Since prices and production collapsed because of COVID-19, drilling for fossil fuels has not rebounded as fast as demand, driving up their prices. This winter, reports The Wall Street Journal, prices for heating fuels could jump significantly. Ryan Dezember writes:
Propane has rarely been so expensive this time of year, and prices may have to move higher yet to ensure ample supply for winter, when millions of rural Americans rely on the fuel to heat their homes.
At hubs in Mont Belvieu, Texas, and Conway, Kan., propane futures traded Wednesday at $1.09 and 95 cents a gallon, respectively. Those prices are roughly twice their levels during the past two summers. Spot prices have moved in a similar way.
Retail prices have also risen, though not as sharply. The Energy Information Administration said U.S. households can expect to spend an average of 14% more on propane this winter than they did during last year’s—and significantly more than that if the weather is colder than forecast.
Now is the time of year when many Americans purchase propane for their grills, but those filling up cylinders ahead of Fourth of July cookouts aren’t driving the gains. Prices have risen because of booming exports, February’s freeze and drillers who have eased off since last year’s Covid-19 pandemic lockdown sank energy prices.
One reason drilling has lagged is the Biden administration’s efforts to limit fossil fuel extraction from federal lands. Dan Eberhart explained just how detrimental Biden’s orders on drilling were to the industry in Forbes. He wrote in February 2021:
After the Biden administration took steps to suspend new oil and gas permits and halt lease sales on federal lands and waters, there’s been much talk about how the move wouldn’t impact the energy industry too dramatically.
The theory went that only a sliver of U.S. output – about 25 percent of oil and 10 percent of gas – is produced on federal lands and waters. The vast majority of operations are on private lands.
It was also noted that the Biden administration wasn’t turning off the faucet entirely. Companies that already hold acreage and permits to drill may continue, and indeed, many have stockpiled federal drilling permits in recent months, limiting the near-term impacts on production.
While all true, those arguments ignore the troublesome side effects of Biden’s actions. In the West, for instance, Biden’s restrictions could have a much more significant impact by strangling gas development in the region – and not just on federal lands.
Any gas producer in the West will tell you that it’s almost impossible to avoid federal lands, even if when drilling on state or privately-held acreage because most shale or “tight” gas plays straddle federal lands.
That is the nature of horizontal drilling and fracking. The technology and drilling strategies that made the shale revolution possible – and turned pre-pandemic America into the world’s top oil and gas producers – allows drillers to unlock resources underground miles from the drill pad.
As the head of a major oilfield services provider, I can tell you that operators can’t just zig-zag their way through underground rocks to avoid federal mineral deposits. Believe me, if producers could operate only on non-federal land, they would do it, because federal land is more costly and the bureaucratic process required to begin operations takes longer.
Gas-prone plays that fall under a great deal of federal control include the Powder River Basin of Wyoming, Colorado’s Piceance Basin, and Utah’s Uintah Basin. In areas like these, it often requires an adjacent lease on nearby land to optimize extraction of the gas reserves in shale rocks, whether because of geology or topography. Under Biden’s crackdown, if any of that land is federal, the entire project would be blocked.
It’s also not uncommon for producers to try to develop a water well on private, state or tribal land but run into ownership issues. The nature of land ownership in the West is such that there is often a closely interlocking patchwork of land ownership – with tribal lands next to federal plots, next to private areas, next to state lands. That points to more above-ground and sub-surface issues as the Biden restrictions take effect.
On Jan. 27, Biden directed the Interior Department to pause all new oil and gas leasing on federal lands and waters indefinitely, following through on a campaign pledge to satisfy the anti-fossil fuel segment of his coalition.
Just as Americans need more oil and gas, the Biden administration has done everything in its power to limit their access to those fuels. Now Americans will be forced to pay a lot more to heat their homes or go without this winter.
Action Line: Sentiment toward the administration is changing constantly, and rapidly. Stay informed of the attitude of America by clicking here to subscribe to my monthly RAGE Gauge report.
E.J. Smith - Your Survival Guy
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