WASHINGTON, DC – Today, government watchdog Accountable.US called on the American Petroleum Institute (API) to stop shamelessly using the crisis in Ukraine to baselessly attack the Biden administration’s energy policies as a means for advancing Big Oil’s agenda to line the pockets of wealthy oil and gas company executives.
“While Americans watch the events unfolding in Ukraine and wonder what they can do to help those bearing the brunt of Russia’s unprovoked invasion, the American Petroleum Institute (API) is busy attempting to use this crisis to advance their own agenda and make wealthy oil and gas company executives even richer,” said Kyle Herrig, president of Accountable.US. “Rather than trying to make a quick buck by lying to the American people about the Biden administration’s conservation policies, Big Oil should start telling the truth and use its billions in profits from the past year to help consumers in need.”
Rhetoric v. Reality
RHETORIC: The American Petroleum Institute (API) Is Using The Russian Invasion Of Ukraine To Fearmonger And Push For Big Oil’s Interests.
On The Day Russia Invaded Ukraine, API CEO Mark Sommers Called Rolling Back Regulations And Encouraging Drilling “The Most Important Move President Biden Can Make.” “Here are three things President Biden can do right now to ensure access to affordable, reliable U.S. energy – and to shore up the foundation for Europe’s energy security. […] Provide clarity on natural gas and oil leasing […] Permit energy infrastructure […] Complete work on a long-term offshore plan […] Europe’s energy security is in the balance. Americans are fighting inflation. Right now, the most important move President Biden can make is to signal that America is positioned to provide stability and supply amid any disruption of international energy markets – and can do so without increasing costs at home.” [API, 02/24/22]
API CEO Mike Sommers Painted The US Oil And Gas Industry As Key To World War II And The Current Crisis In Ukraine. “While it’s unclear what lies ahead as Russia invades Ukraine, we know one thing for sure: American energy is a positive force in difficult times, helping to provide stability and security for allies abroad. […] It’s no surprise Vladimir Putin uses energy as a weapon, but as in World War II and other crises, America has Europe’s back. U.S. liquefied natural gas (LNG) export facilities have significantly increased LNG volumes headed to Europe.” [Fortune, 03/03/22]
REALITY: API Has A History Of Using Crises To Advocate For Big Oil’s Agenda.
API’s CEO Credited 9/11 With Spurring The Oil Industry To Increase Domestic Oil Production
API CEO Mike Sommers Used 9/11 To Emphasize The Importance Of Oil And Gas. “As president and CEO of the nation’s largest trade association representing the natural gas and oil industry, I’m reminded that 9-11 really helped galvanize our country’s focus on the security of our nation’s infrastructure to harden it against any future acts of terrorism, from our airlines to our supply chains to our energy grid. Natural gas and oil keep America running. After 9-11 we innovated and developed technologies to dramatically increase domestic production and become less dependent on foreign oil.” [API, 10/24/20]
- Mike Sommers Used Hypothetical Situations About Natural Security To Highlight The Importance Of American Oil And Gas. ““U.S. energy leadership offers stability in chaotic times and insulates America from unreliable suppliers of energy,” Sommers said. “We saw this reality in action just a few weeks ago. America’s vast energy resources helped stave off economic turmoil and price hikes at the pump when our nation stood on the brink of war with Iran. A few years ago, such stability would be unheard of … You can thank the shale revolution and the sheer fact that American oil production doubled over the last decade. That surge means we import millions fewer barrels of oil per day from other nations.”” [API, 01/23/20]
API Stokes Fear About Venezuela And Other “Regimes That Are Hostile”
Sommers Has Fearmongered By Claiming Keystone XL Will Allow The U.S. To Take A Stand Against Venezuela. “A lot of that – because of pipeline constraints and the lack of the Keystone XL Pipeline from being built because of bureaucracy and court challenges – a lot of that will be done by rail. We’ve been able to take a very firm stand in this country against the oppressive and tyrannical regime in Venezuela. We need to retain and continue to retain that flexibility as we challenge regimes that are treating their people poorly. Canadian heavy crude is an incredible source for the American consumer and we want to make sure that we continue to have access to that market, but the biggest constraint for us right now of course is pipeline infrastructure and that’s going to continue to be a key priority for this association going forward.” [API, 03/08/19]
Sommers Frames Debates Around Energy As A Choice Between Using American Oil And Gas Or That From A Hostile Regime While Touting API’s Outreach To Policymakers. “And the question the American people have to answer is whether they want to get that oil and gas from regimes that are hostile to the United States or whether they want to get their energy from American resources. So, we’re focused on working with policy-makers to ensure that they understand the huge implications so far of what these moves are going to mean for American energy independence.” [API, 01/11/21]
- Sommers Describes OPEC As A ”Cartel” Whose Power Will Diminish With More U.S. Energy Production. “Gone are the days that OPEC can hold the United States hostage because of what they do with their cartel and I think as we continue to expand and find new resources, their power is going to continue to diminish.” [YouTube, Yahoo Finance, 05/08/19]
Leading Up To Biden Taking Office, The Oil And Gas Industry Secured More Drilling Permits Than Any Other Period During The Trump Administration. “Companies submitted more than 3,000 drilling permit applications in a three-month period that included the election, according to data from the U.S. Bureau of Land Management. Officials approved almost 1,400 drilling applications during that time amidst the pandemic. That’s the highest number of approvals during Trump’s four-year term, according to AP’s analysis.” [Associated Press, 01/10/21]
RHETORIC: API Complained That Calling Out Big Oil’s Lease Hoarding Is A “Red Herring” … But Didn’t Deny The Stockpiling.
