President Biden’s decision to ban imports of Russian oil products should be accompanied by a decision to increase production at home, and replace Russian crude oil with additional imports of Canadian crude. Our Canadian friends have plenty to sell us.
By announcing a reversal of prior policies President Biden would change expectations about the direction of U.S. energy production, resulting in an immediate decline in the price of oil and gasoline. Russia would get lower revenues.
The United States is a net exporter of oil, but the nation imports heavy crude oil to refine it and turn it into finished products, such as gasoline and heating oil. Russian crude oil accounted for 3 percent of U.S. imports in 2021, and Canada accounted for 61 percent.
If President Biden is serious about his strong support for Ukraine, then America needs to be increasing domestic production of oil and gas, relying on our ally, Canada, rather than Russia and Venezuela for imported crude.
The United States, as the world’s largest oil and gas producer, has the ability to affect the price of oil. A dramatic transformation in energy production has taken place between 2008, when the United States was producing 5 million barrels per day in 2008, and 2020, when production reached over 12 million barrels per day.
In 2008, America had net imports of around 11 million barrels per day. Now, America is a net exporter, selling around a million barrels per day. Associated natural gas production substituted for coal and reduced emissions, allowing the United States to achieve emissions targets without costly and intrusive regulation.
Producing more oil and gas would allow America to lower prices at home and have more LNG to export to Europe, offsetting Russia’s market. Unfortunately, the United States is moving in the opposite direction, towards less production.
President Biden cancelled the Keystone XL pipeline, which would have brought oil from Canada to be refined in U.S. refineries, making the North American energy platform more efficient.
The Federal Energy Regulatory Commission issued a new policy on February 17, 2022, that will make it harder to put new pipelines in place to carry oil and gas from the interior of the country to the coasts, where it can be exported. FERC will now “consider a proposed project’s impacts on existing pipelines” as well as the environmental effects of the new pipeline.
In November, the Interior Department issued a Report on the Federal Oil and Gas Leasing Program, calling for fewer leases, higher royalties from oil and gas leases, and a more thorough bidding process to screen buyers. The Interior Department proposes that oil and gas drilling not be a priority. These recommendations would make it more difficult to drill.
These policies should be reversed to enable America to expand its leadership role in energy production, benefiting our European allies.
In addition, the United States should not sacrifice economic and national security by becoming dependent on batteries made in China.
As gasoline prices reached the highest prices in U.S. history, on Monday Vice President Kamala Harris announced a new program to electrify trucks and buses. Speaking at the White House, she declared, “Our transportation sector has reached a turning point. We are all in the midst of a turning point. We have the technology to transition to a zero-emission fleet.”
Lucian Pugliaresi, president of the Energy Policy Research Foundation, warned last year in testimony before the House Committee on Energy and Commerce, “We may end up with an energy transition which will see the U.S. move from our current position of energy independence to dependence on a broad set of critical minerals from insecure sources, while at the same time experiencing growing reliance on traditional oil and gas supplies from insecure and expensive sources.”
Mr. Pugliaresi’s testimony is particularly prescient in light of recent events. The Russian invasion of Ukraine should have taught us not to rely on enemies for essential components of our economy, including our transportation system.
In a phone conversation, Mr. Pugliaresi told me that it is essential not to let go of “legacy fuels”—oil, gas, and coal—until the alternative fuels are operating efficiently. Right now, wind and solar are responsible for less than four percent of America’s primary energy requirements
Instead of making it easier to produce oil and gas, the Administration wants to reduce energy production, helping Russia, and do away with gasoline powered vehicles, increasing dependence on China. Go figure.
