Republicans and industry executives say Biden administration policies are preventing the nation’s oil and gas producers from going full throttle and expanding exports, which they say will lower costs for consumers in the United States and make global energy supplies cleaner and more secure.
With Republicans regaining the House majority after the November 2022 midterm elections, GOP leadership is charting a 180-degree reversal in energy policy from the one carved by Democrats over the past four years that saw concerns about climate change, environmental protection, and renewable power pushed as “green energy” emphases.
The bills “will increase American energy production, lower energy costs, strengthen domestic supply chains, and protect America’s energy grid. The various pieces of legislation being considered today will move the nation forward in our effort to enhance and strengthen American energy security,” Jeff Eshelman, president and CEO of the Independent Petroleum Association of America, told congressional lawmakers in a Feb. 7 hearing in Washington.
Democrats, some economists, and a range of consumer advocates argue that since domestically produced oil and natural gas are both globally traded commodities, world events dictate consumer prices—as they are doing now—and, therefore, proposals to “produce our way to lower costs” are poorly camouflaged attempts by an industry already enjoying record profits to degrade environmental regulations.
“Our record natural gas exports have radically upended domestic energy markets, forcing American families to compete with families in Berlin and Beijing for U.S.-produced energy,” Public Citizen Energy Program Director Tyson Slocum said during the Washington hearings, noting that with domestic oil and gas sold on global markets, the fuel prices Americans pay are now “directly influenced by global calamities.”
Among the proposals are measures that would mandate 30-day federal approval of “cross-border energy infrastructure,” aka pipelines; remove “public interest” when the U.S. Department of Energy (DOE) weighs natural gas export proposals; repeal the federal Natural Gas Tax; prohibit the president from banning fracking; and require the National Petroleum Council to research U.S. refinery capacity and needs.
The two resolutions “express the sense” that there should be “no restrictions” on oil and gas exports and express “disapproval” of Biden’s revocation of the Keystone XL pipeline permit.
The 17 bills, which also include proposed reforms of the Clean Air, Toxic Substances, Solid Waste, and Inflation Reduction acts, were vetted in Feb. 7–9 hearings before the House Natural Resources and Energy & Commerce committees in Washington and in Feb. 13–16 Texas field hearings. Some could be up for adoption on the House floor by late March.
Banning Export Bans
When fuel costs were soaring during 2021–2022 inflationary surges, President Joe Biden pondered actions the federal government could take in restraining runaway gasoline prices, such as releasing oil from the nation’s strategic reserve and reimposing the 1975–2016 ban on exporting domestically produced oil and natural gas.He was under pressure to do so. U.S. Energy Secretary Jennifer Granholm in October 2021 said an oil export ban was a “possible tool,” and four senators—Tammy Baldwin (D-Wis.), Tammy Duckworth (D-Ill.), Jack Reed (D-R.I.), and Jeanne Shaheen (D-N.H.)—urged Biden in a July 2022 letter to reinstate an export ban on U.S. oil, claiming that it would “result in lower gasoline prices.”
Biden hasn’t adopted an export ban, nor has such a prospect been discussed recently, and the United States remains the world’s largest exporter of oil and natural gas.
But the president has said the oil and gas industry “won’t be needed” in 10 years, and congressional Republicans want to ensure he doesn’t artificially accelerate its demise. They’ve pushed legislation that entrenches exporting as a key component of the nation’s energy policy.
The 1975 Energy Policy & Conservation Act banned nearly all exports of U.S. crude oil and natural gas because import volumes were increasing while domestic production had flattened out.
The ban was designed to ensure U.S.-produced oil was priced at domestic cost and not on the global market, where prices were higher because OPEC and other producers were implementing production caps.
That all changed with the advent of hydraulic fracturing—fracking—and horizontal drilling in the early 2000s, game-changing technologies incubated in West Texas that ushered in the “shale revolution.”
In the period from 2009 to 2015, U.S. crude oil production doubled. In December 2015, Congress repealed the Energy Policy & Conservation Act export ban, allowing U.S. crude oil to be shipped overseas—60 percent now is—and loosening regulations on natural gas exports, which were also exploding.
