Here are 4 ways Biden can avoid an energy collapse

In recent days the Biden administration has acknowledged the need for more American oil and gas production. But this change in rhetoric stands in stark contrast to the policies the administration is proposing and implementing.

Consider the comment of Bharat Ramamurti, deputy director of the National Economic Council, in a recent interview: "If folks want to produce more, they can and they should," Ramamurti said, adding: "The idea that the federal government is restricting the ability of oil and gas companies to produce more, I think, is incorrect." 

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In fact, the administration has and is deterring production through its words and actions, including several targeted policies.

In the first week of the administration, the president ordered a halt on all federal oil and gas permitting and leasing, pending the issuance of a comprehensive study. Permitting was eventually put back on track (a Department of the Interior spokesman conceded that "permits reviews are required by law"). Alas, leasing remains indefinitely on hold, and if continued, could lead to a concerning decline in domestic production on federal lands and waters. 

Roughly one-quarter of U.S. oil production comes from federal lands and waters. Stopping new development by halting lease sales will inevitably lead to production declines. It is a fundamental principle of oil and gas production that all wells naturally produce less over time, and thus operators must continually drill new ones to sustain production. Without new leases, production from key federal areas is headed on a downward trajectory, which does not bode well for U.S. energy security. 

Declining domestic production is especially dangerous when independent studies conclude the world will continue to demand more energy, not less. The question is whether the oil we need will come from the U.S. or hostile regimes like Russia. The answer should be obvious for an American president, regardless of political party.

Yet the administration’s inaction should not be surprising – it is merely the fulfillment of President Biden’s campaign promise to "ban new oil and gas leasing on public lands and waters." Still, it is not too late for the administration to mitigate this pending production decline. But it will require an energy policy course correction in numerous respects – and fast. 

First, the administration should mitigate the headwinds it has already embedded in future production by holding lease sales as soon as possible. To do so, the administration must stop invoking excuses for evading its duty to conduct such sales. 

Interior recently announced that the one onshore lease sale in the planning process is now indefinitely on hold due to a recent court decision barring the administration from using its interim estimates for the social cost of greenhouse gas emissions. This particular cost analysis, however, is not required for lease sales, so the administration can and should proceed with previously used cost estimates. 

With respect to offshore leasing, Interior should promptly complete the next five-year leasing program, which is required by law, as expeditiously as possible. In addition to the already unprecedented gap of more than one year since the last successful lease sale under the current program, we are also on track for at least a second year without offshore leasing. There is no excuse for the administration’s protracted delay in issuing the next iteration of the offshore leasing program.

Second, the administration should work with all relevant agencies to ensure that infrastructure permitting processes are designed and implemented in a manner that ensures consistency, transparency and timeliness – supporting both federal production and much larger production on state and private lands. (Another benefit to the administration is that this would aid renewable energy infrastructure, too.)

Third, the administration should reinstate the leases it suspended in Alaska’s Arctic National Wildlife Refuge and the permit development it approved in the National Petroleum Reserve. These were permitted with stringent environmental standards and could prove to be a significant source of domestic production over time. 

Fourth, if the administration wants to see domestic energy projects and production continue, it should end its efforts to deny capital to oil and gas producers. American energy leadership requires a fair and welcoming investment environment.

Thus far, the administration’s efforts to increase domestic supply have been misguided at best.  Releases from strategic stockpiles provide a short-term increase in oil – literally for days, not weeks or months – but do not help in the longer term if comparable quantities are not later produced to refill the reserves.

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And the administration’s other stated policy – that industry can simply "take advantage" of developing "unused" leases to increase production – is flawed. When the underlying geology of a lease parcel dictates that a company can earn a return on its investment, a company has historically produced on such leases, rather than return them to the government as required by law. Telling companies to produce on such leases only exposes the administration’s lack of understanding of how a great American industry operates.

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Without the above policy changes, the unfortunate result will be a steady decline in oil and gas production over the next several years – and a reliance on unsteady regimes. Europe knows how that movie ends. 

Despite Mr. Ramamurti’s assertion, the Biden administration is restricting the ability of oil and gas companies to produce more. The U.S. oil and natural gas industry has helped strengthen American energy security and we stand ready to partner with this administration to reassert America’s energy leadership.

Frank Macchiarola is senior vice president of policy, economics and regulatory affairs for the American Petroleum Institute, which represents all segments of America’s natural gas and oil industry. API’s nearly 600 members produce, process and distribute the majority of the nation’s energy.