The Single Biggest Thing Pres. Biden Could Do to Lower Gas Prices

Earlier this week, Alliance President Kathleen Sgamma testified at a joint virtual forum hosted by the Congressional Western Caucus and the House Committee on Oversight and Reform Republican members. Lawmakers held the event on the anniversary of Pres. Biden’s first year in the White House to explore how his policies have contributed to increased energy prices.
 
The discussion focused on the consequences of the Biden Ban on federal leasing, the overreaching threats from the Build Back Better Act, and overregulation from the Department of the Interior and other agencies that will further dampen American production. Participants also explored how to reverse the administration’s policies, the climate benefits of producing oil and natural gas in the United States, and Interior slow walking the permitting process. 

​The forum was led by Western Caucus Chairman Dan Newhouse (WA-04), Vice Chair and Oversight and Reform Ranking Member James Comer (KY-01), and Oversight Environment Subcommittee Ranking Member Rep. Ralph Norman (SC-05).
 
Testifying at the forum were:

• Leslie Beyer, CEO of the Energy Workforce & Technology Council
• Kathleen Sgamma, president of Western Energy Alliance
• Thomas Pyle, president of the American Energy Alliance
• Heather Reams, president of Citizens for Responsible Energy Solutions
• Katie Tubb, senior policy analyst for Energy and Environment at the Heritage Foundation.

 
The following are excerpts from Kathleen’s opening remarks and her conversation with lawmakers.

Opening Remarks
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​“We saw those market reactions immediately after the initial announcements of the president on Keystone and banning leasing. And so that sent a message of regulatory and political risks to the markets. But that follows a trend of the last several years where activist shareholders have helped to decapitalize the industry. As a result, we're not able right now to respond to the market signals, to the higher prices and increase production accordingly so that we bring those prices down because of those uncertainties in the marketplace.

“This administration has come in with an intention using the Securities and Exchange Commission, the Department of Labor, and other agencies to regulate the financial markets in such a way that they elevate political considerations over what should be material market factors. In other words, elevating climate change risks over actual return on investment and actual market factors. 
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​“We're seeing that the markets are anticipating more regulation in that space, which will insert that political factor into financial decisions. So, the single biggest thing this president could do right now—and I mean, I'm not naive, I don't expect it to happen—but if we really wanted to stop going to Russia and OPEC, he could just say we're going to back off on regulations at the SEC, and others, that will elevate climate change over affordable, reliable energy for Americans.
 
“By backing off of those regulatory efforts, it would send an immediate signal to the market and we would start to see this reverse of this recapitalization of the industry. And if we were able to get more capital, we could respond to the market today and we could lower prices for consumers. So that would be the one action I would ask this administration to undertake.”

Q: If we could wave a magic wand, how long would it take to reverse the policies of this administration, both from a natural gas and oil and then from the minerals?
 
“I actually don't think it would take that long. Luckily, the administration has been slow to move forward with rulemaking. I think it's because they were waiting for Build Back Better to just kill this industry. I mean, if the House passed version actually passed in the Senate, flat out no new development on new leases on federal lands. I don't know how anybody could have operated under all of those additional fees and costs.

“So if that magic wand was waived, it wouldn't take too long to just send the signals to the marketplace that it's OK to invest in oil and natural gas. It's OK because we're not going to raise all these additional costs on federal lands, and we can get back to that record production that we saw in 2020 on federal lands and waters, for example.” ​

Q: What would you say are some of the most effective things we can do now to make sure that we're fighting against these policies and that we're prepared to make sure that the industry can recover as effectively as possible, hopefully in the not too distant future, once we have better policies, better leadership in place?
 
Luckily, the Build Back Better Act didn't pass the House version because I honestly don't see how anybody could operate on new leases with all the provisions there. I do think that it's really positive that the that didn't happen, but we expect to see the administration do rulemaking to do several of the things that were in there, like raise royalty rates, rents, bonuses, adding in a new nomination fee. There's all these additional costs that they're planning to put in place, which I'm not sure if we can stop that rulemaking.

​But I think what was effective during the Trump administration—And just to some extent, it's not positive because we have this with whiplash between different administrations—but there were rules put in place during the Trump administration that did rescind some of these harmful rule makings. I would hope that we can do that in the future. But I'm not sure there's a lot we can do with how gridlocked Congress is to stop them from moving forward with increasing costs on federal lands. That has been one of their big priorities, and I'm not sure that I have a simple solution for stopping that.

Q: How do these policies impact our own climate goals here in the United States and how could we better focus on domestic production to advance not only those climate goals, but also our own energy leadership?
 
“I really was discouraged when Senator Warren sent out a request to several different companies asking about how much LNG (liquified natural gas) they had exported. Because again, we all recognize that climate is a global issue. It's not just about reducing emissions here in the United States.

​“If we can export natural gas to Poland and Japan, then we export greenhouse gas reductions as well. So, it's really discouraging when the other side comes down on natural gas because it's a practical solution and it's not the top-down government, COP26-type of policy, which doesn't work.
 
“It's the actual reduction in greenhouse gas emissions, which is where the United States is a leader in the world. But, you know, Senator Warren and others don't want to recognize that actual reduction in greenhouse gas emissions. They just want to recognize when the government controls it, and I think that's the real agenda, which is disappointing.”

Q: Can you explain to the members here today how delays in permitting negatively impact producers you represent and how these delays make producing energy on federal lands less attractive?
 
“The permits are certainly slow to come, and that's kind of the tip of the, or the last step, really, because sometimes you can spend years getting through the environmental analysis and various surveys, and there can be years of prep work that need to go into getting a permit.

“When every stage along the way can take months, years in several cases, then it does get frustrating. And as a result, we end up having to request more permits than we may ultimately use because, when it takes you two years to get them the process, you don't have certainty that in two years you're going to need those permits because market conditions can change.
 
“We often get beat up by having permits in hand that may not ultimately get used, and the only reason is because the system is so inefficient. Whereas, if we can, if we're on the timescale of states where it takes a couple of months to get a permit, then you don't have to have them in hand. You know, you have some certainty about getting permits. But right now, I mean, it's a constant struggle on federal land.”