Biden-appointed Energy Secretary Jennifer Granholm confirmed on Oct. 7 that Americans should expect higher heating costs for the winter of 2021. In a time when the pandemic has hit the world’s economies hard, the rise in gas prices has prompted a firm warning by the U.S. that people’s quality of life is going to be impacted.
“This is going to happen. It will be — it will be more expensive this year than last year,” Granholm said in an interview with CNN. “We are in a slightly beneficial position, well certainly relative to Europe, because their choke hold of natural gas is very significant.”
SPR and the high costs of oil
Granholm’s comment came after President Joe Biden declared that he was “noncommittal” to utilizing the Strategic Petroleum Reserve (SPR), which was constructed as a back-up source for the supply of crude oil should there be any major disturbances or disruptions in the nation’s oil reserves.
The SPR was first established during the Ford administration in 1975 in response to the oil embargo of 1973-1974. In 1977, it received its first oil supplies from Saudi Arabia. Since then, oil has been released from the SPR by multiple administrations in attempts to help supplement the country in times of need.
The Biden administration has been concerned about the increasing price of crude oil after the Saudi-led Organization of the Petroleum Exporting Countries (OPEC) refused to respond to calls by the U.S. and other oil-rich nations to increase oil production by “more than planned in December.” OPEC is committed to keeping their monthly oil output increase plan in place.
To date, oil prices have increased to more than US$80 per barrel, driving an increase in gasoline prices for consumers, Reuters reported.
Because of OPEC’s refusal to pump more oil, the White House has accused the organization of endangering the global economic recovery.
“I’m not anticipating that OPEC would respond, that Russia and/or Saudi Arabia would respond,” Biden said to reporters. “They’re gonna pump some more oil. Whether they pump enough oil is a different thing.”
Granholm said last month that tapping into the SPR was considered, but it was later put aside as there was no “immediate plan” in place. Biden has indicated that there are other options on the table.
While she has stated that the U.S. is at a “slightly beneficial position” compared to Europe, Granholm still warns that the country has the “same problem in fuels that the supply chains have,” which is that oil and gas companies are not addressing the need to pump more oil.
By releasing SPR stockpiles, it’s believed that it would only provide momentary relief from the higher prices. Granholm assures that Biden is looking for “immediate-term and the long-term” solutions, such as investments in clean energy.
In addition to the problems with OPEC, Biden also signed executive orders that ended the construction of the Keystone XL pipeline — which would have distributed oil from Alberta, Canada — and shuttered U.S. drilling sites, but the action was met with a lawsuit by the Alaska Industrial Development and Export Administration (AIDEA).
CEO of Blackstone (BX), Stephen Schwarzman, stated that fossil fuel companies are facing difficulties funding production projects, mainly in the U.S.
The idea of closing down the Line 5 pipeline would be beneficial for several indigenous tribes in Michigan, who have requested the shutdown to Biden to “preserve treaty rights.” However, it has also faced criticism, with an environmental expert anticipating another loss of heating energy like the one that happened in Texas during last year’s winter storm.
Consequences at home
According to the Energy Information Administration, it is calculated that U.S. households that depend on natural gas for heating will spend an average of $746 to warm up their homes for the coming winter, 30% more than the last.
Experts have warned that the increase in natural gas futures, which have risen by 132% this year, could be higher during the winter, when Americans need more heat.
Personal trainer Shannan Phillips Hunt shared with NBC News her fears that her family’s low budget will be tarnished further by the high heating costs. Despite her and her husband having two jobs each, they still feel like they are “living paycheck to paycheck.”
“We never changed our behaviours, we were doing the same things that we kept doing and it was unbelievable how much money we spent,” she said. “It was scary, are we going to be able to pay this and afford this? How high is it going to go?”