According to the President’s Council of Economic Advisers, between 2007 and 2019, there was an eight-fold increase in extraction productivity for natural gas and a 19-fold increase in oil activity “resulting in the United States becoming the world’s largest oil and gas producer—a net exporter of oil and the largest exporter of gas.”
The United States is especially dominant in natural gas, with domestic producers accounting for 25 percent of daily global production—twice the combined output of its two largest rivals, Russia and Iran, up from 6 percent in 2015.
Bills Boosting Exports
Republicans and industry representatives argued across 10 hours of testimony before various committees in Washington and four hours of “field hearings” in Odessa and Midland, Texas, that higher production will keep prices steady even as demand increases. They want any talk of export bans peremptorily ended and regulations on natural gas exports loosened.The DOE regulates domestic natural gas exports, including LNG, under the 1938 Natural Gas Act. The 1992 National Energy Act amends the Natural Gas Act to allow exports to countries with which the United States has free trade agreements.
Exports to non-free trade agreement nations must be approved by the DOE in a review process that requires the export to be in “the public interest.” More than 76 percent of current LNG exports are to nations the United States doesn’t have free trade agreements with and, therefore, must meet the “public interest” standard.
Johnson, in both the Washington and West Texas hearings, said his bill “strengthens the United States international posture” so it “can lead the way in providing the world energy” that is produced under the planet’s most environmentally sensitive standards and is cleaner than natural gas produced elsewhere.
The bill also promises “to bring jobs and economic growth in places in ... Ohio, which sits atop the Utica-Marcellus [shale] shell,” he said.
Mark Menezes, a former DOE deputy secretary under the Trump administration, said during the Washington hearings that expanding U.S. natural gas exports “helps our friends and allies around the world by providing a steady source of clean natural gas to replace Russian gas and to help them meet their net-zero emission goals.”
Menezes said the bills remove “redundant reviews,” such as “public interest,” and the need for “multiple federal ‘permission slips’ to produce and liquefy LNG for export,” and it gives the Federal Energy Regulatory Commission, not the DOE, the authority to approve natural gas export proposals.
Not in ‘Public Interest’
Public Citizen’s Slocum, whose national consumer advocacy organization represents more than 500,000 members, said during his testimony before the House Energy & Commerce Committee in Washington that the industry wants to remove “public interest” from the export review process because exporting domestic oil and natural gas isn’t in “the public interest.”“Courts have long interpreted the intent of the ‘public interest’ determination ‘was to protect consumers against exploitation at the hands of natural gas companies,’” he said.
The purpose of the “public interest” review “was to promote a North American natural gas market that would benefit consumers—and not tolerate the use of a free trade agreement public interest determination to freely re-export to nations with whom no free trade agreement exists,” he said, noting that it’s doubtful the American people would think a bill that “endorses re-exports of U.S. produced gas from Mexico to China” would be in their “public interest.”
The “public interest” review has “been the standard for 85 years and we shouldn’t change it now,” Slocum said. “This legislation would remove all routine regulatory review to ensure that exports are not increasing prices for American families, and would allow unregulated exports to China” by allowing U.S. oil and natural gas exported to Mexico to be “re-exported” from Mexico to anywhere on the globe.
Oil and natural gas exports are very much in Americans’ interests—both geopolitically and financially, Menezes said.
“[An] American energy system is necessary for a reliable, affordable, and sustainable supply of energy for the U.S. and our neighboring countries,” he said, adding that the “cross-border infrastructure bills” outline needed clarifications in agreements among the United States, Mexico, and Canada.
The bills “will allow the three countries to be able to better withstand the global energy shocks of autocratic actions, like Putin’s invasion of Ukraine,” Menezes said. “Had the Keystone Pipeline not been canceled by President Biden, the U.S. and its allies would have had access to Canadian oil to lessen the import and use of Russian oil.”
Pipelines to China
Slocum said the bills seek to administratively grease the rails for domestic producers to expose more U.S. oil and gas to global market prices, increasing their profits while creating costly uncertainties for consumers—all while duping U.S. taxpayers into subsidizing infrastructure improvements to increase their capacities to export.For instance, he said, an expansive pipeline network already exists in delivering Permian Basin natural gas to processing and refining plants along the Texas Gulf Coast, including seven LNG terminals with the combined capacity to handle 14 billion cubic feet a day (Bcf/d) of natural gas and that are authorized by the DOE to export to non-free trade agreement countries.
