Evidently $8 a gallon gas simply isn’t high enough for the Biden Administration’s EPA. Hot on the heels of the Supreme Court telling the EPA it can’t regulate carbon dioxide absent congressional authority to do so, the EPA is attacking drilling in the Permian Basin over ozone.
The Permian Basin, straddling Texas and New Mexico, is the world’s biggest oil field and accounts for over 40% of the nation’s petroleum production.
It is now in the regulatory crosshairs of the Biden administration’s Environmental Protection Agency . . . not because of carbon dioxide, but due to ozone.
The Environmental Protection Agency is weighing labeling parts of the Permian Basin as violating federal air quality standards for ozone — a designation that would force state regulators to develop plans for cracking down on that smog-forming pollution. The move, outlined in a regulatory notice, could spur new permitting requirements and scrutiny of drilling operations.
Ozone levels in the basin have surpassed a federal standard “for the last several years — really since the fracking boom took off in the Permian,” said Jeremy Nichols, climate and energy program director for WildEarth Guardians.
The conservation group formally petitioned EPA for the so-called non-attainment designation in March 2021 and, roughly six months later, warned the agency it intended to sue to force action. The designation “basically says you’ve got to clean up this mess or the consequences are going to get even more severe as far as restricting your ability to permit more pollution and more development,” he said.
So expect an industry that’s already taken it on the chin thanks to Flu Manchu lockdowns and Biden Administration policy to be further slammed during an energy crunch.
Oil prices sit consistently above $110 per barrel. Average gasoline prices in Texas have eclipsed $4.50. And natural gas prices in May were three times higher than in 2019.
Fossil fuel producers do not see a break in these high costs any time soon, according to a survey done by the Federal Reserve Bank of Dallas.
Uncertainty about their industry is as prolific as was their fossil fuel production before the pandemic.
Nearly half of respondents blamed labor shortages, inflation, and supply chain bottlenecks as the primary causes for oil and gas production concerns — each of which is an indirect consequence of government policy.
Responding to the coronavirus pandemic — a factor outside of their control — federal, state, and local governments shut down business operations across the nation: grounding air travel, closing everyday businesses, or putting strict constraints on ingress and egress of persons.
This sent a ripple effect throughout the global supply chain, creating a self-fulfilling disruption for both demand and supply. Fewer people traveling meant less demand for fuel. Less demand for fuel at first drove down the cost of oil to historic lows, but then led to less fuel production when the market adjusted. As travel demand recovered, the production side struggled, and continues to struggle, to catch up — playing into the high prices currently seen.
Another consequence of the shutdowns, unemployment skyrocketed both as a result of the closures themselves and the loss of business profits the lockdowns exacerbated. The oil and gas industry is still struggling to return to pre-pandemic levels of employment — employing 30,000 fewer workers than at the end of 2019.
How important is the Permian Basin for American energy production?
In July, the Permian Basin will produce roughly 60% of the oil barrels per day from of the seven most prolific U.S. basins, according to the Energy Information Administration (EIA); 5.316 million BPD out of a total of 8.901 million.
In June, the Permian Basin is expected to generate 5.232 million BPD; the second most prolific area is expected to produce 1.152 million BPD.
The idea to wield ozone regulations against Permian Basin operations evidently came from environmental activist and regulator Joe Goffman.
Climate activists also want EPA to tighten ozone standards to indirectly regulate CO2 from fossil fuels. Joe Goffman, a champion of this idea, is leading EPA’s Office of Air and Radiation on an acting basis, and he’s in charge of ozone rules.
Mr. Goffman midwifed the Obama Clean Power Plan that had sought to conscript states into a force-fed green energy grid transition until the courts killed it. A 2014 article from E&E News described Mr. Goffman as the “U.S. EPA’s law whisperer. His specialty is teaching an old law to do new tricks.” How many more tricks does he have up his sleeve to keep gas prices high?
Just how high does the Biden Administration want to raise the price of gas?