President Joe Biden‘s top economic advisor suggested Friday the White House is not rethinking its decision to cancel the controversial Keystone XL oil pipeline in response to elevated crude and gasoline prices.
National Economic Council Director Brian Deese told CNBC the Biden administration is instead concentrating on policies and strategies that can deliver lower fuel prices as soon as possible. He pointed to Biden’s decision Thursday to begin releasing 1 million barrels of oil per day from the Strategic Petroleum Reserve over the next six months.
“Any action on Keystone wouldn’t actually increase supply, and it would transmit oil years in the future,” Deese said in a “Squawk on the Street” interview.
“What we’re focused on right now is what we can do right now, and … there are wells that are shut in and that can be brought back online over the course of the next couple months. What we need right now is to address the immediate supply disruption,” he added.
The Russia-Ukraine war delivered a supply shock to global oil markets, which had already been tight as demand recovered from Covid-pandemic related declines. As crude prices hit record highs recently so has prices at the gasoline pumps.
Russia, a major energy exporter, has been hit with a wave of sanctions after it invaded neighboring Ukraine. The U.S. banned Russian oil imports, in an attempt to punish Moscow, and the U.K. also is phasing them out.
Oil prices have retreated from their early March peaks, when they traded at their highest levels since 2008, However, they are still are up considerably for the year, adding to inflationary pressures in the economy. West Texas Intermediate crude, the U.S. oil benchmark, traded around $100 per barrel Friday, up 35% so far in 2022. Brent crude, the international benchmark, hovered around $104 per barrel.
As oil prices jumped in recent weeks, some Republicans have called on Biden to reverse course and immediately grant the permits necessary to build Keystone XL, a proposed 1,200 mile project that would’ve delivered oil from Canada to American refineries.
Biden canceled the permit needed to construct the pipeline on his first day in office last year. In June 2021, the company that owned it, TC Energy, officially nixed the $9 billion oil pipeline. It had first been proposed in 2008, but faced numerous delays due to legal challenges from the likes of environmentalists and Native American tribes.
In addition to tapping the nation’s oil reserves, Deese said the Biden administration wants to generate more production from the approximately 9,000 drilling permits on federal land that already have been approved. Deese said that’s the motivation behind Biden’s decision to call on Congress to implement fees on companies that aren’t using wells from their leases located on public acreage.
“Those wells that can come back on, that’s what’s going to bring those million barrels of day in the short term, not long-term questions that we can have debates about,” Deese said. “But the long-term questions really cloud what is the short-term priority. We’re trying to keep our focus there.”