President Biden and the U.S. oil industry are at each other’s throats over the cause of the historic oil and gas prices.

At a time when Americans are feeling pain at the pump, the U.S. oil industry is making record profits.

Biden has made it clear that he wants a future in renewable energy, but he wants U.S. oil to drill more now to offset the lack of supply.

This, as the U.S. oil industry and Republicans, claim Biden’s regulations are the cause of the high prices because they are stifling production.

Institute for Energy Economics and Financial Analysis (IEEFA) Clark Williams-Derry says the U.S. is not insulated from the global oil and gas market. If there is any disruption in the global supply chain U.S. consumers feel the pinch.

“We as a country, for some reason, probably because the oil industry has lobbied to make it so, we are now integrated into the global markets. We are now basically on a roller coaster ride of high prices, low prices, prices that we do not control. Decisions that are made in Beijing or Moscow are now affecting pocketbooks in Fargo,” explained Williams-Derry.

There is trepidation in the markets. No oil company wants to make big investments when they don’t know whether they’ll be knocked again by another global disruption.

“Global oil markets have been buffeted repeatedly over the past two years by forces beyond the U.S.’s control. It’s been battered by Covid, it’s been battered by Ukraine, the Russia sanctions, the European response to Russia’s invasion. All of those things are combining to sort of create a perfect storm for gasoline prices in the U.S.”

Given the fact that two years ago the pandemic drove U.S. oil prices below negative, and producers were paying people to take their oil because there was not enough room to store it, oil industry executives are acting in their best interest by cautiously adding new production.

“A lot of oil companies don’t want to right now. They’ve got private land that the U.S. government has no control over. They have a backlog of permits, drilling permits on Federal land, many of them are not being used. And, the reason why is well frankly the oil industry is telling its investors we would rather be turning our cash back to you, our investors rather than producing more oil. We are actually enjoying high prices. We’re generating cash, we’re not drilling so much, we are saving money on drilling. We’re generating dividends and share buybacks. So, it’s the oil companies who are saying themselves, look, we don’t want to produce more right now.”

In addition to the oil side, there is also a problem with the refining. Because Europe is curtailing its purchases of grades of Russian crude oil, U.S refiners to readjusting to serve European countries and other rebounding markets.

“Essentially U.S. consumers are now competing against Chinese consumers, against European consumers, for the same oil and the same gasoline. You know when you have a limited pot, and you sort of stir the pot, well you know everybody, we’re all competing, we’re all bidding up the price of gasoline, that’s the way supply and demand is supposed to work.”

Williams-Derry points out there were more drilling permits issued under the first year of Biden than there were under any year of the Trump Administration.

“There was not a slow down in Federal permitting on Federal lands. It just didn’t happen. And, so claiming there was some sort of roadblock in terms of production, it does not show up in the numbers.”

In short, William-Derry asserts that claiming that the Biden Administration is to blame for high gas prices is political posturing that is divorced from a serious analysis of the oil and gas markets.

For the next segment, we will talk with lawmakers and other energy financial analysts about long-term issues driving high energy prices, and examine the efficacy of Biden’s proposed gas tax holiday.