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U.S. Energy Secretary Granholm calls on oil and gas companies to raise output


Jennifer Granholm (US Secretary of Energy) speaks with delegates during COP26, Glasgow, Scotland.

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Oil prices have been soaring recently the highest level since 2008Jennifer Granholm, Secretary for Energy, addressed a crowd of executives in the energy industry with one simple message.

“We are in an emergency, and we have to responsibly increase short-term supply where we can right now to stabilize the market and minimize harm to American families,” she said Wednesday at CERAWeek by S&P Global.

The U.S. has tapped the Strategic Petroleum Reserve twice in recent months — last week and in November — and Granholm said a further release is not off the table.

But she also called upon the private sector — and Wall Street — to play a role at a pivotal time.

She stated, “I trust your investors are also saying these words: In times of crisis, there is more demand. Right now, it’s necessary for oil and natural gas production to increase to meet this current demand.”

The pandemic has forced oil and gas companies to fundamentally change their business models. It was all about growth, but capital discipline has taken over. Companies announce share buybacks, increasing dividends, and are reducing their debt. They have pledged to limit supply.

Granholm spoke to an industry that feels alienated under the Obama administration by saying that both the Department of Energy and Biden Administration were open to working together with them.

According to her, increasing production doesn’t diminish the White House’s long term goals for clean energy.

Oil and gas companies claim that the White House has resisted drilling by imposing unfriendly policies. These allegations have been dismissed by the officials.

These supply chain challenges are also affecting the industry, which is reverberating across the economy. Vicki Hollub of Oxy, the CEO said that finding raw materials like sand can be difficult. She also stated that labor is still scarce. Hollub stressed that it is not possible to increase output on a dime. The industry prepared for bottlenecks in supply chains, but it was not equipped for immediate calls for production growth.

On Sunday, oil prices reached $130 per barrel. This is the highest price since 2008. West Texas Intermediate, an American oil benchmark, was trading below zero less than two years ago.

Demand has rebounded since then while producers have slowed down, keeping the supply under control. A tight market is also being created by years of underinvestment. Russia’s invasion into Ukraine led to crude prices spiking due to the basic backdrop of rising demand and a slowing supply.

Granholm called for partnership in the future, stating that government and industry had worked together for more than 100 years. Granholm urged energy companies to help her transition.

It’s difficult to look back at history when you are right there in it. She said that she believes we’re at the edge of the greatest transition human society has ever witnessed.