Will Biden Cancelling Huge Alaskan Oil Lease Affect Fuel Prices?

© AP Photo / Sue OgrockiA pump jack is silhouetted against the setting sun in Oklahoma City on March 22, 2012.
A pump jack is silhouetted against the setting sun in Oklahoma City on March 22, 2012.  - Sputnik International, 1920, 14.05.2022
The US is among the few western countries that cut themselves off from Russian oil suppliers this year. Washington hopes to replace the suppliers and eventually drive crude prices down via a boost to internal production. However, US drilling companies seem in no rush to reap the reported opportunity.
US President Joe Biden has cancelled a one-million-acre Alaskan oil and gas lease that might have been used by US companies to drill for extra resources to help Europe replace Russian energy suppliers.
The extra oil could also have been used to reduce the inflationary burden on US businesses and citizens, who are currently shouldering a $1 dollar rise in average fuel prices compared to 2021.
While Biden's green agenda is not new, his apparent commitment to it in times of high oil prices poured gasoline on the flames of criticism of the president.
However, Washington’s Department of the Interior explained that the lease cancellation in the potentially oil- and gas-rich territories of Cook Inlet, Alaska, was due to a lack in demand, with the US oil and gas industry showing no interest in drilling the land over the five year lease plan.
As such, the lease cancellation seems to not directly affect the US’ immediate oil supply. What more, even if it were renewed, it would take years before any company could extract crude or gas out of the Cook Inlet. Nonetheless, the area could potentially expand net crude and gas output in the future.
Following the start of the Russian special military operation in Ukraine, the US and European countries vowed to do away with Russian oil and gas suppliers. While Washington managed to achieve this immediately, most European countries found they depended too heavily on Russian crude.
In this Nov. 6, 2013 file photo, a Whiting Petroleum Co. pumpjack pulls crude oil from the Bakken region of the Northern Plains near Bainville, Mont. U.S. - Sputnik International, 1920, 28.04.2022
US Companies in No Rush to Substitute Russian Oil in Europe Despite Washington's Promises
In the light of this situation, Biden called on US companies to increase their output, promising to export the surplus to Europe. However, these calls have fallen on deaf ears, as energy companies, still recovering from recent price shocks caused by the pandemic, did not announce any plans to expand their operations.
The majority of US oil extraction is based on fracking – an expensive method which requires significant investment and greatly raises the bar on sustainable oil prices. In the absence of guarantees that any new oil wells will have a future, and with both the US and European establishment discussing a transfer to green energy sources, many oil companies rather opted to stay put and reap the benefits of the high crude prices while they last.
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