API Called Comments On Big Oil’s Stockpiled Leases A “Smokescreen For Energy Policies.” “The argument about “unused” leases is a red herring, a smokescreen for energy policies that have had a hamstringing effect on the world’s leading producer of natural gas and oil.” [API, 03/04/22]
API Did Not Deny That Oil Companies Have A Stockpile Of Leases. “Psaki has made the claim about “unused” federal leases before. It has become a line the White House pivots to when pressed to explain why it isn’t doing more to support American oil and gas production – with soaring demand putting upward pressure on prices and with much of Europe at the mercy of its top energy provider, Russia. […] Developing a lease takes years and substantial effort to determine whether the underlying geology holds commercial quantities of oil and/or gas. The lengthy process to develop them from a lease often is extended by administrative and legal challenges at every step along the way.” [API, 03/04/22]
REALITY: Oil Production Skyrocketed In 2021, Surpassing Past Years’ Production By Millions Of Barrels In Just Ten Months.
Oil Production Was Higher Than Ever In 2021, With 310,273,809 Barrels Of Oil Produced In Just Ten Months.
2021 oil production in the first ten months of 2021 surpassed production in the last five years alone by tens of millions.
Oil production totals for November and December of 2021 are not yet reported, but production earlier in the year was well on track to exceed 2020 and had already exceeded any prior year on record.
October 2021, the most recent month with data available, is the single highest month for US public lands oil production on record—nearly 32 million barrels.
Even without data from the last two months of 2021, more oil was produced on US public lands in 2021 than any year of the Trump administration.
[ONRR, accessed 03/07/22]
There Are Not Regulatory Or Legislative Hurdles Stopping Big Oil From Drilling More.
There Are No Regulatory Or Legislative Hurdles Preventing Oil Drillers From Increasing Supply. “But in truth, there are no regulatory or legislative hurdles standing in the way of U.S. shale oil drillers from increasing supplies. Private oil producers, unburdened by investor demands, have expanded rig fleets at a startling pace this year and now account for most of the country’s growth in crude production. Publicly traded companies, meanwhile, are unwilling to budge from austerity programs popular with investors.” [Bloomberg, 11/15/21]
REALITY: The Biden Administration Isn’t Standing In The Way Of The Oil And Gas Industry, Approving More Permits In Its First Year Than The Trump Administration
The Biden Administration Approved 900 More Permits To Drill On Public Land In Its First Year Than The Trump Administration During The Same Time Period. “The Biden Interior Department approved nearly 900 more permits to drill on public land in 2021 than the Trump administration had in its first year in office, according to an analysis from progressive group Center for Biological Diversity.” [Politico Pro, 01/21/22]
Many Of The Drilling Permits Are In New Mexico, The U.S.’s Second Largest Oil-Producing State As Of 2021. “Many of the 3,557 permits for oil and gas drilling on public lands the Biden administration approved last year were in New Mexico, according to the count CBD made using Interior data. […] New Mexico last year became the second largest oil-producing state in the country as much of the exploration and drilling of the prolific Permian Basin oil producing region in West Texas spread northward.” [Politico Pro, 01/21/22]
By November 2021, The Biden Administration Had Already Approved More Oil And Gas Drilling Permits Than The Trump Administration Did Annually For Three Years.
