Why Energy Companies Won’t Produce

They expect the war on fossil fuels to resume when the current crisis ends

By Wayne Stoltenberg and Merrill Matthews. Excerpts:

"President Biden has urged oil and natural-gas companies to ramp up production, and you’d think, given the current high prices, that it would be in their interest to do so. But the industry has been slow to respond, with some justification. Companies expect that as soon as the current turmoil subsides, the Biden administration will shift back to hostile rhetoric, anti-energy legislative proposals, and oppositional regulatory policies."

"The reason is the left’s incessant demonizing of the fossil-fuel industry, leading to near pariah status, which has succeeded in driving capital away from the industry. Small and midsize producers rely more on outside capital than larger companies such as Exxon to increase their production."

"Last September, 20 House Democrats introduced the Fossil Free Finance Act, which would require the Federal Reserve Bank to take steps to stop banks from investing in fossil-fuel production. The bill’s goal was “no financing of new or expanded fossil fuel projects after 2022,” the Naderite group Public Citizen noted approvingly.

Then there’s the harping about excessive profits, which led Sen. Elizabeth Warren to propose a new tax. “The oil companies need to understand that the benefits of price gouging will be sharply undercut by a tax that’s not across the board, but instead is a tax on how their profits increase during this short-term crisis,” she declaimed."

"the message to participants in the highly regulated financial markets is clear: We want to see less, not more, capital flowing to domestic oil and gas production.

Unsurprisingly, many larger institutional investors have heard the message and are touting their support for clean energy and opposition to fossil-fuel production."

Mr. Stoltenberg, a former executive vice president and chief financial officer of Vine Energy Inc., is chairman of the Dallas-based Institute for Policy Innovation. Mr. Matthews is a resident scholar with IPI.