API: American oil & gas as ‘reliable and realistic partners’ of renewables and energy security
As the global energy crisis grips the world in its clutches, taking it by storm, the American Petroleum Institute (API), a trade association representing the oil and gas industry, is advocating for a ramp-up of the U.S. oil and gas production not only as a solution to the energy security concerns plaguing the world at large but also as an enabler of the energy transition, which will help to accelerate renewable and low-carbon developments.
The American Petroleum Institute highlights that the U.S. is facing an energy crisis and needs long-term solutions that support increased production of natural gas and oil to meet demand, strengthen energy security and boost economic growth. Therefore, API believes that America will bolster its energy security and meet growing demand both at home and around the world by continuing to scale up domestic production for which new leases are needed to help avoid future shortages and price surges.
In line with this, the American Petroleum Institute points out that one new law – referring to the Inflation Reduction Act (IRA) of 2022 – no matter how broad in scope, will not be enough to fill a large supply gap as the world confronts an unprecedented energy landscape. However, as outlined by API EVP & Chief Advocacy Officer, Amanda Eversole, the U.S. oil and natural gas industry is poised to help but a longer-term plan for critical investment in American-made energy and associated infrastructure is required.
Eversole underlines that oil and gas provide nearly 70 per cent of the U.S. energy needs, while independent projections of growing global energy demand indicate that oil and natural gas will supply nearly 50 per cent of that energy in 2050. API emphasised this within its 10-in-2022 plan, setting out ten actions for Washington to unleash American energy and foster economic growth. Within its Climate Action Framework, API also details solutions to the dual challenge of meeting energy demand and reducing carbon dioxide emissions on the path to a lower-carbon future.
Moreover, Eversole claims that the American oil and natural gas industry knows how to develop the energy needed to meet demand and in ways that advance environmental progress while the government’s discouragement of domestic production and the push for “a hasty transition away from traditional energy sources has had bad consequences.”
Keeping energy security at the forefront, she explained that established and more dependable energy sources can have an important role in supporting emerging renewable projects, thus, “natural gas and oil should be recognized as reliable and realistic partners to enable renewables’ growth – as well as the lead energy sources in places without enough wind and sunlight to generate sufficient energy to meet demand.”
While some believe that new energy sources can quickly bridge the gap between supply and demand, the best solution for Eversole is increased American oil and natural gas production for which API’s 10-in-‘22 plan supplies the path. She also elaborates that the recently passed IRA offers some help, including reinstated offshore lease sales and incentives to bring carbon capture technology to scale.
However, Eversole says that IRA’s new taxes on oil and natural gas could work against increased production. In addition, the new energy bill lacks permitting reform, which is affecting key energy infrastructure. Eversole concludes that a finalized five-year federal offshore leasing programme is also needed to help ensure safe and long-term production off America’s shores.
Energy exports ban would undermine American leadership
As the global energy crisis gains momentum, the American Petroleum Institute is adamant that the U.S. oil and natural gas “must be part of the picture now and in the future,” thus, restricting or ending American energy exports could have not only “big domestic impacts,” but also global ones on countries that import U.S. energy.
To this end, API’ Mark Green underscored that when talk of curbing or banning U.S. energy exports starts making the rounds in Washington – as U.S. Energy Secretary Jennifer Granholm hinted at the end of August – “it’s critically important to think not only about the impacts on American families and businesses but also impacts on the people living in nations receiving those exports.”
To illustrate this further, Green pointed out that Europe is currently dealing with an energy crisis and reduced flows of Russian natural gas to the west, while “winter looms around the corner, and there are plenty of signs of energy insecurity,” thus, “this human cost is a key counterpoint to Washington talk about cutting back or even ending U.S. energy exports.” He also adds economic and job reasons to the list to debunk arguments for export bans.
Last week, Secretary Granholm sent a letter to seven U.S. refiners urging them to hold onto fuel stocks and refrain from further increases in fuel exports to help offset low domestic inventories, adding that the Biden administration might need to consider “additional federal requirements or other emergency measures” if the refiners do not comply with this.
Commenting on this, Green says that looking for a solution for lower-than-average domestic inventories by restricting or banning U.S. energy exports is “misguided,” and a recent study by the American Council for Capital Formation (ACCF) found that “there could be significant harm to America’s position as a leader of the global energy market and U.S. relationships with key allies that benefit from our energy exports.”
This was also confirmed by Mike Sommers, API President and CEO, who urged: “We have to remember that we operate in a world energy market. Prices are set by the world market, not just a domestic market. So, any restrictions on production or on exports from the United States [could] actually increase prices on American consumers.”
In light of this, Green sees “clear, long-term support for producing more American-made energy” as a better solution “to put downward pressure on costs in the global marketplace, helping American families and businesses.”
“Instead of undermining American energy leadership by restricting or banning energy exports – as well as asking other countries to increase their energy production – Washington should look to American energy as a meaningful solution to the current energy crisis,” concluded Green.