The Biden Administration Approved More Oil And Gas Drilling Permits In Ten Months Than The Trump Administration Approved Annually For Three Years. “The Biden administration has approved more oil and gas drilling permits on public lands per month than the Trump administration did during the first three years of Donald Trump’s presidency, according to an analysis shared exclusively with The Climate 202.” [Washington Post, 12/06/21]
REALITY: Big Oil Is Sitting On A Stockpile Of Leases And Permits.
Big Oil Corporations Went On A Permit Spree As Trump Was Leaving Office, Anticipating Changes To The Public Lands Leasing Program
In The Last Three Months, The Industry Secured More Drilling Permits Than Any Other Period During The Trump Administration. “Companies submitted more than 3,000 drilling permit applications in a three-month period that included the election, according to data from the U.S. Bureau of Land Management. Officials approved almost 1,400 drilling applications during that time amidst the pandemic. That’s the highest number of approvals during Trump’s four-year term, according to AP’s analysis.” [Associated Press, 01/10/21]
One Company, EOG Resources, Bragged To Investors That It Had Secured 2,500 Permits, Enough To Carry Them Through A Presidential Term. “Houston-based EOG Resources amassed the most permits this year — 1,024 — including 549 since September, according to AP’s analysis. In total, EOG has about 2,500 federal permits approved or in progress. ‘If he (Biden) tries to impose some regulations on how new federal permits are issued, we certainly already have an inventory, a large inventory, of existing federal permits that will sustain activity for several years,’ company CEO Lloyd Helms told a November investors conference. Oklahoma-based Devon Energy collected the second-highest number this year. As the presidential campaign wore on this summer, Devon executives assured investors that the company was amassing permits. By October, Vice President David Harris said the company had enough ‘federal drilling permits in hand that essentially cover all of our desired activity over the next presidential term.’” [Associated Press, 01/10/21]
Corporations Intentionally Built A “’War Chest’” Of Permits, With Companies In Some States Sitting On Decades Of Unused Leases.
The Oil And Gas Industry Stocked Up A “’War Chest’” Of Permits To Drill On Public Lands. “Meanwhile, if Biden becomes president that may lead to the ‘possible cessation of new drilling permits on federal land,’ said [CFRA Energy Equity Analyst Stewart] Glickman. Many firms, however, have already built up a ‘war chest of such permits,” so any such new law ‘probably only has real teeth to it by maybe 2024.’” [MarketWatch, 11/04/20]
Wyoming Has A “Stockpile” Of Leases That Could Support Over 60 More Years Of Drilling. “Wyoming has a “stockpile” of leases that aren’t yet producing that could support more than 60 years of drilling, the report estimates.” [E&E News, 08/04/21]
New Mexico Has A Stockpile Of 11 Years Of Activity From Nonproducing Leases. “New Mexico, the largest oil producer from federal stores, has roughly 11 years of activity from nonproducing leases.” [E&E News, 08/04/21]
RHETORIC: API Claims Potential Changes To Tax Policies Hindered Oil And Gas.
API Claimed The Biden Administration “Discouraged American Energy,” Citing Development In Alaska And Taxes. “Instead, the administration discouraged American energy. For more than a year it has halted new federal leasing – key to future energy investment and production. It canceled energy infrastructure, blocked development in parts of Alaska, entertained new taxes to punish the U.S. energy industry and chilled future investment by signaling that oil and gas wouldn’t be part of America’s future energy mix.” [API, 03/04/22]
REALITY: Big Oil Already Avoids Taxes And Gets A “Sweetheart” Deal On Public Land Drilling Thanks To Rock Bottom Federal Royalty Rates.
Senator Chuck Grassley: Artificially Low Royalty Rate Is A “Sweetheart Deal” For Oil Companies. “The law no longer reflects fair market value. It has become a sweetheart deal for legacy energy companies. It’s shortchanging the taxpayer and depriving public coffers from their fair share of revenue generated from public lands.” [Senator Chuck Grassley, 03/06/20]
States Miss Out On Billions Annually Because Federal Royalty Rates Are So Low.
In 2019, Western States Collected $2.6 Billion In Revenues From Their Share Of The 12.5% Public Lands Oil And Gas Royalty Rate. A calculation estimate shows that If the royalty rate were 20%, states’ share from oil extracted on public lands in their state would have been $1.5 billion higher. [Interior Office of Natural Resource Revenue, accessed 09/24/21]
|2019 Cost Of Low Royalty Rate In Western States*|
|2019 Royalty Revenue (actual)**||2019 Royalty Revenue (at proposed 20% rate)||2019 cost to state of low royalty rate|
*Total cost is calculated from actual share of onshore oil and gas production revenues received by states under the low 12.5% rate and extrapolating them to the amount that states’ share would have been had the royalty rate been 20%, all other factors equal. This cost is a conservative estimate because it only reflects the royalty rate change in the reconciliation package; it does not include new royalties for vented methane or increased revenues from updated rents and bonus bid increases.
