case of a state-owned oil company

Should the US government get into the oil and gas business? no at all! This is a capitalist country and….

Wait, maybe that makes sense.

Since 1975, the United States has bought and sold oil for Strategic Petroleum Reserve, a national repository set up for times of emergency. This year, President Biden authorized the release of 180 million barrels of oil—a quarter of the total—a peak of $5.02 per gallon by Russia after Russia invaded Ukraine and imposed sanctions on Russian energy exports. To help tackle rising gasoline prices. At some point in the future, Washington will buy oil to replace this year’s release.

Why not take a step or two forward? on the national security website war on the rocks, energy-industry veterans Ryan Kellogg and David Brunert make the case for a national reserve of drilled but unfinished oil and gas wells on federal land that could be tapped in the crisis to add to US energy capacity. This would give the government the ability to actually produce oil and gas instead of having to resell the barrels it had already bought. The government may own those additional wells outright, or pay private sector firms to maintain them and operate them when necessary.

Yale University energy historian Gregory Brough has suggested that the government could stabilize energy markets and bring down prices. Subsidizing US oil refinery operations or even Establishment of a national refining company To add gasoline-producing capacity without worrying about making a profit. President Biden Has Already Said He’s Ready use emergency government officials To promote gasoline production, by adhering to the following same playbook The government used to speed up the production of vaccines and address other urgent issues during the COVID pandemic.

Laissez-faire capitalism can only take you so far

Americans generally oppose direct government involvement in the business sector, which has allowed American companies to flourish and become super-skilled. But laissez-faire capitalism has lost its sheen as millions of manufacturing jobs have left the United States for cheaper foreign countries and China has become an economic superpower through massive government support for industrial sectors. Congress’s recent route chips+ actwhich would subsidize domestic semiconductor manufacturing, was a move toward more aggressive industrial policy in the United States, even amid complaints that it Amount of “corporate welfare”,

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The US Energy Industry Is Famously Independent, Yet Cowboy Swagger Leaning toward tougher economics as climate change upends oil and gas business models and investors turn energy bets on. The pressure to reduce carbon consumption makes energy firms reluctant to add oil and gas production capacity and invest in long-term projects. For example, US refinery capacity has declined slightly since 2020, when COVID hit, everyone went on the ground and the fossil-fuel industry lost billions of dollars. Demand has boomed during the recovery, but refiners still don’t want to add capacity that doesn’t produce healthy returns before renewables begin to displace carbon. Tight capacity is one factor that pushed gasoline prices to an all-time high earlier this year.

The profit motive in oil and gas is no longer producing all the products consumers currently need. As a solution, Kellogg and Brunert argue for a new “energy security administration” that would assure adequate supplies of oil and gas, including refining capacity and energy transportation infrastructure. Capacity targets will exceed normal market support, but excess capacity will be closed during normal times. While the government can set priorities, it will partner with industry on existing projects and technical expertise. Contracts would have to be structured so that the government would not stifle profitability by forcing excessive production and energy firms to subsidize taxpayers for what they could produce anyway.

This may anger environmentalists

Environmentalists can scoff about subsidies for fossil-fuel production. Conservatives may regret the government’s involvement in boardroom decision-making. But the Biden administration’s bash-and-cox strategy is hardly better, and it’s not clear that any president can effectively balance the need to address climate change with the lack of fossil-fuels we rely on today. could. Oil and gas prices have fallen slightly during the past six weeks, but the crisis could get worse this winter as Ukraine and its allies try to squeeze Russian energy exports and Russia seeks ways to retaliate. doing.

At the moment, there is not much conversation in Washington about the operational role of the US government in the domestic energy industry. Yet the United States is unusual in that regard, given that nearly all governments in the OPEC oil cartel either control or play a major role in their domestic oil industries. The reason Biden “demanded” countries like Saudi Arabia and Venezuela to produce more oil is because those governments can decide whether to do so, whereas here in the United States, the president may well Can ask (or beg) but cannot force private ownership. Companies will produce more energy.

ambitiously named inflation reduction act, which Democrats may be able to pass by the end of the summer, includes some federal intervention in domestic energy markets. The bill includes $375 billion for clean-energy incentives, but also some measures that could boost new oil and gas production and ease the transportation of fossil fuels. If the bill passes, it could be a blueprint for how to pave the way for clean energy in the future while protecting the fossil fuels we depend on. If we’ve learned anything from 2022, it’s that none of these things stop the other.

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