As Congress holds hearings on the price of oil, it is important to set the record straight on the various factors causing high gasoline prices. Fact: Prices are not caused by energy companies. Also fact: It’s time for Congress and the administration to pass and implement effective policies that provide relief to American families and small businesses.
MYTH: Currently, gas prices are extraordinarily high because oil and gas producers are “gouging consumers” to reap massive profit for their companies and shareholders.
REALITY: Gas price hikes are largely the result of demand significantly outstripping supply as the economy recovered from the pandemic, coupled with misguided policies from the Biden administration. Shutting down energy pipelines, restricting development of oil and gas on federal lands, imposing burdensome and duplicative regulations, calling for punitive taxes and fees on our industry, and mobilizing the federal government to quickly end fossil fuel use—these actions are driving up costs that directly hurt American families and businesses. High energy prices have further been exacerbated by the significant impact on global energy markets due to Russia’s invasion of Ukraine. International conflict and harmful domestic regulatory policies are contributing directly to a significant spike in energy costs for the American people.
MYTH: Oil and gas producers are intentionally sitting on 9,000 federal leases and choosing to not produce.
REALITY: The reality is that vast majority of leases on federal lands are currently producing oil and gas. There are about 37,500 total oil and gas leases in effect, with about 75 percent of them producing, and the other 25 percent going through a complex regulatory process or being held up in litigation. This is the highest percentage of producing leases the industry has ever had.
MYTH: Oil and gas producers could immediately ramp up production, which would lower energy prices.
REALITY: We are responsibly producing and providing energy to the market in a way that meets current demand and future projections. The oil and gas industry is heavily regulated by local, state, and federal agencies at each phase of the energy production process. It takes months, if not years, of planning, permitting, and preparation for one of our members to find producible reserves and then drill and complete a well before any oil or natural gas can reach the market. From the regulatory outlook to storage levels, to additional sanctions on Russia, to how OPEC nations will respond to increased American production – there is much still unknown about the current global oil market. Inflationary costs, labor shortages, and supply chain disruptions are just some of the many factors hindering increased domestic production. According to projections from the Institute for Energy Economics and Financial Analysis, inflationary pressures could lead to a 15 to 20 percent increase in capital costs for producers just to maintain current oil and natural gas production levels.
MYTH: The Biden administration has done all it can to lower energy prices for the American people.
REALITY: By not holding legally required lease sales, shutting down energy pipelines, not approving permit applications, and implementing regulatory roadblocks to production, the administration has taken several actions that stymie production, and hence negatively impact the price of oil for consumers. Our companies do not have the ability to set the price of oil or natural gas, only to make long-term assessments or investment based on, among other things, capital availability and the current regulatory environment. The best way for Congress and the administration to ensure Americans have a stable, abundant supply of oil and natural gas is by working with our industry to set sensible regulations and policies that enable us to meet demand domestically and abroad.
The American Exploration & Production Council (AXPC) is a national trade association representing the largest independent oil and natural gas exploration and production companies in the United States. Learn more by visiting https://www.axpc.org/.