President Joe Biden didn’t mince words as he blamed the oil industry for gasoline prices running at a seven-year high.
“Gas supply companies are paying less and making a lot more,” he said in televised remarks from the White House last week. “That’s unacceptable.”
Within minutes, the oil industry and its congressional backers pointed fingers right back at the Biden administration, blaming it for policies to reduce the nation’s reliance on fossil fuels and the president’s decision to block construction of an oil pipeline from Canada.
The reality of who’s to blame for high prices -- and what could be done to lower them -- is more complicated. Here’s a closer look:
Claim: The oil companies can just open the taps
Yes, they could, but really they don’t want to.
The U.S. oil industry is still producing less crude than it did before the pandemic curtailed travel and cratered demand for fuel. Even as demand returns, oil companies are keeping production flat while using profits to reward shareholders.
“Oil production is lagging behind as the economy roars back to life after the shutdown,” Energy Secretary Jennifer Granholm said recently during a White House briefing.
This year, explorers boosted output 4.5% and are expected to keep up the same pace next year. Total U.S. oil production remains 12% below pre-pandemic highs of 13.1 million barrels a day, with no sign of surpassing that in the next couple of years.
That follows a blistering four-year run that saw U.S. oil producers boost output by more than 50% between 2016 and 2020. Investors are now demanding greater returns so oil companies are forgoing crude expansion and instead returning cash to shareholders while vowing to keep spending in check.
Claim: Companies aren’t drilling all the federal tracts they’ve leased
Yes, but energy companies have a long history of renting federal land and waters with the intention to drill when the price is right.