Sunday, 17 October, 2021
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US oil, gas cos asked to help lower fuel costs

US oil, gas cos asked to help lower fuel costs

WASHINGTON: The White House has been speaking with US oil and gas producers in recent days about helping to bring down rising fuel costs, according to two sources familiar with the matter.

Energy costs are rising worldwide, in some cases leading to shortages in major economies like China and India, report agencies.

In the United States, the average retail cost of a gallon of gas is at a seven-year high, and winter fuel costs are expected to surge, according to the US Energy Department. Oil-and-gas production remains below the nation’s peak reached in 2019.

The talks with energy companies touched on several issues, including prices, according to a third person familiar with the discussions. The administration has been in discussions with the oil industry over limiting methane emissions in recent months.

“We are closely monitoring the cost of oil and the cost of gas Americans are paying at the pump. And we are using every tool at our disposal to address anti-competitive practices in US and global energy markets to ensure reliable and stable energy markets,” a White House official said.

US crude oil recently hit US$80 a barrel for the first time in seven years, as the Organization of the Petroleum Exporting Countries and their allies known as Opec+ restrict output. The White House has discussed rising prices with top Opec producer Saudi Arabia in recent weeks.

The average retail price of a gallon of petrol has risen to US$3.29, according to AAA figures.

The US Energy Department said on Wednesday that household heating costs are expected to rise dramatically this winter for all fuels, but particularly for heating oil and propane.

US oil production has been slow to rebound from 2020, when output dropped during the coronavirus outbreak. Production hit a record of nearly 13 million barrels per day (bpd) in late 2019, but the US Energy Department said Wednesday that output will only average 11 million bpd in 2021, rising to 11.7 million bpd in 2022.

Natural gas prices are up sharply this year, the result of supply shortages and stronger-than-expected demand in Europe and Asia.

US shale producers, who are responsible for the boom in crude oil output in the last 10 years, have been less willing to drill for more oil after years of weak financial performance, and have instead focused on cutting spending to boost returns for investors.

It can take six months to drill and complete a new well and bring the oil and gas to market. Any call by the White House for an increase in US production is likely to fall on deaf ears, according to one oil executive, who did not want to be identified criticising the approach.