16
ENERGY NEWS
US
ENERGY REVIEW
US crude oil production is recovering from the pandemicdriven impact and from the shut-ins due to the hurricanes in August and September, while petroleum demand in the United States held strong in October. By Tsvetana Paraskova
The largest US shale region, the Permian in West Texas and eastern New Mexico, is set to see its highest ever oil production in December, estimates from the US administration show. Due to rising global oil supply, including from the US, the oil market is expected to swing into a surplus as early as in 2022, the US Energy Information Administration (EIA) said in its latest monthly Short-Term Energy Outlook (STEO) in November. While the Biden Administration is looking at ways to reduce the highest US petrol prices in seven years, including via a release from the Strategic Petroleum Reserve (SPR), the US shale patch continues to exert capital discipline and is not rushing to raise production too much even at oil prices at around $80. US producers prefer to grow within cash flows and reinvest less of the record cash they have been raking in in recent months. The US oil and gas industry is also apprehensive about the US Administration’s policy toward oil and gas with expected additional fees and taxes on the sector that
www.ogv.energy I December 2021
has been discouraged to invest in more production while President Joe Biden is calling on OPEC+ to raise output.
Efforts to bring down high petrol prices Since the summer of 2021, the Biden Administration has been signalling increased efforts to try to bring down high petrol prices, which hit their highest since 2014 in the US. Continued pleas with OPEC+ have been ignored for months by the group, and as of the end of November, the US was considering releasing crude oil from the Strategic Petroleum Reserve in a coordinated effort with other major oil consumers such as India, Japan, and China, to reduce prices at the pump. On 23 November, President Biden announced that the Department of Energy would make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve “to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply.”
High petrol prices in the US are a major concern for a sitting president, as expensive petrol typically directly impacts ratings and voter approvals. Apart from calls on OPEC+ to open the taps and announcing a SPR release, President Biden has also requested the Federal Trade Commission (FTC) to investigate rising petrol prices. The American Petroleum Institute (API) issued a statement on 17 November in response to the renewed request for investigation. “This is a distraction from the fundamental market shift that is taking place and the ill-advised government decisions that are exacerbating this challenging situation. Demand has returned as the economy comes back and is outpacing supply,” Senior Vice President for Policy, Economics and Regulatory Affairs Frank Macchiarola said. “Further impacting the imbalance is the continued decision from the administration to restrict access to America’s energy supply and cancel important infrastructure projects. Rather than launching investigations on markets that are
