Within 12 hours of the Russian invasion of Ukraine on February 24th, 2022, the American Petroleum Institute (API), a group representing 600 oil and gas companies including ExxonMobil, Chevron, and Shell, put out a statement urging the U.S. federal government to “unleash American energy.” Condemning the invasion, the statement underlined the role American oil and gas producers could play in “supporting our European allies with access to a stable supply of reliable and affordable energy” and “serv[ing] as a stabilizing force while strengthening global energy security.” 

The API made four demands to the federal government: 1. Release permits for energy development on federal lands to increase oil and gas production 2. Increase the issue of U.S. offshore drilling leases (conveniently contradicting the rhetoric of “American” oil and gas) 3. Accelerate the permitting of energy infrastructure projects such as pipelines and Liquid Natural Gas (LNG) terminals 4. A general call to “reduce legal & regulatory uncertainty.” 

The API is framing these demands as novel and responding to the unique circumstances created by Russia’s invasion to “serve as a stabilizing force while strengthening global energy security.” That to meet the inflation caused by Russian sanctions, oil and gas corporations must have freer reign to secure leases and produce fuel. However, the API has repeatedly made these exact demands on a nearly yearly basis in response to several minor and major political and economic developments.

The API is not the only actor that has exploited a global crisis to push for the deregulation and expansion of the oil and gas industries. On February 17th, 2022, in the lead up to the invasion of Ukraine, 27 Republican Senators signed a letter addressed to U.S. Energy Secretary Jennifer Granholm calling for similar demands to the API:

“We are concerned by recent attempts to restrict liquified natural gas (LNG) exports from the United States to our European allies amid rising tensions caused by Russia… Support for the expansion of pipelines to increase supply into the Northeast would help solve price spikes… increased production and export volumes of U.S. natural gas… increases U.S. energy security and makes us essential to the energy security of others.” 

According to Open Secrets, a nonpartisan and independent American research group, the 27 Senators who signed the letter have received a total combined $4,270,530 USD in donations from oil and gas lobbying groups since 2017. 

The “restrictions” the letter refers to are regarding an executive order signed by President Joe Biden in January 2021 that paused fracking on federal land. However, the senators conveniently overlooked the fact that the leasing pause only applies to new leases, meaning existing operations are unaffected by these regulations. Their demands also completely ignore that 53% of the 26 million acres of federal land currently under lease to oil and gas companies is currently unused, approximated at 7,700 approved yet unused permits. On top of this, oil and gas production on federal land only accounts for 9% of the United States’ total oil and gas production.

Opportunity and False Sentiment

Why then are American oil and gas companies framing the current energy crisis as one that could be resolved if the government just eased up regulations? The United States is the third and fourth-largest oil and gas producer respectively in the world. In 2021, the top 25 oil and gas companies – which includes global giants Shell, BP, Exxon Mobil, Chevron, and others – raked in a record-breaking net income of $74.9 billion that year. Additionally, the Strategic Petroleum Reserve, the federal government’s stockpiled emergency oil reserves, is the largest in the world at 714 million barrels. Production of oil and gas to meet inflation affecting American citizens and European allies reliant on Russian energy is not being held back by regulations as claimed by certain media outlets, lobbied politicians, and the API.

In fact, in December 2021, when oil and gas prices had begun inflating even before the Russian invasion of Ukraine, the Biden administration requested American oil and gas companies to increase production but was rejected. Even as the invasion loomed during early February, which contributed to the rising inflation, oil and gas companies reiterated their stance of maintaining production levels. On February 17th, when asked on Fox News about Biden potentially again requesting increased oil and gas production in the event of an invasion, Pioneer Natural Resources CEO Scott Sheffield curtly answered “No. Pioneer will stay with our plan… I’ll tell him… it’s all about the shareholders. Our shareholders own this company; they want a return of cash. We know what happens when we increase U.S shale [oil production] too much.” Pioneer Natural Resources’ annual revenue for 2021 was $14.643B, a 119% increase from 2020. 

Market analysts understand that oil and gas investors are collectively pushing for their companies not to flood the market with fuel to increase profits and make up for market value lost in the pandemic and 2014 crash. “It’s not the government that is banning them from drilling more. It’s pressure from their shareholders” said Pavel Molchanov, an analyst at investment bank Raymond James.

This shows that American oil and gas companies are not actually interested in increasing production to aid the global effort to move away from Russian energy, but in reeling back the already minuscule environmental regulations the Biden administration passed to secure long-term leases on top of their large monopolies noted earlier. The pressure being mounted on the Biden administration by the API and others to deregulate the industry is framed as one to meet the immediate circumstances affecting the world, but these demands only serve the long-term financial interests of these companies, with the means to meet those immediate circumstances already available to them.

