Congress doesn’t often speak clearly and in plain language. That’s not the case for a hearing in the week ahead with a half dozen fossil fuel company bosses.
The House Committee on Energy and Commerce has titled Wednesday’s subcommittee hearing with the not-so-subtle title “Gouged at the Gas Station: Big Oil and America’s Pain at the Pump.”
Well, don’t let it be said the energy CEOs and their shareholders don’t know the environment they will be walking into in the hearing room on Capitol Hill.
While American production of oil has fallen from record highs two years ago, it remains more than twice what it was when oil last traded over $120 a barrel in the summer of 2008. Three-quarters of the increase in American oil production since that summer comes from two states: Texas and North Dakota.
The U.S. is the largest producer of oil in the world, outpacing traditional petro-nations like Saudi Arabia and Russia. America also is the largest consumer of oil. In each case — production and consumption — the U.S. is responsible for one out of every five barrels worldwide, according to 2020 data from the U.S. Energy Information Administration. And even though American production has jumped considerably, our thirst still outstrips supply. For every 50 barrels of American oil, the U.S. imports one barrel of foreign fossil fuels. By contrast, about one out of every 10 barrels of U.S. crude is sent overseas — most to India, South Korea and Singapore.
Yes, there is a lot of oil flowing elsewhere in the world, yet crude oil pumped out from under American oil and rock is the global standard for pricing. And when the world justifiably stops buying oil from a major producer like Russia, that demand will be filled from other sources. That raises prices for every type of oil.
The market for American crude oil is not solely an American market.
The CEOs and their shareholders should expect to face blistering questions from Democratic members of the panel. “By keeping domestic oil production low and funneling revenue back to investors and executives, the oil industry is keeping energy prices — and profits — artificially high,” said committee chairman Rep. Frank Pallone, Jr., D-New Jersey.
The energy firms are not blameless for higher gasoline prices, to say nothing about favorable tax incentives and climate change contributions. But rhetoric that fans the flames of frustration over gasoline is not a national energy policy that will meaningfully impact prices.
