Confronting Inflation, Biden Administration Turns to Oil Industry It Once Shunned
U.S. producers, chastised about climate change, balk at White House’s call for more drilling to rein in gasoline prices
A gas station in New York City earlier this month. Rising prices have become a political issue.
ByChristopher M. Matthews Follow
Timothy Puko Follow
and
Collin Eaton Follow
Dec. 22, 2021 8:00 am ET
The relationship between the White House and U.S. oil companies has sunk to a new low at a moment when President Biden needs the industry most.
Oil company executives have become openly frustrated with a Biden administration that spent months shunning the industry, only to start urging in recent weeks that it produce more oil to alleviate rising gasoline prices.
In closed-door meetings with Energy Secretary Jennifer Granholm over recent weeks, oil executives have made few promises about raising output, say people familiar with the matter, and explained that it may be months before higher oil prices lead to resurgent U.S. production.
At a time when Wall Street is telling oil companies to tamp down spending and deliver profits after years of poor returns, oil company leaders say Mr. Biden’s positions on oil make it even harder for them to justify new spending to grow.
“The administration’s energy policy has not been very coherent,” said Mike Wirth, Chevron Corp.’s CVX 1.60% chief executive. “The signals from the administration have been very conflicting and that can just chill decision making.”
The Biden administration says that oil companies face no government constraints on drilling more in the short run, even as it presses the companies to shift long term to cleaner forms of energy in response to climate change.
“It’s important for the American oil-and-gas industry to address near-term energy demands while also recognizing that they need to begin transitioning their companies,” said Energy Department spokesman David Mayorga.
The friction is another setback for an administration concerned about inflation. Soaring prices have become a top concern for voters, according to a recent Wall Street Journal poll, clouding prospects for Democrats in next year’s midterm elections.
White House advisers have spent months exploring potential responses on gasoline prices, which, near a seven-year high, are central to rising costs in the economy. But the White House has found little cooperation from oil companies frequently targeted by Mr. Biden’s effort to prioritize climate change in federal policy.
As a candidate, Mr. Biden said the country must transition away from oil, and in his first months in office he moved for more stringent regulations on the industry, explored restrictions on oil production and revoked a permit for the Keystone XL pipeline.
When gasoline prices jumped this fall, officials first called on the Organization of the Petroleum Exporting Countries, not U.S. companies, to increase production, angering many industry executives, who argued that the Biden administration should first consider domestic policies to raise output.
In November, Ms. Granholm laughed at a question during a television interview about what “the Granholm plan” was to increase U.S. output, saying the idea was “hilarious” and that OPEC and global markets set production.
During a public meeting with the National Petroleum Council last week, she asked U.S. companies to boost production, and noted that the Interior Department since Mr. Biden took office has been approving permits for drilling on federal land at a faster clip than under former President Donald Trump.
“Please take advantage of the leases that you have, hire workers, get your rig count up,” Ms. Granholm said.
Increasing U.S. production may be beyond the administration’s control, even if it takes a friendlier stance with industry. Wall Street, scarred by nearly a decade of abysmal returns from oil and gas producers, has pressured companies to pledge fiscal austerity and to return more cash to shareholders.