In his State of the Union address earlier this month, U.S. President Joe Biden both supported and chastised the oil and gas industry. On one hand, he said the U.S. would rely on these energy sources for at least the next 10 years. On the other hand, he criticized the industry for reporting “record profits,” he said.
“Last year, they made $200 billion in the midst of a global energy crisis. I think it’s outrageous.” He also said that “Big Oil” should be investing more, to increase production and bring down prices.
Biden was walking a fine line trying to balance the industry’s contribution to climate change, as well as its record profits last year, with the nation’s dependence on hydrocarbon fuels, not just to heat home and power automobiles, said Benjamin Beberness, SAP vice president and global head of the Oil & Gas Industry Business Unit.
Oil is used for a myriad of products, from medicine to the bodies of electric cars. Additionally, Biden underscored the reality that although U.S. policy is supporting the growth of alternative energy such as wind and solar, they remain a sliver — albeit a growing part — of the energy supply.
“I think the U.S. government is saying: ‘We can’t let them off the hook from cleaning up what they’re doing today, but we still need them to be around because they still are going to be producing oil for us to use to make these other products, as well as to continue to provide fuel for our cars, etcetera,’” Beberness said.
Addressing the criticism about profits and high energy costs due to supply, Beberness blamed the vagaries of federal policy toward drilling and limiting new exploration. Market forces already have brought down the price of oil. Brent Crude, one of the two main benchmark prices for purchases of oil globally, reached a peak of $123.92 per barrel and now stands about $83 per barrel.
“There has to be some commitment from the U.S. government that we can maintain, because what [oil companies] don’t want to do is to make this huge investment in the additional production and other things and then have the US government say: ‘We’re going to put all these regulations in place.’”
Using technology, oil and gas companies can reduce their negative impact on the environment, Beberness said. Although natural gas is by far the cleanest of the big three — coal and oil being the other two — they all can become cleaner though asset management.
Citing a McKinsey study, Beberness said a that a 10% improvement in asset operations of a normal gas company will result in a four percent reduction in CO2 emissions.