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With US fossil fuel production up, GOP would step on the gas

Though it consumes more oil than it produces, the U.S. is on track to achieve record-high production

Rep. August Pfluger, R-Texas, says the methane tax in last year's climate law will hurt independent fossil fuel companies.
Rep. August Pfluger, R-Texas, says the methane tax in last year's climate law will hurt independent fossil fuel companies. (Tom Williams/CQ Roll Call file photo)

Corrected 2:10 p.m. | Energy legislation Republicans are maneuvering through the House would rescind two programs at the EPA, including one with industry support, and push to expand already-burgeoning domestic fossil energy production for a global market the U.S. already dominates.

The chamber is slated to vote next week on the legislation, labeled HR 1 to reflect its importance to GOP leadership — a compilation of energy, permitting, environmental and construction measures. The House Rules Committee will consider the measure on Monday.

If it clears the House, the bill is likely to meet its demise in the Senate, where Majority Leader Charles E. Schumer, D-N.Y., said the bill is “dead on arrival,” though elements of it are likely to bubble up in permitting negotiations this Congress.

A recent survey of the Republican Study Committee, a bloc of hard-right House members, found increasing U.S. “energy independence” — a catchall term generally thought to mean producing more than one consumes — was a top priority.

The U.S. will produce about 12.4 million barrels per day in 2023 and 12.8 million in 2024, both surpassing the previous record of 12.3 million set in 2019, according to Energy Information Administration projections.

But EIA data show production does trail consumption. America burned 19.9 million barrels per day in 2021, about 1.6 million barrels less than it did in 2020 during the COVID-19 pandemic.

The U.S. does, however, produce more natural gas than it consumes, according to the EIA. In 2022 gas production amounted to 38.9 trillion cubic feet, while the nation used 32.3 trillion cubic feet.  Except for a small pandemic-related dip in 2020, domestic gas production has been rising steadily since 2016, according to the EIA.

Provisions

Among a series of changes, the bill would repeal two central elements of the climate law Congress passed and the president signed last year — one EPA program to cut methane and another to establish a federal green bank.

Rep. August Pfluger, R-Texas, who represents the oil-rich Permian Basin of West Texas, has led the push to block the methane-fee provision, which would charge fossil energy companies $900 per metric ton and $1,500 after two years. 

Lawmakers, including Texas Democrats like Rep. Henry Cuellar, a conservative-leaning member, negotiated that fee last Congress, ultimately securing $850 million in federal grants to help companies subject to the tax transition.

The EPA in November issued a separate regulation to slash the release of methane, a vigorously potent planet-warming gas, and the Bureau of Land Management has proposed its own methane rules that would affect operations on federal land.

The methane program would apply only to oil and gas producers emitting more than 25,000 tons of carbon dioxide per year, an amount that covers about 40 percent of the industry, according to Robert Kleinberg, a researcher at Columbia University’s Center on Global Energy Policy.

Pfluger said the methane tax would hurt independent fossil fuel companies. “It will add another layer of complexity to small businesses and divert their attention away from what they should be doing, which is producing American-made energy,” he said.

Lowering methane emissions has general support from large oil and gas companies, like BP, Occidental and Shell, which have voiced their approval of the law’s methane provision.

In November, after passage of the law, Chris Egby of Shell said the law provided “a number of interesting opportunities” in “hard-to-abate sectors,” such as aviation and heavy industry.

Writing about the methane fee in a Shell blog post, Egby said the law was a springboard for industry.

“Emitted during the production, processing, transport and incomplete combustion of oil and natural gas, about 60% of total methane emissions come from human activities, according to the International Energy Agency,” he said. “In this respect, the Inflation Reduction Act presents an opportunity to industry and other companies, because it promotes extra investment in tools and solutions that will make it easier for them to meet their methane targets.”

Included in the GOP energy bill is legislation from Rep. Gary Palmer, R-Ala., to eliminate a $27 billion program EPA is distributing to spur investment in low- and zero-carbon projects.

Of that total, $20 billion will go to projects that reduce pollution and lower energy costs for households, while the remaining $7 billion is slated for solar and electricity storage technology upgrades in poor and historically disadvantaged communities, according to the EPA.

When he announced the energy package, House Majority Leader Steve Scalise, R-La., said the bill would help thwart the Biden administration’s “radical anti-American energy agenda” and lower energy prices. 

Exports

Separately, the bill would lift restrictions on the import and export of liquefied natural gas, or LNG. The U.S. has jockeyed with Qatar for the title of biggest LNG exporter in recent years.

The U.S. is on track to double its LNG export capacity within the next five years, and three LNG export terminal projects are expected to be completed, according to BloombergNEF.

With that trio of projects, “the country’s annual LNG export capacity is expected to reach 169 million metric tons by 2027, placing it far ahead of the world’s second-largest exporter, Qatar,” the research group said.

America will remain a significant exporter of oil and gas through 2050, the EIA said in its annual forecast, released Thursday.

As environmental groups and Democrats in Congress whip opposition to the bill, trade and lobbying groups that represent fossil fuel, pipeline and petrochemical companies have emerged in support of the legislation.

Count the American Public Gas Association, the American Petroleum Institute and the Independent Petroleum Association of America as supporters of the bill.

“It provides guidance and assurance that American natural gas and oil is a top priority that will help American consumers at home and our global allies abroad,” Jeff Eshelman, president and CEO of IPAA, said of the legislation.

Schumer said on Thursday that he would like to see permitting legislation become law this Congress, adding that electric transmission would be critical to such a deal.

“Transmission is vital to getting clean energy from where it’s produced to where people live, but the Republicans’ proposal completely ignores this issue, to its detriment and its demise,” Schumer said. “Until Republicans recognize that permitting reform is an essential step towards laying the foundation for a clean energy future, no proposal or package they put forward will be taken seriously.”

This report was corrected to reflect that the U.S. consumed 19.9 million barrels of oil per day in 2021.

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