The U.S. and European Oil Giants Cut Production
The United States will become more dependent on foreign energy in the coming years. The U.S. has called on OPEC and its allies to boost supply to help down oil and gasoline costs, even as it seeks to limit new oil and gas drilling on federal lands and oceans.
Government-owned energy firms in the Middle East, Africa, and Latin America are boosting oil and natural gas output at the same time as U.S. and European companies are cutting down on supply due to climate concerns.
After years of increasing production of oil and gas, Western energy behemoths like BP, Royal Dutch Shell, Exxon Mobil, and Chevron are slowing down output as they transition to renewable energy sources or reduce expenses as a result of the pandemic's financial toll.
However, this does not necessarily imply that the globe will have less oil.
This is because state-owned oil firms in the Middle East, North Africa, and Latin America are taking advantage of the reductions in production by investor-owned oil companies by increasing their own output.
Because of this massive shift, the United States could reverse a decade-long trend of rising domestic oil and gas production that has turned the country into a net exporter of oil, gasoline, natural gas and other petroleum products. It could also make the country more reliant on the Organization of Petroleum Exporting Countries (OPEC), authoritarian leaders, and politically unstable countries.
In light of the government's drive to expand oil and gas production, it may take decades before global fossil fuel supplies begin to diminish, barring a significant fall in demand for such fuels.
President Biden has essentially embraced the notion that the United States would be increasingly reliant on foreign oil in the coming years, at least for the foreseeable future.
His administration has called on the Organization of the Petroleum Exporting Countries (OPEC) and its allies to increase output to help bring down growing oil and gasoline prices, even as it attempts to restrict the expansion of oil and gas production on federal lands and seas.
Because of two competing objectives, the administration's approach is shaped by these two considerations:
Vice President Joe Biden wants the world to abandon its reliance on fossil fuels while safeguarding American consumers from a rise in energy costs.
To achieve both goals in the short term will be difficult because most people will be unable to easily replace internal combustion engine automobiles, gas furnaces, and other fossil-fuel-based products with versions that run on electricity generated by wind turbines, solar panels, and other renewable energy sources.
Western oil corporations are also under pressure from investors and environmental activists calling for a swift shift away from fossil fuels to renewable energy.
Some oil producers in the United States have said that they are hesitant to increase their investments because they are concerned that oil prices may fall again or because banks and investors are less inclined to fund their businesses.
Consequently, some fossil fuel companies are selling up portions of their empires or simply investing less money in developing new oil and gas resources.
This has provided a significant opportunity for state-owned oil firms, which are not subject to the same level of regulatory pressure to cut emissions. However, some are investing in clean energy.
In reality, their political masters often encourage these oil firms to boost output to assist in debt repayment, funding of government initiatives, and the creation of new employment.
It has been stated by Saudi Aramco, the world's largest oil producer, that it intends to expand oil production capacity by at least a million barrels per day, to 13 million barrels per day, to compete with other countries for market share.
This year, Aramco boosted its exploration and production spending by $8 billion, bringing the total amount invested to $35 billion.
The Saudi Arabian oil company Aramco not only has enormous reserves, but it can also produce oil at a lower cost than Western corporations since its crude is comparatively simple to extract from the earth's crust.
In other words, even if demand for oil falls as a result of the fast transition to electric vehicles and trucks, Aramco will most likely be able to continue pumping oil for years or decades longer than many Western energy firms.
"The state-owned enterprises are going their own way," said Rene Ortiz, a former OPEC secretary general who also served as Ecuador's energy minister.
It doesn't matter to them that political pressure is being applied across the globe to reduce emissions.
State-owned oil firms in countries such as Kuwait, the United Arab Emirates, Iraq, Libya, Argentina, Colombia, and Brazil aim to boost their production volumes.
Energy analysts predict that if oil and natural gas prices continue to climb or perhaps rise higher, more oil-producing countries may be enticed to increase their production.
President Biden has basically accepted the idea that the United States would become more dependent on foreign oil in the next years, if not for the foreseeable future, then for the foreseeable future.
As part of its efforts to limit the expansion of oil and gas production on federal lands and seas, his administration has called on the Organization of the Petroleum Exporting Countries (OPEC) and its allies to increase output to help bring down rising oil and gasoline prices, while also calling for an increase in production from OPEC and its allies.
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