Biden’s New Energy Strategy: Drill, Baby, Drill

Jennifer Granholm, U.S. energy secretary, told oil executives in Houston on March 9 that the country was now on a “war footing,” as she called for an immediate increase in oil production to avert a price spike.

“We are on a war footing. We are in an emergency,” she said at the CERAWeek conference by S&P Global. “That means releases from the strategic reserves across the world, as we have done. That means you producing more right now, where and if you can.”

The comments mark a huge shift in tone from an administration that had previously made climate policy the cornerstone of its energy strategy.

Its restrictions on new fracking leases on federal lands, together with a tighter regulatory and permitting environment for new pipelines, have been bugbears for an industry that has historically expressed skepticism about climate change.

But Granholm indicated that the administration would seek to minimize the obstacles, saying permitting was “on the table.” The remark drew applause from oil executives.

Oil prices have soared following Moscow’s invasion of Ukraine and western governments’ sanctions, including a move by the U.S. to ban imports of Russian energy.

But U.S. oil production, which slumped during the pandemic price crash, remains well below its historic highs, partly because investors have told companies to prioritize dividends and cash flow over new drilling campaigns.

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Lack of labor and other shortages in oilfield services have also held back new supply growth in the once-prolific shale patch.

“I know that some of you are grappling with supply chain issues,” Granholm said. “In this moment of crisis, we need more oil supply.”

She also called on investors to begin supporting the oil industry in a new supply push.

“I hope that investors are listening—we can’t have one element holding back the world,” said Granholm, who also appealed to the U.S. oil sector to strike a new partnership with the federal government.

“We can’t do it if we are fighting internal battles. Lobbyists and Beltway politicians think this is the time to recycle old talking points,” she said, and referred to complaints that the Biden administration had blocked pipelines and other infrastructure. “That is the same old DC BS,” Granholm said.

This article is an excerpt of Energy Source, a twice-weekly energy newsletter from the Financial Times.