**The actual royalty revenue figures are from the Interior Office of Natural Resource Revenue. They reflect each state’s 50% share of the standard 12.5% royalty rate.
Big Oil Already Avoids Taxes And Gets Billions In Federal Subsidies.
22 Oil And Gas Companies On The Fortune 500 Paid Nothing In Federal Income Taxes In 2018. [Institute On Taxation And Economic Policy, 04/11/19]
Oil Majors Use Tax Havens To Avoid Paying Taxes On Billions In Earnings. “Shell and other oil majors are avoiding hundreds of millions of dollars in taxes in countries where they drill by shifting profits to thinly staffed insurance and finance affiliates based in tax havens, according to a Reuters review of corporate filings and rating agency reports. Shell, BP Plc, Chevron and Total use subsidiaries in the Bahamas, Switzerland, Bermuda, the UK Channel Islands and Ireland to provide their global operations with banking, insurance and oil-trading services, the documents show. These subsidiaries, in turn, book profits that go lightly taxed or entirely tax-free.” [Reuters, 12/09/20]
Companies In The American Exploration And Production Council, Including ConocoPhillips, Occidental Petroleum, And Exxon Subsidiary XTO Energy, Have Gotten At Least $92 Billion In Federal Subsidies Since 1998. “Among those lobbying is a relatively obscure industry lobby group, the American Exploration and Production Council (AXPC), which is heavily pushing Congress to keep the IDC in place. AXPC is a collection of some of the largest fracking companies in the U.S., including ConocoPhillips, Chesapeake Energy, EOG Resources, Occidental Petroleum, Pioneer Natural Resources, EQT, and ExxonMobil subsidiary XTO Energy. […] According to Greenpeace, the oil companies that make up AXPC have long enjoyed federal subsidies, receiving at least $92 billion combined since 1998, while also racking up more than $700 million in fines for environmental and other violations.” [DeSmog, 09/02/21]
REALITY: The Industry Had A Chance To Buy Up Leases In ANWR. The Sale Was A Complete Bust That Drew Almost Zero Interest From Industry
The Trump Administration Auctioned Oil And Gas Leases In The Arctic National Wildlife Refuge On January 6, 2021. “Trump administration officials auctioned off oil and gas leases in Alaska’s Arctic National Wildlife Refuge Wednesday, capping Republicans’ decades-long quest to drill in one of the nation’s most vast unspoiled wild places. The move marks one of the most significant environmental rollbacks the president has accomplished in his term.” [Washington Post, 01/06/21]
Major Oil Companies Did Not Bid At All Due To Unimpressive Oil Prices And Growing Numbers Of Banks Refusing To Finance Arctic Energy Projects. “But with lackluster oil prices and an increasing number of banks saying they would not finance Arctic energy projects, major oil companies did not try to buy the leases.” [Washington Post, 01/06/21]
The Sales Netted $14M, A Fraction Of What Republican Lawmakers Anticipated. “The sale of 11 tracts on 600,000 acres netted roughly $14 million, a tiny fraction of what Republicans initially predicted it would yield. Only two of the bids were competitive.” [Washington Post, 01/06/21
The Alaska Industrial Development And Export Authority, A State Agency, Bought Had All But Two Of The Winning Bids. “That left the state agency, Alaska Industrial Development and Export Authority, as the main bidder. The agency put up all but two of the winning bids, which went to a couple of small energy firms.” [Washington Post, 01/06/21]
RHETORIC: API Called For More Gas Exports During The Russian Invasion Of Ukraine.
API CEO Mike Sommers Called For The US To Export More Gas. “Instead, America should harness its energy abundance to fulfill Europe’s desire to receive more U.S. LNG. The administration can move faster in authorizing additional LNG exports to Europe and should ensure LNG facilities here have the flexibility to increase export volumes if needed.” [Fortune, 03/03/22]
REALITY: More Oil Exports Will Not Help Ukraine Or Other European Countries.
