Jakarta, INTI - The global oil supply needs to increase to more than double current production levels, US Energy Secretary Chris Wright said on Thursday, while criticizing the European Union and the US state of California for what he called excessive spending on inefficient green energy initiatives.
In recent years, energy discussions at the World Economic Forum have largely focused on accelerating low-carbon policies. However, during Wright’s conversation with OccidentalPetroleum CEO Vicki Hollub in Davos, both stressed that oil will remain a critical component of the global energy system for many decades ahead.
Wright also said that higher natural gas output and growing investment in liquefied natural gas (LNG) export facilities have positioned the United States to step in as a replacement for Europe’s Russian gas supplies, which were sharply reduced following the outbreak of the Ukraine conflict in 2022.
However, he cautioned that corporate environmental regulations in the European Union could pose challenges to future energy cooperation between Europe and the United States.
“These regulations could threaten you (US producer) liability-wise to send gas to Europe,” Wright said. “We’re working with our colleagues here in Europe to remove those barriers.”
The European Union requires oil and gas importers to track and disclose methane emissions linked to their supplies as part of efforts to reduce emissions of the heat-trapping gas.
Following months of lobbying from companies and governments, the EU agreed last month to narrow the scope of its sustainability reporting requirements. However, investors have warned that reduced disclosure could make it more difficult to determine which companies are genuinely progressing toward low-carbon operations.
The European Union did not immediately respond to a request for comment.
California Under Scrutiny
Wright also took aim at California’s energy policies, saying they mirror those of Europe and have contributed to higher energy costs for consumers. Hollub added that regulatory pressures were a key factor behind Occidental’s decision to exit the state in 2014.
Two refineries accounting for about 17% of California’s gasoline production capacity are currently scheduled to shut down, increasing pressure on Democratic Governor Gavin Newsom to prevent fuel prices from rising sharply.
California’s crude oil output fell to around 300,000 barrels per day in 2024, down sharply from its peak of 1.1 million bpd in 1985, according to long-term data from the U.S. Energy Information Administration.
Due to its geographic separation from major refining hubs along the U.S. Gulf Coast and in the Midwest, California is more vulnerable to fluctuations in energy prices.
In September, state lawmakers approved legislation allowing the development of thousands of new oil wells in an effort to lower crude costs for refineries and help stabilize fuel prices for consumers.
California’s Energy Commission did not immediately respond to a request for comment.
Meanwhile, global oil supply reached 107.4 million barrels per day last month, based on figures from the International Energy Agency.
Conclusion
The debate highlighted in Davos underscores growing divisions over the future of global energy policy. While U.S. officials argue that oil and gas will remain essential for decades and call for expanded production to ensure affordability and security, Europe and California continue to push stricter environmental regulations. As global oil supply remains high and energy transitions advance unevenly, balancing climate goals with energy reliability and price stability remains a central challenge for governments worldwide.
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