The White House’s push for more crude from OPEC and its allies this week has angered Big Oil.
The powerful lobbying group for the US oil and gas industry, the American Petroleum Institute, is arguing that President Joe Biden should focus on increasing domestic oil production before looking overseas.
“You’d think the first place you would go would be American producers, rather than OPEC, which literally held this country hostage for decades because they were our top supplier,” API President Mike Sommers told CNN Business.
A White House official responded by emphasizing the importance of “reliable and stable energy markets at this critical moment” in the global recovery from the pandemic.
“President Biden has made clear that he wants Americans to have access to affordable energy, including at the pump,” the US official told CNN Business.
It’s worth noting that Biden is the most recent US president to turn to OPEC for assistance, a move that even former President Trump made despite his support for American energy dominance. (Trump would later take the unusual step of urging OPEC to pump less oil in order to save domestic oil producers from a historic drop in prices caused by the pandemic and an OPEC+ price war.)
Goldman Sachs strategists said in a note to clients on Thursday that the White House’s outreach to OPEC+ is “unlikely” to be effective in the short term. The Wall Street firm expressed concern about the Delta variant’s impact on demand.
The API, which has a vested interest in domestic energy production, believes that allowing US oil producers to operate freely is a better solution.
“We have this strategic advantage of an energy revolution — that started under President Obama. We should be doing everything we can to encourage production in the United States,” said Sommers, whose group represents ExxonMobil (XOM), Chevron (CVX) and other major US-based oil companies.
Sommers also chastised the Biden administration for tightening regulations on the fossil fuels industry.
“The irony sure is thick,” Sommers said. “We’re talking about an administration that really for the first eight months in office did nothing but try to restrict American development of oil and gas.”
Sommers admitted that the leasing pause, which the API fought vehemently, has had no effect on today’s prices. Instead, he claims, the move, combined with the cancellation of the Keystone XL pipeline, has increased regulatory uncertainty, discouraging future domestic energy investment.