Former Sen. Judd Gregg (R-N.H.) has called President Joe Biden’s upcoming visit to Saudi Arabia “ironic” in light of the president’s sharp criticism of America’s oil industry and what Gregg blasted as the Biden administration’s “green think” undermining U.S. investment in crude production.
Gregg, who also served as governor of New Hampshire, made the remarks on CNBC’s “Squawk Box” in an interview that aired on July 10, ahead of Biden’s planned visit to Saudi Arabia this week.
During his visit to the Kindgdom, the president is expected to press Saudi leaders to pump more crude in a bid to cool soaring gasoline costs that have frustrated American drivers.
Responding to a question about whether the Biden administration should be looking to boost domestic crude production by taking measures like expanding drilling leases or reviving the Keystone XL pipeline, Gregg responded in the affirmative.
“In 2019, we had over 1,000 rigs pumping oil at $50 a barrel. Today we’re down to 750 rigs and the price of oil is twice that,” he said.
‘Undermined by Green Think’
Gregg said it’s not that the U.S. crude industry is lacking price incentives to ramp up production; the problem is that investment in oil infrastructure is done over a long time horizon, which requires a stable outlook. But that outlook has been undermined by the Biden administration’s hostile attitude toward fossil fuels, he argued.
“That’s been undermined by green think and by the attitude of this Administration, which at some levels has actually called the oil industry criminals, and they are going to Saudi Arabia, which is ironic,” Gregg said.
While Gregg did not elaborate on his claim that the Biden administration has effectively labeled U.S. oil industry members “criminals,” Biden has accused America’s crude producers and refiners of profiteering.
“At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable,” Biden wrote in a letter to U.S. oil companies in mid-June.
Responding to the president’s letter, Chevron said that since Biden took office, his administration has signaled that it will “impose obstacles to our industry delivering energy resources the world needs.”
While Chevron did not elaborate, it may have been referring to a number of executive orders Biden signed targeting the oil industry such as revoking the Keystone XL pipeline permit, freezing new oil and gas drilling leases on federal lands and waters, and ending fossil fuel subsidies by certain agencies.
‘Bring Down the Price’
The price of gasoline is around double what it was when Biden took office, with the president variously blaming a lack of refining capacity, global supply shortfalls set against a sharp post-pandemic rebound in demand, the war in Ukraine, and corporate greed.
Besides leaning on OPEC to pump more oil and releasing crude reserves from the national strategic stockpile, Biden has called on refiners to boost output and has increasingly ramped up rhetoric against gas station owners, demanding they drop prices.
Biden recently issued a call to gas station owners to “bring down the price you are charging at the pump to reflect the cost you are paying for the product.”
“Do it now. Do it today. Your customers, the American people, they need relief now,” Biden said at a White House press conference on June 23, in which he also called for a federal gas tax holiday and urged oil companies to use their profits to boost refining capacity.
After climbing to a record high of over $5 per gallon, average gasoline prices have declined steadily over the past 20-plus days and the national average now sits at $4.67, according to the American Automobile Association.
But that trend could reverse, some industry analysts say.
Tom Kloza, founder of Oil Price Information Service, said in a post on Twitter that he believes crude oil markets are poised to rally higher in the second half of the year and that gasoline prices “will eventually ricochet higher.”
‘Killing Both Oil and Refinery Expansion’
Some experts say that for the oil industry to make the kind of major investments required to expand capacity is difficult in a political environment hostile to fossil fuels.
California gubernatorial candidate Michael Shellenberger said in a series of Twitter posts that the reason high oil and gas prices aren’t leading to increased oil production and refining is simple: “President Biden has actively prevented it since taking office in the name of climate change.”
“Biden accused gas stations of over-charging, but their prices reflect the price of gasoline set by the market, and the market reflects the lack of supply which was created by Biden killing both oil & refinery expansion,” Shellenberger wrote.
Shellenberger also argued that it’s possible for Biden to boost near-term crude production and refining “significantly” in three ways.
First, crude production would get a tailwind from an acceleration of the permitting process for oil and gas projects if the Biden administration were to invoke the National Defense Act for Oil and Gas, he said.
Second, he said that “a powerful incentive for the oil guys” would be if the administration were to commit to refilling the strategic petroleum reserve at a minimum of $80 per barrel.
And third, if the Biden administration were to announce LNG supply contracts with international partners, this would incentivize natural gas production, Shellenberger argued.