President Joe Biden warned oil and gas companies against excessive price increases following his decision to block Russian energy imports to the U.S., emphasizing that the industry is capable of ramping up domestic production to ease prices at the pump.
Biden said Tuesday that U.S. gasoline prices will “go up even further” as a result of the move but vowed to do everything he could “to minimize Putin’s price hike here at home.”
“Russia’s aggression is costing us all and it’s no time for profiteering or price gouging,” Biden said Tuesday. “I want to be clear about what we will not tolerate.”
The decision to bar Russian oil is a politically risky one for Biden ahead of November midterm elections. Inflation is at its highest rate in four decades, in large part due to soaring gasoline prices, opening up Biden and his fellow Democrats to attacks from Republicans that their foreign policy and environmental policies are to blame.
At an average of $4.173 per gallon, the auto club AAA says that pump prices have never been higher according to its records, without adjusting for inflation.
By targeting oil and gas companies, Biden sought to deflect blame if prices continue to rise. He said that domestic producers have 9,000 unused permits to drill onshore.
“It’s simply not true that my administration or policies are holding back domestic energy production,” he said. “They are not using them for production now. That’s their decision. These are the facts. We should be honest about the facts.”
Biden’s comments drew immediate blowback from the U.S. oil industry. ConocoPhillips Chief Executive Officer Ryan Lance said they amount to a “talking point that’s not very helpful.”
“They just don’t understand the complexity of the business,” Lance said. “We sell into the market. We’re market takers” and don’t set the price of oil or fuel.
Industry officials argue it’s not unusual for federal leases to be idle, since the tracts may not contain enough crude to justify further investment. And more onshore federal leases are producing oil and gas now than in the past 20 years, according to Bureau of Land Management data cited by the industry.
U.S. oil companies have been reluctant to pump more, preferring to steer record cash flows back to investors instead of spending it on new drilling. Industry executives also say they need long-term government support to justify additional drilling under a president who campaigned on promises to drive a U.S. transition from fossil fuels.
Even though Russian oil is only a small part of U.S. imports, the White House had previously been reluctant to ban it, saying it did not want to do anything to cause gas prices to spike even higher. The move came as Democrats and Republicans in Congress agreed on a legislative proposal to bar Russian fossil fuel imports.
Biden said that American consumers should nonetheless brace themselves for further economic sacrifice.
“Defending freedom is going to cost,” he said.