Ex-Texas Oil Regulator Predicts US Gas Prices May Remain High for 'Couple of Years'
"If we maintain the current political environment which is keeping people, investors especially and institutions, retirement funds and those sort of things, if those people continue to be hesitant to spend money or to loan money or to invest money in oil, then we're going to see high prices for a long time, maybe for a couple of years", Sitton said.
"You're already seeing this a little bit... I think they [the Biden administration] realised they created a problem and that they have somehow caused this", Sitton said. "I think between their language softening and prices coming up, I think what is going to happen is investors are probably going to get a little more confident. It will be easier for private equity groups and investor organisations to raise money at that point. Once you see drilling activity pick up at a faster rate, then prices will come back down".
"Simply releasing a little oil from the strategic oil reserve may do a little bit, but certainly not very much", Sitton said. "It would have a minor impact today".
"More oil could be in the market in three months, but if you say you want a lot more oil, well then you need a lot of companies doing this activity and once again that costs a lot of money and because oil prices were so low during COVID and because of all this investment pull back, there isn't a lot of money available", Sitton said. "We may have to wait for prices to be high for a while before the companies have enough money to go drill".
"He [Biden] wants to look strong but it's hard to look strong if you're begging other countries to produce more oil and at the same time not look like you want them to produce more oil because you're trying to maintain your green philosophy", Sitton said. "He's walking a difficult tight rope and I think he's struggling to stay on it".
"Over the last couple of years where the oil business saw its most tumultuous price environment and you can see that they have weathered the storm of COVID and government pressures and ESG [Environmental, Social and Governance] pressures and I don't think they're inclined to try to lower prices without a good reason to do so", Sitton said.