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Gas prices: Biden administration needs to ‘rethink their policies,’ API exec says

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Frank Macchiarola, American Petroleum Institute SVP of Policy, Economics and Regulatory Affairs, sits down with Yahoo Finance Live to examine gas companies' reactions to the Biden administration's attempts to alleviate rising oil prices, refinery production capacities, and energy sector jobs trends.

Video Transcript

DAVE BRIGGS: Gas prices ticked down a fraction today, but still averaging 5 bucks a gallon for the first time ever. President Biden demanding action in a letter, reading, in part, the crunch that families are facing deserves immediate action. Your companies need to work with my administration to bring forward concrete near-term solutions that address the crisis. Frank Macchiarola is a senior vice president for the American Petroleum Institute. That's the trade association, rather, that represents more than 600 oil and gas companies. Frank, it's good to see you. Thanks for coming on. What's your reaction to that letter from President Biden?

FRANK MACCHIAROLA: Look, we're pleased that the administration is finally engaging on this important energy challenge that the country faces, but it's their policies that have helped put us in the situation that we're in. From day one, this administration has closed important pipeline projects, shut off access to oil and gas development on federal lands, proposed tax increases on domestic producers competing globally. And so they really need to not just rethink their rhetoric. They need to rethink their policies to help the American people and to strengthen our energy security.

SEANA SMITH: And Frank, what would those policies look like?

FRANK MACCHIAROLA: Well, here at API, we released on behalf of the oil and gas industry a 10-point plan called 10 and 22 that really gets at these energy security issues. First of all, we issue-- we ask the administration to issue a five-year program, to open up areas on the outer Continental Shelf for development of oil and gas. We work on permitting. We tell the administration that they ought to get moving on expediting permitting for critical pipeline infrastructure projects.

We also tell the administration that they need to move away from this kind of underinvestment rhetoric, telling folks that they need to move away from investment in the oil and gas industry. Those are all the steps that have constricted or restricted supply here in the United States. They've helped drive prices up. We need to move away from that. And hopefully this administration and Congress takes action now to help the American people.

RACHELLE AKUFFO: And we know that President Biden obviously has his green plan that he wants, which is why he's perhaps not touting as much investment in this space. But if there was one first step-- obviously, you have a lot of priorities listed there. What is the first step? Where do we go from here?

FRANK MACCHIAROLA: The first step the Biden administration can take is very simple-- stop talking down American oil and gas. Since the campaign trail and since his first day in office, the Biden administration has proposed that we move away from oil and gas in this country. They've promoted underinvestment in oil and gas. They've closed off pipelines. And they've closed off access to federal lands for development. And now, two years later, they say, we want to develop oil and gas in this country. It doesn't work that way.

So step one is adopt a position that promotes and advances American energy. Step two is follow it with policies that help implement that. Lift the moratorium on federal leasing. Move critical pipeline infrastructure projects. Scrap this idea of raising taxes on the industry. Again, it's very simple. If you want more American energy, promote it and advance policies that get us more American energy.

DAVE BRIGGS: Frank, you hear a lot about the rhetoric from the administration, even going back to the campaign, but the price of gas doesn't rise or fall on rhetoric. And going back to point one of 10 of 22, which is the permitting process, you say you need more permits. You need more access. But the critics counter every time with the existence of more than 9,000 open permits that are not currently being utilized. What's your answer to that?

FRANK MACCHIAROLA: Yeah, that 9,000 number is actually nonsense. First of all, on federal--

DAVE BRIGGS: On federal land.

FRANK MACCHIAROLA: Yeah, on federal lands today, just to put this into context, we have nearly 100,000 producing wells on federal land. So they provide no context for that 9,000 number. The other thing is, on oil and gas leases on federal lands and waters, currently 2/3 of those leases are in production. That's a 20-year high. Production is coming back in the United States. In fact, for the first time this month, we hit 12 million barrels per day of production. That's the first time in two years.

So what the administration needs to do is really, in a lot of ways, just get out of the way. Open up areas for production. Stop canceling pipeline projects. Stop promoting tax increases, either in Congress or through your budget. It's very simple. Look, this administration talks about supply, but then they put policies in place that restrict supply. The American people understand it. And they want the administration to just take a different policy course.

SEANA SMITH: Well, Frank, when it comes to the refineries, restarting some of these refineries, are some of these ones that have been shut down, are they irreversible? And when you talk about restarting some of these refineries, just give us a timeline just typically how long something like that would take.

FRANK MACCHIAROLA: That's a great question as well. So a lot of these shutdowns or repurposes or reductions in capacity, a lot of this occurred during the COVID pandemic, when demand went from 100 million barrels per day globally down to 80 million barrels per day globally. And so it's taken some time to-- demand has shot back up. It has taken some time to get our refining capacity back.

But look, we haven't built a refinery in this country since the 1970s. We have a president that talks about moving away from oil and natural gas. We have many in Congress who say we ought to move past oil and gas development. What does that do to investment in this country? If you're saying we need to move away from something that Americans use every day, and it's critical to our life, to our economy, if you're telling them we need to move away, you're stifling investment.

And you can't just flip a switch and say, well, now we need more investment. What America needs is a rational, long-term energy policy that promotes the best resource that we have-- America's oil and natural gas. It's helped strengthen our energy security over the past decade. It's helped reduce costs for household consumers. It's created millions of jobs around the country. Our industry supports more than 14 million jobs in the US economy, nearly 8% of the GDP.

Again, the answer is very simple for this administration and the president-- promote American natural gas. Don't go to Riyadh and ask for more oil and gas production. Go to the Permian Basin, the Bakken. Go to the Gulf Coast refineries. Stand next to the men and women of America's oil and natural gas industry and promote American oil and gas.

RACHELLE AKUFFO: Now, Frank, I want to ask you-- because we've talked, obviously, about some of the policies that the Biden administration can put in place. But what about the oil companies? If you're a regular person watching this, you're seeing that 28 of the largest producers made close to $100 billion in combined profits in just the first three months of 2022. What can the oil refineries and the oil companies also do to help alleviate some of these bottlenecks and really get the pumps flowing again?

FRANK MACCHIAROLA: Well, I think this is another area where this administration departs from bipartisan administrations in the past, which is I've never heard a presidential administration talk down profits. I've never heard them talk down business success. They need to promote American energy businesses because we're competing globally. Not just against foreign businesses, but against, in many ways, national oil companies and sometimes in countries that don't have our best interests in heart.

So the best way to strengthen our energy security, our economic strength here in this country, to create jobs, is to promote US industry. When you talk about America's oil and gas companies, it's the men and women who work on the rigs, work in the refineries, work on the pipelines. They're creating jobs all across this country. They're helping deliver affordable, reliable energy to the American people. We need to be promoting that, not talking it down.

RACHELLE AKUFFO: All right, well, we do thank you for joining us. Frank Macchiarola there, American Petroleum Institute senior vice president of Policy, Economics, and Regulatory Affairs. Thank you so much.