American Oil and Gas Reporter - April 2022 - 27

Policies, Supply Chain,
Capital Constraints
Nix Hopes Of Quick Fix
As the price of oil pushes to dizzying highs, consumers and
businesses are struggling under the increasing burden of rising
energy costs. One of the world's most powerful tactics against
rising energy costs is secure, affordable, reliable American oil
and natural gas production, and as such, the industry is doing
all it can to boost domestic production.
The United States is a global leader in oil and natural gas
production, and this should be encouraged, but significant
obstacles litter the road to immediate action.
America's oil and gas companies stand ready to provide
more responsible energy production here at home for our nation
and allies across the globe. Although there are no quick fixes,
now is the time to create solutions that get the nation back on
track to energy and national security.
Let us consider only a few of the factors impeding an
immediate industry response.
For one, oil and gas producers face the same supply chain and
workforce issues that weigh on all industries across the country.
Everyone has felt the pandemic's impacts, and the oil and gas industry
is no exception. There are months-long delays on securing
the steel pipe and casing necessary for drilling. Not only is it impossible
to drill a well without adequate pipe, but steel casing is a
critical component to prevent environmental impacts.
As the World Steel Association's annual report forecast in
November: " However, while the manufacturing side has been
doing well, supply chain shortages are still disrupting the
global steel market and are preventing a strong recovery in
2022. Due to the backlogged steel orders, the demand will
remain high through the next year. Because of the demand for
the limited inventory available, steel prices will continue to go
up in 2022. The U.S. steel industry is currently valued at $180
billion and began to boom last year thanks to the disruptions
caused by COVID-19. "
Scarcity is not limited to materials for drilling. The transportation
sector has been hit especially hard by workforce
shortages and increased fuel prices. American Trucking Association
Chief Executive Officer Chris Spear discussed some of these
challenges in a letter to President Biden. " The trucking industry
is the backbone of the American economy, moving 73% of our
nation's freight, or 10 billion tons of goods annually, " he wrote.
" Our ability to do so on a cost-efficient basis for our customers
throughout the supply chain depends on certain economic conditions,
including fuel prices, which are typically a fleet's second-highest
operating expense. Right now, escalating fuel prices
are driving up the transportation cost of all goods, adding yet
another layer of inflationary pressure on every sector throughout
the entire economy. "
Fuel costs aside, the trucking industry is itself struggling to
obtain parts to make necessary repairs, taking fleets out of service
for extended periods. They also face a worker shortage with too
few drivers to maintain necessary deliveries across the country,
including meeting the trucking needs of the oil and gas industry.
" There are ways we all can work together
to bring down energy costs-perhaps not
immediately-but in the near future. But it is
going to take more than a call to action
from the administration.
"
Unfortunately, President Biden has acted on his campaign
promises to establish a regulatory environment that phases out
fossil fuels. The administration continues to assert that its
policies have not impacted production, but that relies on a very
liberal definition of " impacts. " From immediately cancelling
the Keystone XL pipeline to a continued illegal ban on federal
oil and gas leasing-and a multitude of other policy actions-the
Biden administration has created a cloud of uncertainty for
U.S. oil and gas producers.
These actions and the rhetoric surrounding them have sent
very clear market signals to financial institutions. As a result,
access to the capital required to ramp up development has
been constrained.
It is impractical and disingenuous for the administration to
now reverse course and call for immediate production increases
without addressing the underlying policy impediments.
There are ways we all can work together to bring down energy
costs-perhaps not immediately-but in the near future. But it is
going to take more than a call to action from the administration.
We are working to do our part. Let's hope the administration
will do the same.
❒
JEFF ESHELMAN is chief operating
officer of the Independent
Petroleum Association of America
and the founder/executive vice
president of Energy in Depth.
Along with more than two decades
at IPAA, he previously worked at
the Defense Logistics Agency, the
White House Office of National
Drug Control Policy and three
public affairs firms.
APRIL 2022 27

American Oil and Gas Reporter - April 2022

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2022

Contents
American Oil and Gas Reporter - April 2022 - Intro
American Oil and Gas Reporter - April 2022 - Cover1
American Oil and Gas Reporter - April 2022 - Cover2
American Oil and Gas Reporter - April 2022 - Contents
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American Oil and Gas Reporter - April 2022 - Cover3
American Oil and Gas Reporter - April 2022 - Cover4
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