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Biden adviser calls Wall Street opposition to shale drilling ‘un-American’

The White House’s chief energy adviser has described as “un-American” the refusal of US shale investors to ramp up drilling, even as Moscow’s invasion of Ukraine causes havoc on global oil and gas markets.

US oil groups have been under pressure from Wall Street to funnel record profits back to investors this year, despite repeated calls by President Joe Biden to pump more oil to help tame rampant inflation.

“I think that the idea that financiers would tell companies in the United States not to increase production and to buy back shares and increase dividends when the profits are at all-time highs is outrageous,” said Amos Hochstein, President Biden’s international energy envoy. “It is not only un-American, it is so unfair to the American public.

“You want to pay dividends, pay dividends. You want to pay shareholders, pay shareholders. You want to get bonuses, do that, too. You could do all of that and still invest more. We are asking you to increase production and seize the moment.”

Hochstein’s comments came just days after the twinned launch of an EU embargo on seaborne Russian oil imports and a G7 price cap on the country’s oil in an attempt by western powers to stymie the Kremlin’s income while keeping its crude flowing to the global market.

Moscow has repeatedly vowed not to sell oil to countries complying with the cap. On Friday, President Vladimir Putin said Russia would “even think . . . about a possible cut in production”.

Hochstein said the Kremlin remained a menace to a “highly volatile” oil market and noted that Russia had repeatedly weaponised energy, including shutting gas supplies to Germany this year.

“I think about that all the time,” he said, referring to the Russian threat to stop oil exports. “But that risk exists with or without the price cap.”

Oil prices have swung wildly this year, spiking after Russia’s invasion to almost $140 a barrel in March, prompting the White House to release crude stored in emergency stockpiles in a bid to cool inflation.

Prices have tumbled in recent days on fears of a global recession, with international benchmark Brent settling at a year-to-date low of $76.10 per barrel on Friday.

But further turmoil in global energy was likely, especially in Europe’s gas market, as the stand-off between Putin and the west deepened, Hochstein said.

While an “unprecedented” effort by the US and other liquefied natural gas exporters had left Europe adequately stocked with the fuel for this winter, the loss of Russian pipeline imports would mean repeating the effort “winter by winter”, Hochstein warned.

Extra global LNG supplies would not arrive until plants being built in the US and Qatar came online later this decade, meaning “the mountain to climb [to build] gas stockpiles for next year is much higher”.

“We are really preparing and living from an energy perspective, in Europe and beyond, in a hand to mouth, step by step [way],” Hochstein said.

The longer-term solution was not to invest in more natural gas supply but to cut consumption of fossil fuels themselves, argued Hochstein, a former LNG executive.

“We have to peak the demand [for hydrocarbons] and then shrink it from there,” Hochstein said.

The Biden adviser’s comments will spark a reaction in the US shale sector, which has complained about mixed signals from a White House that has called for more fossil fuel output while also talking of cutting demand and speeding up a shift away from oil and gas.

But Hochstein denied any contradiction, saying the US could “do two things at the very same time, ensuring we have enough [oil] supply for a strong global economy, while accelerating the energy transition”.

Oil would remain useful to the economy for several years, he said, adding that the Biden administration itself would become a major crude buyer to replenish a federal stockpile when US oil prices fell to about $70 a barrel.

Hochstein also criticised ExxonMobil’s $50bn share buyback scheme, announced last week — a payout chief executive Darren Woods recently described as returning some money “directly to the American people”.

“The only thing worse than announcing a share buyback, is to say that is how you’re giving profits back to the American people,” Hochstein said. “If you want to give back to the American people, invest in America, its workers . . . increase production, [make] the United States less dependent on other countries.”

Read More: Biden adviser calls Wall Street opposition to shale drilling ‘un-American’

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