One of the vexing challenges facing the Biden Administration in an important election year for Congress is the high cost of fuel. And experts say there appears to be no major relief in sight. Scott Thuman reports from Texas on why we aren't producing more oil here to bring down prices and meet demand.
The following is a transcript of a report from "Full Measure with Sharyl Attkisson." Watch the video by clicking the link at the end of the page.
In America's energy heartland, a battle between old and new powers comes at a critical time.
Forty percent of the nation's crude oil and a quarter of its natural gas comes from here, but even Texas can't escape the pain at the pump we've all felt as prices for everything have risen for nearly a year.
In January 2020, before the pandemic hit, the average price of gas was $2:55, nearly 800 rigs were drilling, and America produced so much that we exported more petroleum than we imported.
Today, there are around 588 rigs at work, gas averages $3:31 a gallon, and we import more petroleum products than we sell overseas.
David Blackmon: Gasoline prices follow the oil price because gasoline is a byproduct of oil. So we've had a tight supply globally and rapidly increasing demand.
David Blackmon. An oil industry analyst says there's a reason you're still forking over more to heat your home and drive your car.
Blackmon: We had a big depression in the industry in 2020 because of Covid. The industry has recovered from that somewhat, but it's a combination of the companies ramping things back up that always takes time when you go through a bust, and you're coming out of it.
To help consumers, President Biden late last year authorized a rare release of 50 million barrels from the nation's strategic reserve. But that only represents about two and a half days of the nation's consumption, and since that announcement, prices have come down only slightly.
The President, in his first press conference of the year, unable to say when the pain at the pump will end.
President Biden: They pull up to a pump and, all of a sudden, instead of paying $2.40 a gallon, they're paying $5.00 a gallon. That's going to be really difficult.
So we've come back to Texas, where we've covered the oil and gas industry before, to see why supply still isn't meeting demand.
Jason Modglin is President of the Texas Alliance of Energy Producers, where they boast they've got plenty of what the nation needs.
Scott: Prices are high. Supply and demand aren't being met properly. So, the government says, "Hey, Texas. Hey, the rest of the country: produce more oil." Why isn't it that easy?
Jason Modglin: It's not that easy because we need some certainty taking place.
Certainty, he says, is needed because producers want to know their investment in new wells will pay off for years to come. And some industry leaders say that's in doubt, as new White House policies dramatically change the game, halting new permits on federal land, stopping pipelines, and making major new clean energy commitments. It was a cornerstone of President Biden's campaign.
President Biden: High energy prices only — only reinforce the urgent need to diversify sources, double-down on clean energy deployment, and adapt promising new clean-energy technologies so we cannot only — where you don't remain overly reliant on one source of power to power.
Modglin: When you say that oil and gas is going away in ten years, that you're going to foreclose natural gas, electric-fired power plants from having access to that natural gas, that really signals to the market that you shouldn't invest here because that market is going away. They've also threatened investigations of companies.
Scott: The President wants an investigation by the FTC into whether or not oil companies are rigging prices.
Modglin: That's right. Price fixing at the gas pump, which is not taking place. That's a frequent political charge but rarely yields any dividends on that charge.
Scott: Do you think right now you're seeing a hesitation to produce more locally, even though we certainly can?
Modglin: We certainly can. We need that certainty both from federal partners. We also need them to stop calling on OPEC to produce more.
OPEC - the Organization of the Petroleum Exporting Countries - is the international cartel led by the major oil-producing Arab states of the Persian Gulf that often coordinates with Russia to control how much oil they all produce and, therefore, what the price of gas and oil will be.
Last year, President Biden outraged some analysts by criticizing the US oil industry as polluting or dirty, then calling on OPEC - America's competitors - to supply the world with more oil to slow rising prices.
Scott: What did you think when you heard the President say he wanted OPEC and other countries to start producing more because we were suffering here?
Jason: We'd ask him to call us first. We frequently said, "Choose Midland over Moscow," because that would be a better place. The phone would actually be answered. And we'd say we're happy to ramp up production here in the United States if we have a partner in the White House that wants to see more American production.
US oil production averaged 11 million barrels a day in 2021. The government forecasts it'll reach 11.7 million this year, still less than the 12.2 million that were produced before the pandemic.
But energy secretary Jennifer Granholm says there's more that oil companies could do to boost production.
Secretary Granholm: We have 250 fewer oil rigs that are functioning today than we did before the pandemic. And yet, the oil and gas industry has leases on 23 million acres of public lands on and offshore; over 9,500 permits have been issued that are not being used.
Scott: President Trump was very proud to say that this country has become energy-independent. That was then, this is now, and that claim doesn't hold anymore?
Modglin: It doesn't hold because we've started to import more oil than we actually produce here in the United States. We've had a goal since the 1970s to be energy-independent, but when we have these resources here in the United States we should take advantage of them,
And in Texas, there certainly is an abundance of resources, old and new, even as the political winds of change are blowing across this energy-rich landscape.
Sharyl (on-camera): So what could change the equation with our dependence on foreign oil now?
Scott (on-camera): Well, at least two factors, the very real concern of a Russian invasion of Ukraine, and also the increased number of attacks on Arab oil states by Iran backed fighters and terrorists, both of those things are pushing up the price of crude. That may prioritize and incentivize more production here in America to not only secure supply, but also as a matter of national security.