Even API Admits That Increased American Oil And Gas Production Will Not Help The Ukraine Crisis. “Technically, there’s some truth there because, indeed, increasing American oil and gas production will not help Ukraine today.” [API, 03/04/22]
Gas Terminals In Europe Are Already At Capacity. “To export gas to Europe, a facility first needs to convert it to liquified natural gas, which cools and pressurizes the methane so it can be shipped across continents. On the other end of the ocean, another facility must turn it back into gas for shipment via pipeline. That’s a lot of infrastructure, which is impossible to scale up in enough time to make an impact on current prices. There’s one new LNG terminal that opened this year in Louisiana. On the European side, the LNG terminals are already at capacity.” [Vox, 03/05/22]
RHETORIC: API Says Big Oil Can’t Drill More Because They Are Beholden To Stakeholders That Are Worried About Investments.
API Said Accountability To Shareholders Impacts Oil And Gas Companies’ Ability To Increase Production. “Ultimately, energy policies affect the energy investment climate. Specifically, they impact the ability of producers – typically accountable to shareholders – to take the risks involved in spending billions of dollars to find and develop oil and gas.” [API, 03/04/22]
REALITY: The Same Stakeholders Big Oil Claims Are Nervous To Invest Are Making Billions As Oil And Gas Companies Shower Profits On Shareholders Instead Of Investing In Production.
Oil Producers Reinvestment Rate Reached Record Lows In The Third Quarter Of 2021, Dropping To 46% From The Historical Average Of 130%. “The rate at which U.S. shale producers put cash from operations into drilling for oil and gas fell to a record low last quarter, data from consultancy Rystad Energy showed, as those firms returned cash to shareholders through dividends and stock buybacks. The third-quarter reinvestment rate was 46%, below the historical average of 130%, Rystad said in a report this week. Reinvestment could fall further, its analysts said.” [Reuters, 11/23/21]
According To Pioneer, 2021 Was One Of The Best Years For Shareholder Returns For The US Shale Industry In The Last Decade. “Slide 21, again, Pioneer, we’re actually celebrating our 25th anniversary this year. Obviously, it’s been — had one of the best track records on shareholder return during the Shell industry over the last 10 years. Continue to focus on returns, capital discipline, allocation of capital, return of capital to shareholders the greatest among any peer, one of the best balance sheets in the industry.” [Seeking Alpha, Pioneer Natural Resources Q4 2021 Earnings Call, 02/17/22]
With Oil Nearing $100 A Barrel, Oil And Gas Companies Boast Their Ability To Buyback Stocks And Shower Money On Investors.
Chevron’s High Profits Allowed The Company To Raise Its Dividend And Repurchase Stocks. “Our record free cash flow enabled us to strongly address all four of our financial priorities in 2021: a higher dividend for the 34th consecutive year; a disciplined capital program, well below budget; significant debt paydown with a year-end net debt ratio comfortably below 20% and another year of share buybacks, our 14th out of the past 18 years.” [Motely Fool, 01/28/22]
BP CEO Bernard Looney Said The Company Can Afford $4B In Buybacks When The Price Of Oil Is $60 A Barrel. ““At around $60 oil, we have the capacity for around $4 billion per annum of share buybacks,” Chief Executive Officer Bernard Looney said in an interview with Bloomberg TV on Tuesday. “So clearly if prices are higher, there is the opportunity for increased buybacks.”” [Bloomberg, 02/08/22]
Oil Prices Are Currently Nearing $100 A Barrel. “Benchmark U.S. prices last week topped $93 a barrel, up around 65% in the last 52 weeks and the highest since 2014.” [Reuters, 02/08/22]
Shell CEO Ben Van Beurden Had Shares Valued At 637% Of His Base Salary In 2020 And 919% In 2021. [SEC EDGAR, Shell Form 6-K, 03/11/21]
Oil And Gas Companies Are Prioritizing Giving More Money To Shareholders.
Hess’s “Top Priority” Is To Raise Its Dividend And Repurchase More Stocks. “As our portfolio becomes increasingly free cash flow positive in the coming years, our top priority will be both to grow the base dividend and also accelerate our share repurchases.” [Seeking Alpha, Hess Corp Q4 2021 Earnings Call, 01/26/22]
Marathon Is Focused On Giving More Money To Shareholders, Not Production. “While others in our space may once again be focused on growing their production, we are focused on growing the per share financial metrics that matter most to our equity valuation, our cash flow per share and our free cash flow per share.” [Motley Fool, Marathon Oil Q4 2021 Earnings Call, 02/17/22]
Chevron CEO Mike Wirth Is Focused On “Even Better” Cash Returns To Shareholders In 2022. “I expect 2022 will be even better for cash returns to shareholders with another dividend increase announced this week and first quarter buybacks projected at the top of our guidance range. We’re optimistic about the future, focused on continuing to reward our shareholders while investing to grow our businesses and maintaining a strong balance sheet.” [Motely Fool, 01/28/22]