The Hypocrisy of American Energy Policy and the True Drivers of Oil Prices
The recent statements by Democratic Illinois Representative Jan Schakowsky, accusing Big Oil companies of producing insufficient energy while previously supporting a ban on fracking, highlight a stark hypocrisy. These companies have been criticized for their profits and environmental impact, yet the current energy landscape is much more complex than these accusations suggest.
Factors Driving Oil Prices
Anytime the world’s supply of oil faces a disruption, the price of gasoline typically rises. Events such as hurricanes in the Gulf of Mexico, turmoil in Saudi oil fields, or geopolitical conflicts like the war in Ukraine can lead to such disruptions. However, these events are not directly related to the actions of oil companies, making their alleged lack of production even more questionable.
Former President Joe Biden’s plan to shut down US oil resources imported from outside North America is particularly short-sighted. Under President Trump, the US was producing oil from domestic resources, along with supplies from Mexico and Canada, ensuring the country's energy security. Biden’s policy, which reduced US oil and gas output, has made Europe dependent on Russian oil. If Europeans were to cut off Russian supplies, the price of oil would soar, a scenario that Biden set in motion.
Oil Companies and Production Capacity
Claims that oil companies are not increasing production are not only hypocritical but also misplaced. There are thousands of producing wells that remain capped due to the desire to maximize profits. Additionally, there are 9,000 leases with drilling permits that are currently unused. This demonstrates a strategic decision by these companies rather than a failure to produce.
The cheapest oil is produced in Saudi Arabia, but they agreed to cut production for two years under pressure. This highlights the political and economic factors at play beyond the control of the oil companies themselves. Instead of blaming Big Oil, we should look at the broader geopolitical and economic context to understand the drivers of oil prices.
Fracking and Production
While fracking has contributed to enhanced production capabilities, it is not the sole factor influencing oil prices. Oil companies have stated that they can produce more without fracking, but their primary motivation is to maximize profits from each gallon sold. The war in Ukraine has certainly contributed to higher prices, reducing availability on the global market, but the economic recovery following the COVID-19 shutdowns is also a significant factor.
Trusting OPEC to regulate production has also had a noticeable impact. President Trump requested that OPEC cut production, which they did, leading to higher prices that have persisted. Therefore, the current situation is not solely due to the inaction of oil companies but is a result of a combination of global events and market forces.
Conclusion
The criticisms of Big Oil companies need to be viewed in the broader context of the complex factors driving global energy prices. From hurricanes to geopolitical conflicts to economic recovery, the true drivers of oil prices are multifaceted and cannot be attributed solely to the actions of energy corporations. It is important to scrutinize policy decisions and understand the broader implications to ensure a more informed and effective approach to energy policy.
In conclusion, the hypocrisy and outdated policies of both past and current administrations need to be addressed, and a more comprehensive understanding of the energy market is essential for long-term stability and security.