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U.S. Energy Secretary Jennifer Granholm has called on the oil industry to ramp up production in response to soaring fuel prices.
"We are on a war footing," Granholm said at the CERAWeek industry conference, as quoted by Bloomberg. "The DOE and the Biden Administration is ready to work with you. We need oil and gas production to rise."
As for the administration's energy transition agenda, Granholm said the transition and a short-term ramp-up in oil supply were not mutually exclusive.
"We can walk and chew gum at the same time," she said.
True as that might be, the U.S. oil industry has been having trouble raising production and this time it has had nothing to do with Washington policies.
The overall labor shortage in the U.S. has not spared oil and gas, according to a recent Reuters report that cited industry insiders and analysts. In addition to this shortage of workers, the industry has run into oilfield materials and equipment shortages, which has turned production growth into a major challenge.
All these shortages were "not adequately recognized as a significant impediment for growth," Occidental's Vicki Hollub told CERAWeek, as quoted by Reuters. "Nobody really anticipated needing to grow significantly," the executive also said. "If you did not plan for growth, you are not going to be able to achieve growth today."
Meanwhile, the State Department's special envoy and international energy affairs coordinator has called "nonsense" U.S. oil industry claims that it was White House policies that have contributed to their priority rearrangement. According to Amos Hochstein, the blame lies with Wall Street investors hungry for returns, the Financial Times reported this week.
"If there's anyone that's standing in the way, according to them, it's their financial backers, who are insisting on dividends and fiscal discipline in the face of a war in Europe, and the highest prices we have seen in a couple of generations," Hochstein told the FT in an interview.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.