President Biden, who has championed a zero-carbon emissions future, on Tuesday acknowledged that the United States would need oil and natural gas for at least another decade. However, his silence on exploration and production permitting reform was deafening for some politicos and industry groups.
The comments were not part of the prepared remarks in the State of the Union address to Congress. The president did not back down from the climate change crisis, though, which he blamed for increasing global environmental disasters. And he said oil and gas producers were not doing enough.
“You may have noticed that Big Oil just reported record profits,” he said of the 2022 earnings reports. BP plc delivered its results earlier on Tuesday. Chevron Corp., ExxonMobil and Shell plc reported earlier this month and in late January.
“Last year, they made $200 billion in the midst of a global energy crisis. I think it is outrageous. Why? They invested too little of that profit to increase domestic production.”
The president acknowledged that some energy executives are wary about making big investments into U.S. fossil fuel production.
“When I talked to a couple of them, they said, ‘We are afraid you are going to shut down all the oil refineries anyway, so why should we invest in them?’ We are going to need oil for at least another decade…and beyond that,” Biden said.
Hold On, Says BP
In fact, BP CEO Bernard Looney, ahead of the speech during a quarterly conference call, said the company was pivoting toward more oil and natural gas production to ensure global energy security. Executives with Paris-based TotalEnergies SE, which issued its results on Wednesday, made similar statements, noting liquefied natural gas would be a pillar of the company’s growth going forward.
President Biden also urged climate change be addressed nationally.
“Let’s face reality,” he said. “The climate crisis doesn’t care if you are in a red or blue state. It is an existential threat. We have an obligation, not to ourselves, but to our children and grandchildren to confront it…We are still going to need oil and gas for a while…But there's so much more to do.
“We have got to finish the job. And we pay for these investments in our future by finally making the wealthiest and biggest corporations begin to pay their fair share.”
The president proposed quadrupling the tax on corporate share buybacks “to encourage long-term investments. They will still make considerable profit,” he said of the companies.
States today do not yet have enough renewable energy infrastructure to displace fossil fuels, but the Federal Energy Regulatory Commission is working toward consensus to approve more transmission lines. Capacity is expanding, though, in part because of the Inflation Reduction Act, signed into law last year, and a major infrastructure bill.
“Look, the Inflation Reduction Act is also the most significant investment ever to tackle the climate crisis,” the president said, by “lowering utility bills, creating American jobs, and leading the world to a clean energy future.”
He also highlighted that 500,000 electric vehicle charging stations are being installed across the country. In addition, families may be able to save $1,000-plus a year “with tax credits for the purchase of electric vehicles and energy-efficient appliances, historic conservation efforts to be responsible stewards of our lands.”
Knock, Knock…What About Permitting?
One thing not mentioned in the president’s speech was a call for action to reform oil and gas permitting, a cause championed by Sen. Joe Manchin (D) of West Virginia.
“It’s accepted across the aisle that permitting has to be done,” Manchin told reporters following the State of the Union. “It should have been mentioned. I would have liked to see that.”
Republican Sen. Bill Cassidy (LA) also talked with reporters following the speech, agreeing with Manchin.
“Both the left and the right know we need it, but I’m not surprised he didn’t mention it,” Cassidy said. To acknowledge the issue, however, “would take a level of bringing his party to a point of understanding that, and this speech doesn’t seem like it was challenging his own party to move out of their safe zone. It was trying to hype up where they currently are.”
The Interstate Natural Gas Association of America (INGAA) and the American Petroleum Institute (API) also weighed in after the State of the Union.
“The INGAA appreciates President Biden’s acknowledgement that the United States will continue to rely on natural gas for years to come and share his commitment to leading the world in creating a clean energy future,” CEO Amy Andryszak said. “However, to achieve that goal and to realize the full benefits of the Inflation Reduction Act, we need immediate action on permitting reform.
“From pipelines to power lines, enacting bold and meaningful permitting reform is the only way we’ll advance domestic energy infrastructure projects that will lessen consumer costs, deliver reliable energy to homes, and help meet our nation’s emissions reduction goals,” she said.
“As you said, Mr. President, ‘we’ve got to finish the job.’ INGAA is committed to working with the administration and Congress to bring permitting reform across the finish line so we can build much needed energy infrastructure projects, including natural gas pipelines and related infrastructure.”
API’s Ben Marter, vice president of Communications and Public Affairs, said the president “is right that Americans and the world will continue to need affordable, reliable energy for decades to come. So why attack the industry working day and night to provide it?
“We call on the president to drop the rhetoric and policies that hamstring domestic production and work with us to secure America’s energy future.”
Setting Stage For Second Term?
ClearView Energy Partners LLC in an analysis of the speech said the president appeared “to have been laying a conceptual foundation for his yet-to-be-formalized reelection bid. In that respect, we would suggest that the speech reinforced climate and energy policy as a central plank in that platform.
“We would note, however, that other potential aspirants to President Biden’s seat – for example, California Gov. Gavin Newsom (D) – may be looking to replicate some of the same national political resonance Biden acquired by criticizing oil companies for high energy prices,” ClearView analysts wrote.
“And, despite repeated declarations of bipartisan intent in this year’s speech, Biden’s team appears to be hunkering down for execution mode as the divided Congress looks poised to stall (or severely curtail) near-term legislative opportunities.”
