Suddenly, we just can't get enough oil.
After years of hearing about the energy transition, the decline of fossil fuels and the need to keep it in the ground, everyone is talking about how we can produce more oil as prices soar and the U.S. and its allies look to disarm Russia's energy weapon. As Amanda Drane reports, the war in Ukraine has turned the energy world on its head as illustrated by last week's CERAWeek conference.
What was supposed to be an agenda devoted to the energy transition and alternatives to petroleum became focused on energy security and the need to secure oil and gas supplies to replace Russian energy. Even the Biden administration, which has favored alternatives to oil and gas as it pursues its climate agenda, is exhorting producers from the Permian to Saudi Arabia to Venezuela to increase output.
For U.S. oil companies, it's becoming a patriotic duty. U.S. Secretary of Energy Jennifer Granholm pleaded with energy executives at CERAWeek to begin producing more crude and natural gas — now. Sen. Joe Manchin, D-W. Va., called for invoking the Defense Production Act to mobilize the energy sector while Sen. Lisa Murkowski, R-Alaska, echoed the urgency to pump more crude.
Oil companies, so far, have moved cautiously to boost output, wary of repeating the mistakes of past booms gone bust and alienating investors who want higher profits, not necessarily higher production. Even though oil prices are double what they were before the pandemic started, the rig count remains about 130 lower.
This discipline is likely to be tested if triple digit prices hang around. In the meantime, the message out of Washington is pretty clear: Drill, baby, drill.
— Rob Gavin, business editor