Source: CNBC
- Oil and natural gas prices have leaped globally in the last three months.
- Former U.S. Secretary of Energy Rick Perry said $100 oil within next six months is possible.
- “The potential for disaster is very real, both in a national security standpoint, and whether or not we literally can keep the lights on,” he said.
Donald Trump’s former energy secretary on Sunday attacked the Biden administration’s energy policies, linking them to inflation and claiming that restrictions on the U.S. oil industry and rising costs at home could lead to “disaster.”
Energy prices have leaped globally in the last three months. Natural gas has soared almost 600% this year, and international oil benchmark Brent crude is up more than 60% year to date. Currently, crude is hovering around $82 per barrel.
“The Biden administration’s restrictive actions — no to pipelines, no to drilling, no to the financing of oil and gas projects overseas … is a stunning reversal of the energy independence achieved under the Trump administration,” Rick Perry told CNBC’s Hadley Gamble.
The United States never stopped importing oil during the Trump administration, though domestic production rose. On a monthly basis, U.S. production edged higher than consumption during most of 2019 and 2020, according to the U.S. Energy Information Administration.
But the most recent EIA data shows that pattern continuing after Biden became president in 2021, including U.S. exports of energy continuing to exceed imports.
As gas prices have risen in the United States, the Biden White House has pressured OPEC and its oil-producing allies including Russia to accelerate plans to increase output. But that group, called OPEC+, last week said it would stick with its plan to increase output by 400,000 barrels per day starting in December.
“The potential for disaster is very real, both in a national security standpoint, and whether or not we literally can keep the lights on,” Perry said.
The inflation problem
Aside from pressuring OPEC to produce more oil, U.S. Secretary of Energy Jennifer Granholm has pushed the Biden administration’s plans to develop domestic clean energy, arguing that the U.S. should focus on renewable energy as a long-term strategy to ensure the U.S. isn’t “reliant on political adversaries.”
Perry pointed out an apparent contradiction between the Biden administration’s stance on clean energy and its pressure on OPEC+ to produce more oil.
“On the one hand, you’ve got John Kerry, jetting all around the world, lecturing people about the use of fossil fuels, and then you have the Secretary of Energy Mrs. Granholm standing up and begging His Royal Highness Abdulaziz bin Salman to send more crude so we can drive down the cost of gasoline,” Perry said.
“Our people are hurting,” said Perry, citing broadly rising costs in the United States. He added that he thinks ”$100 oil within the next six months is possible.”
U.S. annual inflation rose at its fastest pace in more than 30 years during September, despite a decline in personal income, the U.S. Commerce Department reported last month.
The White House and U.S. Department of Energy were not immediately available for comment. Granholm acknowledged during the COP26 climate summit in Glasgow, Scotland, that the amount of clean energy that’s available isn’t sufficient to replace fossil fuels. She said a priority for the administration is to ensure Americans can afford to heat their homes and fuel their cars this winter.
Granholm last week hit back after OPEC and its allies decided to continue with their current output plan, adding 400,000 barrels per day each month through to next year.
Asked by CNBC about the United States’ relationship with de-facto OPEC leader Saudi Arabia during the COP26 climate summit, Granholm said: “In some places we have strong relationships, and in some places we wish our allies would move a little faster.”
Strategic Petroleum Reserve?
President Joe Biden blames high costs squarely on OPEC+ countries, while some oil drillers blame restrictions on the fossil fuel industry. Granholm has pointed out that the pandemic slowed U.S. oil and gas investment and drilling.
To combat rising prices, Granholm told Bloomberg in an interview last week that tapping America’s Strategic Petroleum Reserve “is certainly on the table as an option.”
The Strategic Petroleum Reserve holds up to 714 million barrels of crude oil. It’s located in sites along the Texas and Louisiana Gulf Coasts and is the world’s largest backup oil supply. It’s designed as a buffer to protect the United States from a major supply disruption, such as a natural disaster or war.
Perry pointed out that the Strategic Petroleum Reserve isn’t designed for “long-term assistance,” adding that tapping it would be “a fool’s errand.”
“They’re there for a hurricane or some type of a national disaster that occurs,” Perry said. “You go in, you use it, it’s [for] a short period of time,” Perry said, adding, “I don’t know what tools [Biden]’s got in the toolbox. I think he’s making it up as he goes.”
Biden said on Saturday his administration has “other tools” to deal with high oil prices. “There are other tools in the arsenal that we have to deal with other countries at an appropriate time,” he said.
