The Senate Committee on Energy and Natural Resources held a hearing on Tuesday regarding the outlook for domestic and international energy price trends.
The committee heard testimony from Stephen Nalley, Acting Administrator, U.S. Energy Information Administration, Tim Gould, Chief Energy Economist, International Energy Agency, and journalist Robert Bryce. The hearing was an important and candid discussion on an issue that has pressing domestic and global implications.
The expert testimony was consistent in much of their analysis of the current state of the global energy market. Witnesses recognized that energy prices are likely to remain high through the winter, and the current trajectory of the energy transition is not sustainable if society wants to maintain reliable energy supplies.
In his testimony, Bryce discussed how high energy prices affect a myriad of industries and compound economic issues that countries around the world are facing.
“Fertilizer plants across Europe are shutting down because of high natural gas prices. Similar fertilizer and urea shortages and price spikes are occurring across Asia, which is threatening both the agriculture and transportation sectors,” Bryce said.
When asked about the value of domestic energy export bans as a potential solution to solve rising energy prices, witnesses agreed this tactic would not be a wise strategy to solve short-term domestic energy issues. Gould explained, “The U.S. has been a major beneficiary of open international markets. And I continue to believe that over the medium or long term, that would be the case.”
Several Senators inquired about a release of oil stored in the Strategic Petroleum Reserve as a potential solution to solve high oil prices. Nalley, who is with the U.S. Energy Information Administration at the Department of Energy, the agency responsible for the Strategic Petroleum Reserve (SPR), explained how an SPR release would affect markets.
“Analysis generally shows it’s pretty short lived for a couple months and that typically, the other dynamics in the market would overtake any decrease in price. Ultimately, the amount of impact would be relatively short lived, depending on how much was released,” Nalley said.
While this hearing was focused on energy price trends and not on specific legislation, it was clear the hearing was an opportunity to test the waters on potential regulatory action on the domestic energy industry from the Biden Administration. The hearing took place as reports have indicated the White House domestic policy team has been considering a number of actions that can be taken to attempt to lower gasoline prices. A release from the SPR, temporary suspension of ethanol mandates and curbs on exports are all reportedly being considered.
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Deidre Kohlrus, Director Government Affairs, writes about industry-specific policies for the Energy Workforce & Technology Council. Click here to subscribe to the Council’s newsletter, which highlights sector-specific issues, best practices, Council activities and more.