President Joe Biden’s top economic adviser suggested on Friday that the White House was not reconsidering its decision to cancel the controversial Keystone XL pipeline in response to rising crude and gasoline prices.
National Economic Council Director Brian Deese told CNBC that the Biden administration is instead focused on policies and strategies that can bring fuel prices down as soon as possible. He pointed to Biden’s decision on Thursday to begin releasing 1 million barrels of oil per day from the Strategic Petroleum Reserve over the next six months.
“Any action on Keystone wouldn’t actually increase supply, and it would transmit oil years into the future,” Deese said in a “Squawk on the Street” interview.
“What we’re focusing on right now is what we can do right now, and … there are some wells that are shut down that can come back online in the next two months. What we we need right now is to deal with the immediate disruption of supply,” he added.
The Russian-Ukrainian war has caused a supply shock in global oil markets, which were already stretched as demand recovered from declines linked to the Covid pandemic. While crude prices have recently hit record highs, prices at the gas pump have also risen.
Russia, a major energy exporter, has been hit with a wave of sanctions after invading neighboring Ukraine. The United States has banned imports of Russian oil, in an attempt to punish Moscow, and the United Kingdom is also phasing them out.
Oil prices retreated from their highs in early March, when they traded at their highest levels since 2008. However, they still rose significantly for the year, adding to inflationary pressures in the ‘economy. West Texas Intermediate crude, the U.S. oil benchmark, was trading around $100 a barrel on Friday, up 35% so far in 2022. Brent crude, the international benchmark, was hovering around $104 a barrel.
A supply depot serving the Keystone XL crude oil pipeline sits idle in Oyen, Alberta, Canada February 1, 2021.
Todd Korol | Reuters
As oil prices have surged in recent weeks, some Republicans have called on Biden to reverse course and immediately grant the necessary permits to build Keystone XL, a proposed 1,200-mile project that would have delivered oil from Canada to the American refineries.
Biden rescinded the permit needed to build the pipeline on his first day in office last year.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 canceled the $9 billion pipeline. It was first proposed in 2008, but faced numerous delays due to legal challenges from environmentalists and Native American tribes.
In addition to tapping into the country’s oil reserves, Deese said the Biden administration wants to generate more production from the roughly 9,000 drilling permits on federal lands that have already been approved. Deese said that’s the motivation behind Biden’s decision to ask Congress to apply fees to companies that don’t use wells in their leases that are on public land.
“These wells that can come back are what’s going to bring in those millions of barrels a day in the short term, not long-term issues that we can have debates about,” Deese said. “But the long-term questions really obscure what the short-term priority is. We’re trying to stay focused on that.”