Domestic crude production ticked lower last week along with demand, the U.S. Energy Information Administration (EIA) said Wednesday. The latest government snapshot followed President Biden’s assertion this week that energy majors are keeping a lid on output in order to maintain high oil and natural gas prices to bolster profits.

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Biden on Monday floated a “windfall” tax on corporate profits, focusing specifically on oil and natural gas producers after ExxonMobil, Shell plc and others posted surging third-quarter earnings. BP plc followed on Tuesday and reported its second-highest adjusted quarterly profit on record, nearly $8.2 billion, citing “exceptional” sales of its natural gas division that more than doubled the prior quarter.

Though both oil and natural gas prices have moderated during the autumn alongside a seasonal downturn in demand, costs for both remain elevated by historic standards. Biden blamed constrained crude output as well as natural gas supply interruptions imposed by Russia’s war in Ukraine. European countries are moving with haste to end their dependence on Russian gas in protest of the conflict, and they are buying up U.S. exports to fill the void. But with limited global supply, Europe’s shift fueled a price surge this year.

Energy majors’ robust profits “are not because of doing something new or innovative. Their profits are a windfall of war, a windfall for the brutal conflict that’s ravaging Ukraine and hurting tens of millions of people around the globe,” Biden said in a statement. “My team will work with Congress to look at these options that are available to us and others. It’s time for these companies to stop war profiteering, meet their responsibilities in this country and give the American people a break and still do very well.”

Critics within the oil and gas industry said such a tax was a longshot in Congress because it would disincentivize production and, ultimately, drive prices even higher.

Energy producers “do not set prices – global commodities markets do. Increasing taxes on American energy discourages investment in new production, which is the exact opposite of what is needed,” American Petroleum Institute President and CEO Mike Sommers said.

Producers, meanwhile, have said during earnings season they are focused on aligning supply/demand.

Natural gas output did indeed climb over the summer months amid robust domestic demand, and it hit a record level above 101 Bcf/d in October in anticipation of elevated consumption this winter in the Lower 48, Europe and Asia.

Crude production, meanwhile, reached a pandemic-era high of 12.2 million b/d over the summer before tapering off modestly in the fall. In its latest Weekly Petroleum Status Report on Wednesday, covering the week ended Oct. 28, EIA said output declined 100,000 b/d week/week to 11.9 million b/d. On a year/year basis, however, production was up 5% in October.

Demand last week ticked down 0.5% week/week. For all of last month, total petroleum consumption was down 0.5% year/year.

U.S. commercial crude inventories, excluding those in the Strategic Petroleum Reserve, decreased by 3.1 million bbl from the previous week. At 436.8 million bbl, stocks last week were 3% below the five-year average.

Global Outlook

Saudi Arabia-led OPEC and its allies, aka OPEC-plus, plan to cut their collective production by up to 2.0 million b/d this month. The cartel cited near-term global economic headwinds amid lofty inflation in the United States and Europe as well as pandemic-related lockdowns in China.

OPEC and the International Energy Agency (IEA) in October both downgraded their demand expectations for this year and next, citing inflation-induced recessionary concerns in the United States and Europe as well as pandemic-related lockdowns in China.

Long term, however, OPEC researchers said in their annual report this week they expect strong global oil demand over the next two decades as developing countries’ populations swell and economies both modernize and expand. The cartel said this necessitates oil industry investment of $12.1 trillion between now and 2045. That marked a $300 billion increase from OPEC’s forecast last year.

“It is crucial we appreciate just what each energy source can provide, as we look to answer the questions related to energy affordability, energy security and the need to reduce emissions,” said Haitham al-Ghais, OPEC’s secretary-general. “All-options, all-solutions and all-technologies must be utilized.”

The Paris-based IEA, in contrast, said in its own outlook last week that the vast majority of new investments should go toward renewable energy sources to combat climate change. It envisions a future in which demand for fossil fuels peaks this decade.

IEA researchers said Russia’s invasion of Ukraine and the resulting backlash from Europe could hasten the energy transition.

Global fossil fuel demand could fall “steadily from the mid-2020s to 2050 by an annual average roughly equivalent to the lifetime output of a large oil field,” IEA researchers said.