On Friday, President Joe Biden’s chief economic adviser said the White House was not revisiting its decision to cancel the controversial Keystone XL oil pipeline in response to higher oil and gasoline prices.
National Economic Council director Brian Deese told CNBC that the Biden administration is instead focusing on policies and strategies that can deliver lower fuel prices as soon as possible. He pointed to Biden’s decision on Thursday to release 1 million barrels of oil a day from the Strategic Petroleum Reserve over the next six months.
“Any action on Keystone is not really going to increase supply, but it will push oil forward a few years,” Dees said in an interview with Squawk on the Street.
“Right now we are focusing on what we can do right now and … there are wells that are shut down and could be brought back on stream within the next few months. What we need now is to address the immediate supply disruption,” he added.
The Russo-Ukrainian war has sent a supply shock to global oil markets that were already tight as demand rebounded from the Covid pandemic-related decline. As oil prices recently hit record highs, so have gas station prices.
Russia, a major energy exporter, has been hit by a wave of sanctions after it invaded neighboring Ukraine. The US has banned Russian oil imports in an attempt to punish Moscow. The UK is also phasing them out..
Oil prices retreated from their peaks in early March, when they traded at their highest level since 2008. However, they still rose significantly over the year, adding to inflationary pressures in the economy. West Texas Intermediate, the benchmark for U.S. crude, traded around $100 a barrel on Friday, up 35% in 2022. Brent crude, the international benchmark, fluctuated around $104 a barrel.
A supply depot serving the Keystone XL oil pipeline sits idle in Oyen, Alberta, Canada on February 1, 2021.
Todd King | Reuters
As oil prices have soared in recent weeks, some Republicans have urged Biden to reverse course and immediately grant the permits needed to build Keystone XL, a proposed 1,200-mile project that would carry oil from Canada to US refineries.
Biden canceled the permit needed to build the pipeline on his first day in office last year. In June 2021, the company that owned it, TC Energy, officially abandoned the $9 billion oil pipeline. It was first proposed in 2008 but faced numerous delays due to legal action from environmentalists and Native American tribes.
Dees said that in addition to tapping into the nation’s oil reserves, the Biden administration wants to boost production with the roughly 9,000 federal drilling permits that have already been approved. Dees said that was the motivation for Biden’s decision to call on Congress to impose fees on companies that do not use leased wells located in public plazas.
“The wells that can recover are what will produce these millions of barrels per day in the short term, not long-term issues that we can argue about,” Dees said. “But long-term issues do cloud what is a short-term priority. We’re trying to focus on that.”