Biden broke his promise not to touch oil in Alaska
The US is starting to produce oil in Alaska. They have already brought equipment and people there. This is a prime example of an American president not keeping his campaign promises. American environmentalists are simply shocked at the betrayal of their elected representative. Why did Biden, an ardent supporter of the green agenda, defect to oil? And what role do Russia and the European Union play in it?
It’s only been a few weeks since Joe Biden’s administration approved the $8 billion Willow development and oil drilling in Alaska’s National Oil Refuge. This happened for the first time in twenty years.
But oil giant ConocoPhillips has already begun assembling equipment here and transporting workers and provisions to this largest stretch of unspoilt wilderness in the country, 250 miles beyond the Arctic Circle, writes the New York Times. More than two dozen yellow dump trucks are already waiting in the snow-covered tundra at the northernmost tip of the United States on a glistening patch of ice.
The project has the potential to produce around 600 million barrels of oil over 30 years. To do so, ConocoPhillips will drill wells in three sections of the field, the minimum volume that the company estimates makes it economically viable. It is a highly controversial project that has been fiercely fought by environmental activists.
The US is already the second largest emitter after China (it emits around 5.6 billion metric tonnes of carbon dioxide into the atmosphere every year). And burning that much oil in a new field could emit 9.2 million metric tons of carbon dioxide into the atmosphere annually, the equivalent of nearly two million new cars on the roads.
The approval of mining in Alaska immediately sparked a wave of outrage inside the US – among environmentalists and other Biden supporters alike. After all, the American president has radically changed his original position. In the 2020 election, one of his key pledges was that no new oil fields would come on stream in the country. Biden got all environmentalists on his side with such a tough “green agenda”. However, on 13 March, in a surprise move, the US approved a bill allowing drilling in Alaska as part of the Willow Field.
“The start of drilling at sites in Alaska is a massive blow to Biden’s image. He was betting the campaign on a ‘green agenda’ and now that promise is being broken,” says Artem Deyev, head of analysis at AMarkets.
Why did Biden go against himself, not even frightened by the criticism of his own supporters? What was he afraid of?
There are two main theories. The first is that the U.S. economy cannot absorb oil shortages and high oil prices, and the states need more oil for themselves. The second is that the US wants to increase its oil exports even more, to become a stronger exporter in the world in order to keep the same Europe in check, and at the same time to make even more money from the raw material.
“Sanctions against Russia have hit the US oil and gas industry. Their refineries consumed either Venezuelan oil or Russian Urals. But both countries are under sanctions, so there is not enough crude, and the attempt to restore relations with Caracas has failed: Venezuela would love to supply oil to the US again, but it is technically impossible as the industry is virtually ruined. Buying oil from Russia to bypass its sanctions means losing its reputation. And then there are the OPEC+ cuts in production. Quotations are rising, which will have a direct impact on the rising cost of fuel in the US. And the country’s strategic oil reserves have long been unloaded and need to be replenished,” explained Deyev.
Meanwhile, world oil prices are rising, but OPEC+ does not listen to the US and cuts production at will in order to keep black gold expensive – around $90 a barrel. And there is nothing Washington can do – and it is really pissed off. Adding to the problem of rising gasoline prices inside the US, for which Americans may not re-elect Biden, is the problem of inflation, the rate of which promises to accelerate again from such a situation. In other words, the USA is trying to win back oil.
Finally, against the backdrop of these difficulties also in the USA green energy has been relegated to the back burner (the EU has long since given up and switched even to coal).
The West admits without a word that the transition to green energy will take a long time. “During this transition time, oil products will remain in demand on the world market and are likely to be quite expensive, judging by the measures the OPEC+ countries are taking to achieve this,” says Vladimir Chernov, an analyst at Freedom Finance Global. It is worth realising that development of the Alaska field is just starting from scratch and it is projected to take six years before the first oil from this project reaches the market. This clearly speaks to the US expectation that in six years oil will be in extremely high demand in the US market, and secondly, it will be expensive, because producing oil from scratch in a challenging environment like Alaska is very expensive.
The statistics scream inexorably that the US needs more oil, they are short of it. First, US drilling activity has been stagnant for more than six months and shale oil production has gone down because of rising production costs, Chernov notes.
Secondly, US oil inventories are decreasing. In March this year they fell by 4.35 million barrels and strategic reserves to their lowest level since 1983. “Last year the US actively released strategic oil reserves, which helped reduce domestic fuel prices slightly, but only slightly, by about one or two dollars per gallon,” Chernov says.
Finally, America is increasing exports to the EU to replace Russian energy supplies. And, to all appearances, the US plans to increase these exports and earn even more from them. While the US used to be both an oil importer and exporter, at the beginning of 2023, the US became a net oil exporter for the first time. They supply up to 2 million barrels per day to other countries.
“Most likely, the US tactics now will not just be about energy neutrality, but about increasing oil exports, primarily to EU countries, so they need to increase production as well,” Chernov believes.
Although Deyev believes that the US itself needs this oil first and foremost – to solve its problems with fuel prices and reserves. “What cannot be done to keep the economy from collapsing: oil is the foundation of the modern economic system, without it one can forget about development,” the expert believes.
“The Biden administration’s decision confirms only one thing: the world is facing a lack of resources amid sanctions against Russia. Because of that, unpopular projects, which were previously banned, have to be initiated. It was easier and better for the environment to buy oil from other countries than to produce it at home. It is also not for nothing that the UK has recently approved a project to frack and extract oil in its territory in this way. It is extremely unpopular in England, but they have to restart it, as the island also needs oil,” concludes the interlocutor.
Olga Samofalova, VZGLYAD
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