Oil Industry Stirs Blowback After Weaving War Into U.S. Lobbying

Oil Industry Stirs Blowback After Weaving War Into U.S. Lobbying

The U.S oil and gas industry is seizing on the market turmoil sparked by Russia’s invasion of Ukraine to demand the Biden administration take steps to encourage more drilling. 

Industry executives and their allies on Capitol Hill are citing the war in a push for long-sought policy goals such as pipeline approvals, expanded exports of natural gas and more drilling rights -- even as the White House says companies aren’t making full use of the permits they already have. 

“In a time of tight markets for oil and natural gas and geopolitical unrest, American energy serves as a strategic asset and stabilizing force for global energy security,” American Petroleum Institute president Mike Sommers said in a letter Monday to Interior Secretary Deb Haaland. Sommers warned against “unwarranted delays in federal permitting and leasing of American energy.”

Environmentalists dismissed the efforts as a ploy.

“This is the industry trying to take incredibly cynical advantage of a really tragic situation,” said Collin Rees, U.S. program manager for the environmental group Oil Change International. “It makes it all the more clear we need to break our dependence on fossil fuels around the world and that means more distributed renewables.”

The phenomenon isn’t unique to oil. Jeremy Harrell, the chairman of the U.S. Nuclear Industry Council, extolled the virtues of nuclear power in an op-ed published on the eve of Russia’s invasion. 

“In the midst of these dynamics, nuclear energy looks really appealing,” Harrell said, as he cited unstable oil and gas markets caused by the military tensions. “A new generation of American advanced reactors will make immense contributions to global security, U.S. economic growth, and climate action if we let them.”

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Edwin Lyman, the director of nuclear power safety for the Union of Concerned Scientists, dismissed the piece as “shameless opportunism.”

“The current crisis only underscores why new nuclear power plants around the world need to meet higher safety standards and be more robustly protected against attack than operating reactors --- in the event that they end up in a war zone,” Lyman said.

Bud Albright, president of the U.S. Nuclear Industry Council said the industry wasn’t taking advantage of the war but trying to call attention to how energy dependence on Russia by any region of the world is a “mistake.” 

The oil and gas lobby is a political heavyweight in Washington, D.C., spending some $115 million on lobbying last year, behind just five other industries, according to the financial watchdog OpenSecrets. 

In many cases, the lobbying is aimed at scoring policy victories the industry was already pursuing before Russia moved on Ukraine. The American Exploration and Production Council and LNG Allies, for instance, have asked that the Energy Department immediately approve pending applications to export natural gas.

Though the industry is pushing for swifter drilling permits on federal land, the Interior Department is still approving them, with more than 3,800 authorized onshore last year, according to a Public Citizen analysis of Bureau of Land Management data. That’s down from the 5,426 permits issued in 2020, but in keeping with prior year permitting levels. 

White House National Economic Council Deputy Director Bharat Ramamurti said the industry should take advantage of some 9,000 unused drilling permits it already has.

“People are free to use them if they’d like to,” he said Tuesday in an interview on Bloomberg Television. “If people want to step up to the plate and produce more, they’re they’re free to do so.”

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So far, U.S. oil companies have been reluctant to pump more, preferring to steer record cash flows back to investors instead of spending it on new drilling that could flood the world with cheap crude but also stoke another boom-and-bust cycle.

The arguments have been amplified by industry allies on Capitol Hill who say that with additional U.S. oil and gas production to soften the economic blow domestically, Biden could move more aggressively to toughen sanctions on Russian President Vladimir Putin and directly hit Russia’s energy exports. 

“The United States ought to be looking at ourselves, frankly, as an arsenal of energy for the world,” Representative Liz Cheney, a Republican from Wyoming, said Sunday on CBS’ “Face the Nation.” “We ought to be unleashing our own energy resources, our own energy production.”

Republican senators from oil-rich states, including Dan Sullivan of Alaska and Bill Cassidy of Louisiana, are preparing to give Biden a list of nearly a dozen specific steps they say the administration can take immediately to unshackle domestic production. Senator Lisa Murkowski, a Republican from Alaska, has already called the administration with her suggestions.

And Democrat Joe Manchin, whose home state of West Virginia is a top natural gas producer, is arguing that the U.S. needs to step up production to replace Russia’s energy, for both the U.S. and its NATO allies. 

The arguments may be gaining traction as the U.S. and other nations tap emergency crude stockpiles in a bid to calm energy markets. Senator Bob Casey, a Democrat from Pennsylvania, said Monday he would be willing to look at doing things he wouldn’t have before the invasion, including more energy production.

Industry leaders rejected allegations of political opportunism.

“This basic policy principle is not new; it has longstanding support from Republican and Democrats alike, who view domestic energy production as a form of national security,” said Anne Bradbury, chief executive of the American Exploration and Production Council.

Frank Macchiarola, senior vice president at the American Petroleum Institute, said the invasion of Ukraine is a reminder of the strategic importance for the U.S. to rely on domestic resources.

©2022 Bloomberg L.P.

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