulate an American consumer from these forces without a massive federal subsidy to support a lower gasoline price. These concepts are used in countries such as Egypt, India, Venezuela, and Saudi Arabia for gasoline. And, it places a tremendous stress on the public treasury. European countries are considering subsidizing natural gas prices right now. In my opinion, that would be a really bad idea in this country. In fact, open discussion about eliminating the federal tax on gasoline is moving in exactly the wrong direction – Americans can and should pay more to improve their roads via this tax! To learn a little more about the interplay of these forces, take a look at this article https://www.cnn.com/2022/03/10/politics/record-gas-prices-wont-be-solved-by-drilling-more-oil-climate/index.html.
A sober viewpoint comes from Bret Stephens of the New York Times advocates… “Be honest about energy. The world will need carbon-based fuels for decades to come. And we are better off extracting more of it in North America — including on U.S. federal land — than by asking Saudi Arabia to ramp up production or hoping to get more from Venezuela and Iran with sanctions relief. The alternative to increasing domestic oil and gas production isn’t only clean alternative energy. It’s also filthy petrostate energy.”
But, will the O&G industry actually respond and ramp-up production? As reported last week, the industry seemed to greet this crisis with a big yawn as senior management genuflected in the direction of Wall Street. So, is Wall Street to blame for this unpatriotic and counterproductive stance? It’s impossible to not hear blame directed at the Biden Administration. Well, the CNN article points out that criticizing the Biden Administration for insufficient permits is factually inaccurate. But, its report also points out that the Administration really ought to cut through the red tape in order to to speed up construction of new LNG terminals.
One of the better summarizations of the debate of who is to blame – Wall Street or the federal government? – was provided by CNBC’s Stephen Liesman – check out this clip from Morning Joe (https://www.msnbc.com/morning-joe/watch/-they-want-to-be-on-the-right-side-of-history-inside-the-white-house-s-ban-on-russian-oil-134962245593) to get his understandable explanation on who should do what. (Spoiler alert: They each need to do something!)
First Keystone is taking steps right now to aid the increase in U.S.-based O&G production by accelerating our plans to make available for lease warehouses by adding a 5,000 s.f. version of our Bobcat line of products.
The opinions expressed above reflect only those of the author and do not represent those of the First Keystone Pecos Industrial Park organization. First Keystone welcomes responsible fact-based discourses on these topics.