U.S. trade associations came out in defense of the oil and gas industry in response to accusations made at a hearing recently held by U.S. Congress on high gasoline prices.

“Our companies do not have the ability to set the price of oil or natural gas,” Anne Bradbury, CEO of the American Exploration and Production Council (AXPC), told Hart Energy

Bradbury clarified that oil and gas producers are only capable of making long-term assessments or investments based on capital availability and the current regulatory environment. The real cause of rising gasoline prices, she added, includes “excessive regulation, lack of needed pipeline infrastructure and policies to suppress exploration and development,” which create market volatility that results in higher prices.

Democrats have accused U.S. oil and gas producers of “gouging at the pump” and boosting profits at the expense of American consumers. U.S. Congress on April 6 summoned Big Oil executives for a hearing to examine why prices at the pump remained high despite dropping of crude oil prices.

The AXPC, whose members include oil majors like Hess, ConocoPhillips and Pioneer Natural Resources, also noted in a separate analysis that high energy prices have further been exacerbated by the significant impact on global energy markets due to Russia’s invasion of Ukraine.

Bradbury explained that the best way for Congress and the Biden administration to ensure Americans have a stable supply of oil and natural gas is by working with the industry to “set sensible regulations and policies” that will enable U.S. producers to meet domestic and international energy demand.

“Increasing domestic oil and natural gas production will help bring down prices for the American people and will reduce our nation’s reliance on foreign sources of energy,” she said.

Reflecting a similar sentiment, Ed Longanecker, president of the Texas Independent Producers & Royalty Owners Association (TIPRO), said in a statement that U.S. oil and gas companies “do not set the market, but are subject to it like the rest of the world.”

Instead of interrogating oil and gas executives, he continued, the congressional leaders should focus on extending support to increase domestic oil and gas production, which includes expediting permits for U.S. LNG export facilities and pipeline infrastructure, lifting the ban on federal leasing and stable regulatory environment that provides certainty to producers and investors.

“Overburdensome regulations, increased taxes and anti-oil and natural gas rhetoric will only exacerbate high energy prices and raise costs for American consumers,” Longanecker said.

‘Sitting on leases’

White House Press Secretary Jen Psaki recently faulted oil producers for sitting on 9,000 approved-but-unused permits on leased federal lands.

The AXPC’s defense is that the vast majority of leases on federal lands are currently producing oil and gas.

“There are about 37,500 total oil and gas leases in effect, with about 75% of them producing, and the other 25% going through a complex regulatory process or being held up in litigation. This is the highest percentage of producing leases the industry has ever had,” the AXPC noted.

In his floor speech on April 6, U.S. Senator Kevin Cramer (R-ND) clarified the “9,000 lease” rhetoric, noting that the Biden administration is “more interested in finger-pointing than finding solutions.”

“First, it was OPEC+ not producing enough oil, then it was evil corporations price gouging at the expense of hardworking American families, then it was Vladimir Putin’s invasion of Ukraine, and now it’s oil and gas companies sitting on 9,000 leases,” he said.

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Cramer also said that Psaki is making a “fundamental mistake” of using the word “lease” and “permit” interchangeably.

“They are not synonymous other than both are regulatory hurdles required by the federal government for a producer to work on federal lands,” he noted.

The Senator went on to explain that the administration’s “regulatory schemes, budget proposals, and foot-dragging exude hostility toward fossil fuels” is restricting production in several U.S. shale plays that have production capacity to address energy security concerns.

“I’ve talked to a number of producers in North Dakota and they’re capital-starved,” Cramer said. “If the right messages were being sent to the markets, we could pick up another 200,000 to 400,000 barrels of oil per day… North Dakota alone could provide two-thirds of the product Europe imports from Russia. It would be cleaner than Russian oil and would lessen Putin’s malign leverage over Europe.”

‘Immediate’ production is impossible

For several weeks now, the Biden administration has expressed frustration at oil companies for not ramping up production “immediately,” which they believe could lower energy prices.

The AXPC clarified why this is an impossible feat.

“It takes months, if not years, of planning, permitting and preparation for one of our members to find producible reserves and then drill and complete a well before any oil or natural gas can reach the market,” the trade group said.

Additionally, AXPC noted that inflationary costs, labor shortages and supply chain disruptions are just some of the many factors that are hindering increased domestic production.

“According to projections from the Institute for Energy Economics and Financial Analysis, inflationary pressures could lead to a 15% to 20% increase in capital costs for producers just to maintain current oil and natural gas production levels,” the AXPC said.

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