ARGUMENT: PETROLEUM RESILIENCEReviving the Petroleum Administration for War: A Case for Government-Industry Partnership

Published 3 August 2022

The Russo-Ukrainian War is exposing deep fissures in global energy networks and finally forcing Western capitals to address their energy security. Ryan P. Kellogg and David Brunnert write that “To confront this profound challenge, policy should consider creating a partnership between government and industry for managing energy resources.”

The Russo-Ukrainian War is exposing deep fissures in global energy networks and finally forcing Western capitals to address their energy security. The prices for crude oil and natural gas in the United States have risen approximately 50 percent and 100 percent respectively since December 2021, with even higher prices for U.S. allies in Europe. Ryan P. Kellogg and David Brunnert write in War on the Rocks that, combined, these increases are pushing inflation to 40-year highs and threatening to tip many developed economies into recession. The economic pain is causing instability in the developing world and weakening NATO cohesion on Ukraine.

They add:

To confront this profound challenge, policy should consider creating a partnership between government and industry for managing energy resources. We believe the Biden administration should look to the World War II-era Petroleum Administration for War as a model. A 21st-century Petroleum Administration for War would focus on supply chain resiliency and price shock mitigation measures to rapidly increase oil and natural gas volumes when needed, with the ultimate goal of delivering lasting energy security to the United States and its allies.

The Petroleum Administration for War, first known as the Office of Petroleum Coordinator for National Defense, was created in 1941 to marshal America’s diverse production, refining, and transportation assets for the war effort. The administration relied on deep industry buy-in, leveraging the technical and commercial know-how of the private sector for its remarkable success. An updated version of this approach — call it the Energy Security Agency — could again facilitate government-industry cooperation, enabling the U.S. government to partner with domestic producers to address key energy security challenges.

….

We believe a 21st-century Petroleum Administration for War would be an asset to the security of both the United States and its allies….. we propose a new Energy Security Administration, organized around addressing four main challenges: supply resiliency, refining capacity, natural gas transport, and climate change mitigation. As with the Petroleum Administration for War, the government, in close consultation with industry advisors, would provide the overarching goals and coordination for the Energy Security Administration, while industry committees would provide the technical analysis and implementation.

….

The advantages offered by an engaged partnership between government and domestic energy providers are immense. They include building emergency oil and gas supplies to lessen price shocks, maximizing global natural gas production as a transition fuel, and creating a shared strategy based on decarbonization

As members of the oil and gas industry, we and our colleagues are eager to be part of the solution to ensure the United States and its allies can access sustainable and affordable energy without interruption. The Russo-Ukrainian War has given Washington and other NATO capitals a newfound focus on energy security, creating the opportunity to forge a new path forward. Prior to meeting with industry executives on June 23, Energy Secretary Jennifer Granholm remarked, “this is an honest conversation… how we can be partners in providing relief to people.” We believe this spirit of partnership is the right one to build on delivering long-term energy security to the United States and its allies.

Leave a comment

Register for your own account so you may participate in comment discussion. Please read the Comment Guidelines before posting. By leaving a comment, you agree to abide by our Comment Guidelines, our Privacy Policy, and Terms of Use. Please stay on topic, be civil, and be brief. Names are displayed with all comments. Learn more about Joining our Web Community.