President Biden’s recent admission in the State of the Union that the United States will need oil for at least another decade was a significant understatement. While there may be a relatively large reduction in demand in a decade due to the growth of alternatives, the U.S. will remain heavily dependent on oil.
During President Biden’s 2023 State of the Union Address, he relayed an anecdote that explains his stance toward the oil and gas industry.
At first, he stayed on the script with his prepared remarks, claiming:
“You may have noticed that Big Oil just reported record profits. Last year, they made $200 billion in the midst of a global energy crisis. It’s outrageous. They invested too little of that profit to increase domestic production and keep gas prices down. Instead, they used those record profits to buy back their own stock, rewarding their CEOs and shareholders.”
Oil companies made substantial increases in capital budgets last year as oil prices rose. The number of rigs drilling for oil has risen sharply, and U.S. oil production last year hit the second-highest level on record. But, President Biden — who strongly believes in bringing down our carbon emissions — doesn’t think we are investing enough in producing more oil, even though 2023 may set a new record for U.S. oil production.
But then President Biden went off script.
He said that he had pressed oil executives on the issue of increasing investments, and he said they told him: “We’re afraid you’re going to shut down all of the oil wells and all the oil refineries anyway so why should we invest in them?”
President Biden said he responded: “We’re going to need oil for at least another decade.”
The chamber burst into laughter, and then Biden quickly added, “and beyond that.”
Today the U.S. consumes around 20 million BPD of petroleum products. A 10% decline in this number would reduce consumption back to what we were consuming in about 2012. A large reduction, to be sure, but our transportation infrastructure would still run primarily on oil.
So, make no mistake. We aren’t going to just need oil a decade from now. We are still going to be overwhelmingly dependent on oil a decade from now. Our energy policies should reflect this reality.
Go ahead and aggressively try to speed up this transition, but also recognize that oil will still be our most important commodity in a decade; probably even two decades from now.
The Biden Administration should recognize this and cease the hostility toward this critically important U.S. industry.