They are Sabine Pass—where Cheniere Energy exported its first LNG cargo in March 2016—Cove Point, Elba Island, Cameron, Freeport, Calcasieu Pass, and Corpus Christi I and II. Three additional terminals authorized to export are under construction in Plaquemines, Corpus Christi III, and Golden Pass.
If completed as planned, the LNG terminals will increase exports just from the Permian Basin to 4.18 Bcf/d over the next two years, and increase the nation’s total natural gas exports to nearly 20 million Bcf/d by 2025.
There are an expanding number of similar terminals on Mexico’s Pacific coast that “serve Asian markets,” Slocum said. “Exports from Mexico’s Pacific Coast avoid the expense and time of scheduling travel through the Panama Canal faced by LNG export terminals located on the U.S. Gulf Coast.”
The bills being proposed by Republicans would essentially use pipelines to connect U.S. producers with terminals on Mexico’s Pacific coast all while avoiding the free trade agreement issue or any review at all, making Mexico the world’s fourth-largest exporter of natural gas despite not producing any domestically.
A key component for proponents of increasing exports is a 155-mile pipeline from the Permian Basin to several LNG terminals on the Texas coast and to the border, where it will be funneled to the eight terminals on Mexico’s Pacific Coast.
The proposed “Promoting Cross-Border Energy Infrastructure Act” would require pipeline proposals such as this to be approved by the federal government within 30 days.
“That is a de facto approval” of a pipeline that will send “U.S. natural gas to México’s Pacific Coast and to China,” Slocum said, vowing that Public Citizen would challenge the proposal in court as against the “public interest” of U.S. consumers. “We are going to raise concerns about exporting Permian natural gas directly to China.”
More Is Less Costly—Or Not
Menezes and others who testified in the Washington and Texas hearings disagreed. The bills “both ensure domestic supply of natural gas for both domestic consumption and export and increase access and delivery of supply to lower the costs of natural gas to homes and businesses and the cost of electricity to consumers,” he said.Oil and natural gas exploration, excavation, refining, transmitting, and transporting are entangled in costly regulations that waste time and money without serving the “public interest” or domestic consumers, Menezes said.
The bills streamline and integrate federal agency actions and “establish reasonable timelines, and keep track of progress of the permitting and environmental reviews required under the National Environmental Policy Act and other laws” for the siting and construction of natural gas pipelines, he said.
“Not only is it imperative that all Americans have clean and reliable energy—Congress should prioritize efforts to reduce energy costs. Reducing costs of government can save taxpayers’ dollars for use to offset the costs of energy,” Menezes said.
The measure that captures the mood of the House is the resolution “expressing the sense” of Congress that there should be no federal restrictions on the export of crude oil or other petroleum products.
“This is necessary because President Biden and Democrats on this committee have advocated for reinstating the crude oil export ban,” Rep. Jeff Duncan (R-S.C.) said in Washington. “Lifting the export ban in 2015 has lowered prices while also increasing our leverage globally—it would be shortsighted to reverse this.”
Rep. Diana DeGette (D-Colo.) said the bills dodge reality: Increasing exports won’t lower U.S. energy costs.
“They want to expand our and gas drilling and undermine bedrock environmental laws while not lowering costs for consumers, all to aid and abet an industry already reporting record profits,” she said.
Republicans are fostering confusion to make people think “that if we produce more oil and gas domestically, this is going to make us [energy] independent. That is simply not the case because it is an international market,” DeGette said.
She turned to Slocum sitting at the witness table during the Washington hearings and said: “Increases in oil and gas production would make us less energy dependent. Is that correct? It will make us less dependent?”
“No,” Slocum said. “That is not correct. Markets are globally priced.”
A week later in Texas, Republicans remained consistent and persistent: Increasing exports will lower domestic energy costs.
“Producing more American energy will reduce global emissions, increase energy reliability, and lower costs for American consumers,” Johnson said in Midland, deep in the heart of the Permian Basin.
“President Biden’s war on reliable energy, and the problems that war creates, is not limited to killing the use of oil, natural gas, and coal. His administration’s policies are blocking progress on the president’s own stated goals to develop resources for alternative energies such as wind, solar, and batteries.”
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