Alaska officials pretend that Biden is stopping higher oil production, ignoring industry focus on boosting returns

The time-worn comments from Gov. Mike Dunleavy, Sen. Dan Sullivan, Sen. Lisa Murkowski and Rep. Don Young about high gasoline prices are easy to recite.

More oil and gas drilling. Blame Biden. Open ANWR. More military spending. Blame Biden. Blame Biden. Build the Ambler Road. Blame Biden. Open ANWR.

There is a master conspiracy at work for “social engineering,” according to Dunleavy, who goes on Fox News to say Biden wants to punish the American people with high prices: “The purpose behind this, obviously, is to drive us into a green world quicker than the green world itself is ready for.”

Dunleavy, Sullivan, Murkowski and Young oversimplify this complex situation and fail to mention the real issues that have contributed to this spike—the oil price collapse two years ago, the pandemic, broken supply chains, Putin, turmoil in the world oil market, the future of climate change and the desire by oil companies to focus on returns for shareholders instead of increasing production.

But nothing stops the Alaska Republicans from falsely blaming Biden for the price of gas.

For a more rational explanation try this detailed report from the New York Times. Or this account from PolitiFact, which says 2021 domestic production was about the same as in 2020. And this analysis by FactCheck.org, which says that by the definitions used by politicians, “the U.S. was still ‘energy independent’ in 2021 under President Joe Biden—contrary to claims made by Republicans who have suggested otherwise.”

The pandemic has changed the oil and gas business. U.S. producers cut oil production when the bottom dropped out of the market and investors in oil companies put a priority on higher dividends and stock buybacks.

“Energy companies have emerged from the pandemic within a wholly different industry. While in previous years, it was all about growth, now capital discipline is king. In the wake of the pandemic, companies focused on paying down debt, returning cash to shareholders and reining in spending,” CNBC reported Tuesday from the energy conference in Houston.

“Capital discipline” means that increasing production takes a back seat to increasing returns.

Ryan Lance, the head of ConocoPhillips, said "You'll see the growth, you'll see it coming out of this business, but people are going to have a hyper-focus on returns.”

Vicki Hollub, the CEO of Occidental Petroleum, said “I feel now that we do need to return cash to the shareholders in the form of dividends or buybacks, especially during the better cycles.”

This is one of those “better cycles.”

“Nobody really anticipated needing to grow significantly,” Hollub told the Houston conference. ”If you didn’t plan for growth, you won’t be able to achieve growth today. Nobody wanted to increase production. Now supply issues are making growing production difficult.”

Sullivan offers more oil drilling and more military spending as a solution to almost every problem and habitually uses military allusions to sound tough.

“You need to get your boot off the neck of American energy producers,” Sullivan says to Biden, a phrase he has been repeating for months, along with the claim that Biden wants to “unilaterally disarm the American energy sector.”

This week Sullivan took his role as a industry cheerleader literally, according to a report in Politico.

“Sullivan led the room of executives at the conference in a round of applause for the industry in general, and told them, ‘What we need is to replace that production with American production, which has not been the strong suit of this administration.’”

Meanwhile, the fossil fuel industry and its future are inextricably linked to climate change, which you would never guess by listening to Dunleavy, Sullivan, Murkowski and Young, who chose to address climate change by trying to ignore it.

At the same time, Democrats and environmental groups are oversimplifying and downplaying the economic and political costs of reducing fossil fuel consumption. There is also the question of world politics and how best to position the U.S. and other nations to withstand authoritarian dictators who control massive oil supplies.

There has to be a combination of continued oil development in the U.S. and a continued push toward renewable energy sources.

Conserving fuel, car-pooling, smaller cars, smaller trucks, more electric vehicles, more hybrids, more public transportation, more renewable energy production are all part of the solution, but no one should assume all this happens without higher prices and political controversy.

There are no easy answers to this.

Your contributions help support independent analysis and political commentary by Alaska reporter and author Dermot Cole. Thank you for reading and for your support. Either click here to use PayPal or send checks to: Dermot Cole, Box 10673, Fairbanks, AK 99710-0673.