Biden Scrambles for Oil

Unable to convince American companies to increase oil and gas production at home, Biden has since scrambled to find alternatives to meet the growing domestic and global economic consequences of Russia’s invasion of Ukraine. The past month has seen the Biden administration reach out to oil-rich regimes it has previously criticized like Venezuela, Saudi Arabia, and the United Arab Emirates (UAE). 

On March 5th, 2022, a delegation of American representatives met with officials from the Venezuelan government to discuss the easing of sanctions in exchange for favorable oil exports. Venezuela has been under economic embargo by the U.S. since 2006 and therefore was receptive to talks. However, Saudi Arabia and the UAE have not been as receptive to Biden’s attempts at reconciliation in a time of need despite long withstanding relationships, having rejected American attempts to organize talks. Analysts point to Biden’s criticisms of Saudi and UAE human rights abuses and the recent removal of the Houthis, the Iranian-backed party Saudi Arabia is currently waging war in Yemen, from the global terror list as reasons for the souring of American-Gulf relations in recent months. 

Throughout March, members of Congress placed mounting pressure on the Biden administration perceived as “holding back” the American oil and gas industries in a time of crisis, with the possibility of cooperating with Venezuela only further igniting discontent. “Nicolás Maduro is a cancer to our hemisphere and we should not breathe new life into his reign of torture and murder” Democratic Senator Robert Menendez (D-N.J.), the chairman of the Senate Foreign Relations Committee, declared in a published statement on March 7. “President Biden, stop begging dictators to produce the energy that we need here in America… Don’t go to Venezuela when the answer is right beneath our feet,” said House Republican Whip Steve Scalise (R-La.). 

The pressure came to head on March 30th when 18 Republican senators led by Representative Matt Rosendale (R-MT) introduced the “Restore Onshore Energy Production Act” which seeks to roll back Biden’s pause on oil and gas leasing on federal lands. “The Biden administration imposed an illegal moratorium on federal onshore and offshore lease sales, damaging our nation’s traditional energy production and energy independence when we need it most,” Rosendale said in a statement on the bill. Rosendale has received $321,555 from oil and gas industry lobbying groups since 2017. 

The next day on March 31st, Biden announced that the federal government would be tapping into the Strategic Petroleum Reserve by releasing an unprecedented 1 million barrels a day for the next six months. This episode reveals the extent to which the API and other lobbied interests are able to hijack popular discourse to exert influence over American domestic and foreign policy. While unable to push through a repeal of Biden’s minor regulations yet, the American oil and gas industries were able to offset the costs of meeting inflation to the publicly owned Strategic Petroleum Reserve rather than tapping into their own supply in a time of crisis. 

A Window for Green Energy 

Fundamentally, the political and economic crisis boils down to a desire to support Ukraine and counter Putin’s oligarchic dictatorship. Continuing to fund and rely on fossil fuel – the industry that props the Putin regime up – is not the way. Transnational American oil and gas companies stand to gain from Russia’s fossil fuel-reliant economy and will not push for a fundamental challenge to Putin’s rule. 

ExxonMobil, for example, has refused to sever its business relations in Russia, owning “a 30% stake in Sakhalin-1 — a vast oil and natural gas project located off Sakhalin Island in the Russian Far East.” Rex Tillerson, the former CEO of Exxon, was awarded the Order of Friendship, “one of the highest honors Russia gives to foreign citizens.” Shell, BP, and other American companies also had lucrative operations in Russia before the sanctions. In January 2022, the API, anticipating potential conflict with Russia, lobbied Congress to limit the scope of U.S. sanctions. “Sanctions should be as targeted as possible to limit potential harm to the competitiveness of U.S. companies,” said an API representative. 

According to the U.S. Energy Information Administration, Russia has double and four times the proven oil and gas reserves respectively that the U.S. does. The reality is that, as long as the world is dependent on fossil fuels, Putin will have control of a valuable resource that will allow him to retain and grow power. It stands that, on an environmental, economic, and political level, the world’s reliance on fossil fuels has only produced volatile results. To seriously counter Putin and develop a less fragile and more sustainable global economy, Russia’s invasion of Ukraine should be seen as an opportunity to establish the political momentum to economically shift toward renewable resources and weaken Russia’s global monopoly on energy. 

Majeed Malhas

Majeed Malhas is a Palestinian-Canadian journalist from Amman, Jordan. He received his MSc in Social Anthropology from the London School of Economics & Political Science in 2020, where he has since...