Amos Hochstein, Biden’s Special Presidential Coordinator for International Energy Affairs, told Yahoo Finance, “We can’t be an oil supplier.” Hochstein was talking about further releases from the nation’s Strategic Petroleum Reserve (SPR) that Biden has been tapping since last April.
“It’s a reserve and so we have to keep that,” Hochstein added. He says the administration will halt releases from the SPR sometime this fall.
But Hochstein swears that there won’t be any supply shocks for consumers. He says that the oil companies have assured him they’re prepared to ramp up production and avoid price increases.
“I myself had those conversations with the leadership of several of the companies,” added the former oil company executive.
At least some companies are investing right now in the months-long process of ramping up production, he said, making him optimistic that the fears of a fall surge in prices may be overblown.
“There’s a little bit of hysteria at the moment in the analysis of oil markets,” he said during Friday’s conversation with Yahoo Finance’s Akiko Fujita.
For example, some experts predicted record-high prices this summer, he noted — but drivers have instead enjoyed a month of declines in both crude oil prices and prices at the pump.
Hochstein believes that because he’s buddy-buddy with many oil company executives they’d never double-cross him. But does Hochstein really believe the oil companies are going to tailor their production to the needs of the temporary occupant of the White House?
Hochstein says he has secured promises from CEOs that investments being made now in improvements like drilling profiles and platforms will pay off with an increase of about 800,000 to a 1 million barrels a day towards the end of the year. This would replace, his argument goes, the 1 million additional barrels a day on the market right now because of Biden’s April move to release the oil reserves.
Privately, many of those same CEOs are expressing skepticism about calls to quickly ramp up production.
Energy leaders are wary of being on the wrong side of another boom and bust cycle in gas prices. Just two years ago, oil companies increased production and then faced massive losses when they couldn’t get the new oil to market in time before the bottom fell out of prices.
At one point in 2020, oil prices even went negative.
“Whether it’s $150 oil, $200 oil, or $100 oil, we’re not going to change our growth plans,” Scott Sheffield, the CEO of the energy exploration company Pioneer Natural Resources, told Bloomberg.
Hochstein can spin the situation all he wants, but the fact is that these businesses are smart enough to play the political game well. They will smile and assure Hochstein of their noble intent to help the administration out — and then cut their throats.
If I were a betting man, I’d wager big that gas prices on election day are going to be far above $5 a gallon.