The Oil Industry’s Dishonest Effort to Wring Profits from Pain
While Ukrainians fight for their lives, the oil industry has pounced on an opportunity to profit economically and politically.
Gasoline prices in the United States have been rising since the depths of the COVID pandemic in late 2020. Demand for gas collapsed when the economy shuttered after the pandemic first hit in early 2020, driving gas prices down. When the economy began to recover and demand increased as people drove more, gas prices predictably rose in the United States and around the world. More recently, gas prices have shot up as Russia, a major oil-producing state, prepared for and then launched an invasion of Ukraine, causing Western nations to impose economic sanctions that limit Russia’s ability to sell its oil into the international marketplace. Less Russian oil, and now a U.S. import ban on Russian oil announced by President Biden, means a tighter supply in international markets, driving prices for gasoline rapidly upward in America and elsewhere.
So far this is a story of economic pain from higher gas prices in America and around the world caused by changes in supply and demand that have nothing to do with regulatory matters here at home. Even more significantly, it’s a story of tremendous human pain for the more than two million Ukrainians who have fled their homes, some desperately trying to do so under mortar shells and rockets from Russian forces, while others have been forced to take up arms to defend their country. But while Ukrainians fight for their lives, the oil industry has pounced on an opportunity to profit economically and politically.
The industry claims that the rise in gas prices is due to an alleged failure by the Biden administration to sell enough leases and issue enough permits to drill for oil on federal lands and in federal waters. Flying under claims of “energy security” and the false pretense that more reckless drilling on public lands would lower increasingly rising gas prices, the oil and gas industry is demanding the U.S. government give them more public lands to stockpile. The oil and gas industry and their allies in Congress have pushed a false narrative that the fault of rising gas prices lies with the White House and are shamelessly preying on the fears of working families concerned about prices at the pump to extract big regulatory policy wins to enhance their future profits. Big Oil’s latest demand – immediately open more public lands for drilling – is both illegal and will do nothing to lower gas prices for everyday Americans.
Let’s be clear about the facts. The oil and gas companies lack neither the money nor the permits to drill for oil on federal lands. They currently possess over 9,000 approved permits to drill for oil on federal lands they already have leased but have failed to drill on. They could begin drilling tomorrow using those permits but have decided not to do so. That’s not the Biden administration’s fault, it’s the industry’s fault. The industry is demanding new leases but hasn’t bothered to drill on thousands of leases it already holds. Moreover, even if the industry were showered with new federal leases tomorrow, in most cases it would take years for those leases to be moved into production to deliver oil and gas. To summarize: Gas prices are not dictated by White House policy, and the industry’s argument that federal leasing and permitting policies are the source of high gas prices is a flat-out lie crafted to deceive the American public.
The real problem here is corporate greed. The industry could drill on those 9,000 leases with approved permits, but drilling costs money the industry doesn’t want to spend. In 2021 alone, Exxon Mobil, Shell, BP, and Chevron made a combined $75 billion in profits. Instead of spending some of this massive profit on drilling the leases they already hold, oil companies are buying back their own shares, funneling dividends to their shareholders, and paying lobbyists to demand cheap new federal leases so they can stockpile them for future profit. The industry is also talking out of both sides of its mouth. It suggests that issuing new federal oil leases or permits would magically cause gas prices to go down. But just this week, Exxon Mobil and Chevron announced they would increase production immediately by 160,000 barrels a day collectively—but warned we wouldn’t see that oil at the pump anytime soon.
Chasing more fossil fuel leases on public lands and waters would increase industry profits but wouldn’t do anything to decrease today’s gas prices at the pump. It also would keep sending us down the same road of fossil fuel production that is the main driver of the worsening climate crisis. The industry gets the profits, and the American people get handed the resulting wildfires, droughts, hurricanes, and coastal flooding caused and exacerbated by climate change. There’s a better road to go down, and it’s the road of clean energy. For as long as we’re addicted to oil for energy, Americans will be subject to big cost increases when a foreign dictator decides to invade another country or there is a change in the world economy. In addition to being more stable from a price standpoint, clean energy offers America greater energy security. There’s no way some hostile foreign country can block the wind that powers wind turbines in Wyoming, and there’s no way some other foreign nation can blot out the sun that powers solar energy panels in Florida.
Real ‘energy security’ starts at home by making robust investments in clean energy and accelerating our transition to renewable sources. Not only will a transition prevent fossil fuel-driven geopolitical turmoil like this in the future and limit Putin’s power, but it will deliver predictable, lower costs for Americans in the long-run and limit the destabilizing impacts of the climate crisis. These are the investments we should be making today, not relying on Big Oil’s recycled rhetoric to justify a drilling free-for-all on our public lands and waters. With 25 percent of our country’s carbon emissions coming from public lands, our climate can’t afford more leases in the long term. Issuing new leases on public lands and waters would not increase our oil and gas supply for nearly a decade, a decade after this geopolitical crisis and a decade into an increasingly worsening climate crisis.
As Earthjustice has proven in court in our recent Gulf lease sale victory, new oil and gas development must pass the climate test. New leasing simply doesn’t. Drilling on our public lands and waters wrecks ecosystems, coasts, groundwater, and critical habitats. Our country has laws in place precisely to protect people from corporate greed and ensure that the environmental and human cost of fossil fuel extraction is taken into account.
As the newly released IPCC report tells us, we have a narrowly closing window to take meaningful action to stop irreversible harm to our planet. Transitioning away from fossil fuels is the only way to stop this, and that starts by locking in new energy policies in place to accelerate the transition to clean energy. Real energy security means renewable energy here at home that lowers costs, creates jobs, and averts some of the worst climate disasters that could lie ahead if we don’t urgently transition away from fossil fuels. This crisis in Ukraine should be a wake-up call that ‘business as usual’ is no longer sufficient.
The administration and Congress have an opportunity to make their mark in history as the leaders who led us back from the brink of both a geopolitical crisis and this climate crisis. The good news is that it’s not too late, and we can make sound policy decisions that simultaneously avert future geopolitical crises over fossil fuels and meaningfully address climate change. It’s time to shift our economy away from an obsession with fossil fuels that mostly serves industry and its shareholders, and instead invest in a clean energy transition that serves the American people. We can do better for the climate, American wallets, and American energy security.