How To Lower Gas Prices? Drill More Oil Off NJ, Oil Lobby Group Says

NEW JERSEY — With New Jersey's gas prices reaching $5 per gallon for the first time in state history, the oil-industry lobby offered President Joe Biden a solution: drill more oil.

The American Petroleum Institute (API) sent a 10-point plan Tuesday to President Biden with proposals to tame rising fuel prices. One of the proposals, if enacted, could have major impacts on the waters off New Jersey's coast: removing federal restrictions on oil exploration and drilling along the Outer Continental Shelf (OCS).

The OCS includes bodies of water off the U.S. coasts, including a portion that begins 3 nautical miles away from New Jersey. The API called for the federal Department of the Interior to reinstate "canceled sales and valid leases on federal lands and waters."

The API is the nation's largest trade association for the oil and natural-gas industry. The lobby group has been criticized for blocking climate legislation and advancing climate-change denial.

For more than a decade, New Jersey environmental groups have battled efforts to drill for oil off the state's coast. But record-high gas prices have put President Biden in an increasingly desperate crunch to find solutions. In New Jersey, gas prices averaged $5.05 per gallon as of Wednesday — nearly $2 more than one year ago, according to AAA.

"America is blessed with abundant energy resources that are the envy of the world," said API President Mike Sommers. "Given today’s global unrest and economic uncertainty, American energy is a long-term strategic asset that can advance our national and economic security."

It's uncertain how much of the API's advice President Biden may take. Although he campaigned in 2020 as the best candidate to take on climate change, the Biden administration approved 3,557 permits for oil and gas drilling on public lands in its first year — 34 percent higher than the total President Donald Trump's administration approved in its first year.

But President Biden will consider invoking emergency powers to boost U.S. refinery output, according to a letter — which Axios obtained — sent to the CEOs of the nation's largest oil companies.

"I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office," he wrote. "But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable."

As President Biden sees it, refineries are capitalizing off uncertainties caused by "a time of war," citing the industry's record profits this year. U.S. gas prices have risen since June 2020, but the increase in prices has accelerated since February — the month Russia invaded Ukraine — according to federal data.

President Biden's letter says roughly 3 million barrels a day of refining capacity around the world have gone offline since the onset of the pandemic. In the U.S., refining capacity fell by more than 800,000 barrels a day in 2020. But there's skepticism that refinery capacity can rebound.

"U.S. refiners cannot increase capacity beyond current levels," Claudio Galimberti, senior vice president at Rystad Energy, told the Associated Press. "If they could, they would have done it already."

But in the meantime, New Jerseyans continue to struggle with rising prices at the pump. The Garden State hit a $5 per gallon average June 7 for the first time in state history.

The Associated Press contributed to this report.