White House, shale industry point fingers over oil crisis

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Calling the sanction "another powerful blow to Putin's war machine," President Biden has announced a U.S. ban on Russian oil imports, as well as natural gas and other energy sources. About 8% of American imports of oil and refined products, or about 672K barrels a day, came from Russia last year, according to the Energy Information Administration. Crude continues to soar on the news, while the national average for a gallon of gas has hit $4.25 per gallon, up from $3.65 only a week ago.

CERAWeek: Down at the energy conference in Houston, Texas, Amos Hochstein, the state department's advisor for energy security, said claims that White House policies are holding back drilling are "nonsense," blaming those on Wall Street who are "insisting on dividends and fiscal discipline in the face of a war in Europe." The administration is now telling U.S. shale producers they should do "whatever it takes" to increase supply as the risk of recession rises amid a surge in inflationary pressures. "If there's a bottleneck it is on Wall Street and that's not a U.S. government problem," added Hochstein. "They should call their financiers and tell them there’s a war going on. The American public is paying the price."

On the other side of the discussion, shale executives have pointed to the administration's freeze on leases for drilling on new federal lands, the rejection of the Keystone XL and Biden's promise to "transition" away from the oil industry. "The only thing missing here is that stable regulatory environment... a policy environment that actually encourages American energy leadership rather than discourages it," said Mike Sommers, head of the American Petroleum Institute. Investors are also urging operators to pay back capital burned during debt-fueled production sprees in the leadup to the pandemic oil crash instead of spending the big bucks on new drilling campaigns.

Greener future? Some say the recent rush for energy supply supports the push for renewable energy source in the long term and even underscores the risks of reliance on hydrocarbons. "I think this is the last gasp for fossil-fuel production," said Cheryl Smith, a portfolio manager for the Green Century Balanced Fund. "I don't think consumers have forgotten the last hurricane season. I don't think they’ve forgotten the last flood season. And I think that they kind of see that vulnerability." However, the ability to source key metals used for alternative energy purposes, such as nickel for batteries, has also been on a rip as of late, and it can take years to develop mines or create enough renewable infrastructure.

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