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The Oil Industry is Lying to You About Energy Security

(Image via Reddit user u/dougi3)

Marc Rosario grew up in Fox Point and remembers shoveling sidewalks for Adler’s Hardware on Wickenden and Benefit. In late March, Rosario, now driving for DoorDash part-time, stopped at the Shell gas station next door to purchase water, but not gasoline. “It’s ridiculous. Gas is coming down but it’s not coming down fast enough,” he said. Next time he needs to fill up he’ll drive across the border to Seekonk in Massachusetts, where he says gas is about 30 cents cheaper per gallon.

Gas prices have skyrocketed since Russia invaded Ukraine on February 24, a byproduct of the soaring cost of oil and natural gas worldwide. Russia is the world’s third-largest oil producer behind only the United States and Saudi Arabia. As a result, when the United States banned and the EU placed severe sanctions on Russian oil companies, consumers began experiencing dire economic consequences. 

The cost per gallon at that Shell fill station was $4.29 on Sunday, March 20––70 cents higher than the Providence area average just one month ago. Nationwide, the average cost of a gallon has increased 72 cents in the same timeframe. Gas prices are up by $1.12 in California.

The fossil fuel industry has been quick to capitalize on this crisis. On February 23, the American Petroleum Institute (API), the largest US trade association for the oil and natural gas industry and a certified climate change denial organization, offered a four step plan to “ensure energy security.” It placed blame for production levels squarely on the shoulders of the American government. 

An alarming number of politicians on the political right and even some pundits on the left have picked up this message, demanding that President Biden “unleash American energy” in the name of “energy security” to lower prices. According to this rhetoric, oil and gas wouldn’t be so expensive if the United States was simply a larger producer––if only the Biden administration approved more drilling permits, built more fossil fuel infrastructure, and took its “foot off the neck of US oil producers” through deregulation. 

These lobbying efforts appear to be working: Although President Biden promised “no more drilling on federal lands, period. Period, period, period” on the campaign trail, he recently announced that 144,000 additional acres of public land will be auctioned off to oil and gas companies. Despite political popularity, these talking points are little more than an industry-driven fantasy.

This reactionary response to the perennial issue of volatile oil prices is entirely manufactured, as the fossil fuel industry has spent the past few years maximizing profit instead of increasing production to keep gas prices low. This falsified concept of energy security cannot solve current price increases because the problem lies with oil itself––not just with Russian imports.

To fit the International Energy Agency’s definition of “energy security,” a country’s energy supply simply needs to be affordable and uninterrupted. Achieving this goal through energy independence has been a national priority since the Nixon administration, as this would allow the United States to completely sustain itself using energy produced within its borders.

A nation with secure energy need not fear a conflict or a natural disaster halfway across the globe that destabilizes oil markets, as its citizens would still have access to cheap, reliable energy produced stateside. However, as oil is an international commodity and American oil is priced in accordance with the international market, American prices are far from insulated from global events. 

Plus, due to the logistics of American pipelines and the variety of types of oil necessary for American refineries, the United States will remain dependent on foreign oil. As long as the United States uses the fuel, it will import it, and thus it will never truly gain energy independence. Still, Russian oil only accounts for 2 percent of American consumption, yet gasoline prices are up 18 percent since Russia invaded Ukraine.

How is this possible? As American oil companies operate close to full capacity (as opposed to retaining the ability to turn on the tap during a crisis), the United States cannot mitigate an international spike in oil prices by immediately producing more and thus reducing scarcity. This lack of standby oil infrastructure ensures that when American oil companies decide to drill more, that oil will not be accessible for up to a year––the ConocoPhillips CEO admitted as such. Simply increasing drilling in response to a crisis is insufficient to lower gas prices.

While politicians are drinking the oil industry’s brackish Kool-Aid about regulation stifling development, oil companies could simply choose to invest in new drilling sites, regardless of the federal ban on new leases. Oil and natural gas companies are only drilling on about 14.8 million of the more than 38 million acres of public land and water that the federal government has leased to them. These leases can sustain current levels of oil production for at least the next 10 years. The Biden administration isn’t responsible for the oil industry’s failure to meet demand––the oil industry is.

Crocodile tears about the imaginary impacts of federal regulation mask the true incentive for the recent wave of pro-oil lobbying: pure profit. When demand for oil outpaces supply, prices rise and the oil industry profits. Due to these incentives, the oil industry has actively refrained from increasing production in the past year despite rising gas prices. 

In the third quarter of 2021 alone, when gas prices hit a seven-year high, oil companies turned a profit of $174 billion. That year, they paid out $36.5 billion in shareholder dividends, suggesting that they would rather make Wall Street rich than expand production, though they have the funds to do so.

Oil executives across the board continue to show no interest in changing output. Scott Sheffield, the CEO of shale oil giant Pioneer Natural Resources, said earlier this year, “Whether it’s $150 oil, $200 oil, or $100 oil, we’re not going to change our growth plans.”

While cheap energy is secure energy, expensive energy ensures the greatest profit. Thus, the “energy security” promised by the API to soothe the economic effects of the Russian invasion is a farce. Oil companies are both ill-equipped and unwilling to respond to skyrocketing oil and gas prices, ensuring that their calls for deregulation will fail American consumers. But outside of this crisis, how viable are fossil fuels for achieving energy security?

No amount of fossil fuels make a nation energy secure, as the problem lies not with Russian oil, but with oil itself. Each time the United States elects to solve an energy crisis by doubling down on fossil fuels, it forfeits its ability to weather the next one. Continued fossil fuel dependence worsens climate change, which further increases erratic weather and military conflict—two types of global crises that create volatility in the international oil market. The oil industry is exacerbating problems that it is uniquely unequipped to solve.

Putin’s invasion of Ukraine sparked international coordination against Russian fossil fuel profits, leaving American consumers at the mercy of a murderous despot and his expansionism. But do you know what no despot can toy with? The sun. Solar energy is now the cheapest form of energy in history, according to the IEA, and both solar and wind power cost less per unit of energy generated than natural gas and coal. Investing in renewable energy while rapidly abandoning natural gas and other fossil fuels will drastically reduce the American demand for foreign fossil fuels more effectively than investing in the domestic oil industry ever could.

Yet the best energy security policies might not be about energy at all. As 66 percent of American oil consumption is through transportation, a suite of policy changes that reduce the uniquely American dependency on cars will help insulate the United States from oil price fluctuations. Creating mixed-use development at the expense of single-family zoning, for example, would reduce the amount of driving necessary to get to work, school, and the grocery store. 

Expanding mass transit is another critical component of energy security. Sixty-nine percent of Americans get to work by driving alone, so the impacts of high gas prices are widespread. Redesigning transit systems to recognize the reality that many commutes are between neighborhoods and suburbs—rather than from a neighborhood or suburb to a metropolitan center—will increase the ability of transit systems to support travel patterns. In the interim, cities should establish new bus lines to almost instantly help commuters avoid high prices at the pump.

From renewable energy to zoning to mass transit, politicians at every level of government have a wide variety of tools at their fingertips that can insulate their constituents from variable fossil fuel prices. Instead, oil lobbyists are pushing for further oil dependency that not only fails to address energy security, but actively generates one its biggest threats: climate change. Should these efforts succeed, and the price of oil once again be disturbed by a hurricane or a war 4,000 miles away, it will be people like Marc Rosario, the Providence native and DoorDash driver, paying the price.