Home Business US boosts oil and gas production to drive down prices

US boosts oil and gas production to drive down prices

90
0

Too bad for the environment, the main thing is to save the midterm elections. The US administration announced on Friday, April 15, the relaunch of oil and gas operations on public federal lands. In total, 173 plots occupying 58,275 hectares, spread over nine states, will be put up for sale following an auction procedure.

A moratorium already very chipped

It’s a 180 degree turn for the White House. During his campaign, Joe Biden had promised that the fight against climate change would be one of his priorities. He then announced a moratorium on new hydrocarbon projects on federal lands, which represent about 28% of the territory, mainly in the West, and less than 10% of American hydrocarbon production.

→ READ. Driven by the war in Ukraine, the production of oil and shale gas at its highest in the United States

But in reality, this gel was never actually applied. In practice, the examination of current files has never ceased. And in June 2021, a federal court even suspended the measure, ruling that it must obtain prior authorization from Congress to take effect. In the process, the government had engaged in auctions for oil concessions in the Gulf of Mexico, in an area that is nevertheless protected.

More restrictive conditions

This green light for new drilling on federal lands is causing a stir within the Democratic Party. But the White House argues that this is not a return to the world before. The area of ​​concessions put up for sale is 80% less than initially planned. The royalties requested will now be equivalent to 18.75% of profits, instead of 12.75%. This rate had not changed for a century.

Read:  Eleven countries risk social tensions in the face of the coming food crisis

The companies will also have to commit to using extraction techniques that are least harmful to the environment and they will have to consult the Amerindian populations concerned.

→ REPORT. Americans angry at ‘Biden inflation’

But rather than the climate, Joe Biden’s entourage today has an obsession: to lower the price of gasoline to calm public anger. At the pump, it reached an all-time high of $4.30 per gallon (3.8 liters) in March, before falling to $4.07 (just over one euro per liter) on Friday April 15. . This represents a 70% increase since the president took office in January 2021.

Admittedly, this level remains twice as expensive as in France, but large American cars consume much more. The energy item alone is responsible for half of the inflation recorded in the United States.

For several weeks, the government has multiplied initiatives to lower prices. The war in Ukraine and American pressure for the European Union to engage in an embargo on Russian oil and gas are also sources of tension on the world market.

Read:  Inflation is rising across Europe, but unevenly

Several measures with limited impact

At the end of March, the administration announced its intention to dip massively into strategic reserves to put 180 million barrels on the market over the next few months. From this summer, distributors will also have the right to incorporate 15% ethanol in gasoline, instead of 10% as currently authorized by law.

But the impact of these measures on prices should be marginal. There remains therefore the return to fundamentals, namely an increase in the American supply of oil and gas. Last year, Joe Biden tried unsuccessfully to pressure OPEC member countries, particularly Saudi Arabia, to pump much more. Without success.

→ EXPLANATION. War in Ukraine: what are strategic oil reserves for?

According to the latest projections from the International Energy Agency (IEA), American oil production should increase by 17% between now and 2050. The increase would even reach 24% for gas, i.e. double the growth in consumption during this period, which would allow the United States to greatly increase exports in the form of liquefied natural gas (LNG).

Previous articleThe Last of Us: the two video games that inspired the HBO series are at record prices
Next articleTennis: Nadal back in training, a month after his rib injury