Before we look at the Biden administration’s actions on oil and gas, let’s review how prices are set in a free market economy. When supply goes down and demand stays the same, then prices rise. That’s because more people want to buy a resource that has become more scare, so sellers can raise the price. Now, has the Biden administration taken action to reduce the supply of oil and gas?
Well, consider what he did right after taking office in January 2021.
President Joe Biden on Wednesday signed a series of executive orders that prioritize climate change across all levels of government and put the U.S. on track to curb planet-warming carbon emissions.
Biden’s orders direct the secretary of the Interior Department to halt new oil and natural gas leases on public lands and waters, and begin a thorough review of existing permits for fossil fuel development.
[…]On his first day in office last week, Biden had the United States re-enter the Paris accord. He also cancelled the permit for the construction of the Keystone XL pipeline.
The Keystone XL pipeline would have allowed us to purchase oil and gas from Canada, which is much better than buying it from Russia, the Middle East, etc. Biden loves Russia. One might even say that he colludes with Russia to help them invade Ukraine – by helping them build their military. Biden gave approval for Russia to construct the Nord Stream 2 pipeline from Russia to Germany, so that they could sell all their oil and gas to European countries.
That’s what Democrat voters voted for in 2020: a pipeline for Russia, so they could sell oil and gas and invade Ukraine.
European countries are desperate for oil and gas, after having exchanged their conventional energy sources for green energy sources. Green energy sources produce low amounts of energy, and are inconsistent, while costing more than conventional energy sources. Since the green plan didn’t work out, the Europeans have to enrich Russia now. They make a show of being made at Russia, but they (like Biden) aren’t willing to develop their own energy.
How did American energy producers respond to having their lease applications denied, and their existing leases and pipelines canceled?
Biden’s moratorium on oil and gas leases won’t end fossil fuel extraction since industry leaders currently hold undeveloped leases. Drilling on public lands generates billions of dollars in revenue but comprises roughly a quarter of the country’s greenhouse gas emissions.
Oil and gas producers have strongly opposed Biden’s move and are expected to challenge the order in court.
“Penalizing the oil and gas industry kills good-paying American jobs, hurts our already struggling economy, makes our country more reliant on foreign energy sources, and impacts those who rely on affordable and reliable energy,” Anne Bradbury, president of the American Exploration and Production Council, said in a statement.
Environmental groups, who have long pushed for the changes sought by Biden, praised the orders.
Has Biden learned his lesson from the huge spike in gas prices? Is he concerned about the widespread inflation that is caused by the spike in energy prices?
The Federalist notes:
CBS News revealed the Biden administration canceled more oil and gas leases across the country this week as soaring gas prices reached new heights Wednesday.
The Department of Interior canceled plans to drill in more than 1 million acres in Alaska’s Cook Inlet, arguing “lack of industry interest,” on top of canceling a pair of leases in the Gulf of Mexico over “conflicting court rulings.”
[…]The administration’s relentless animosity towards fossil fuels, showcased in its repeated cancelation of oil and gas projects, has chilled investment in the capital- and labor-intensive industry. This keeps production down despite rising demand at home and turmoil in markets abroad.
[…]In Alaska, upon inauguration Biden canceled leases in the Arctic National Wildlife Refuge, which is forecast to hold between 4 to 12 billion barrels of recoverable oil. He closed another 7 million acres from the state’s National Petroleum Reserve off from development last month.
What happens when investors see that the Biden administration is taxing, regulating and blocking oil and gas development? They say “we would do better investing our money elsewhere”. Oil and gas producers get the message very quickly, and they stop creating new energy sources. That’s how supply dries up. And when supply is reduced, prices go up.
Biden tried to fix the rising prices by getting Russia and the Middle East to drill more, and by stealing the strategic oil reserve, which is primarily designed for use during a crisis. But Biden considers his falling poll numbers a crisis. And begging our enemies to produce the oil that we should be producing seems right to him.
The president has turned to the nation’s emergency petroleum reserves for desperate political capital ahead of the November midterms… With no plans announced to restock the emergency supplies, Biden ordered the self-proclaimed “unprecedented” release of 1 million barrels of oil a day onto the market for the next six months beginning Sunday.
The new Democrat strategy is actually the old Democrat strategy used by Democrat President Jimmy Carter in the 1970s: to impose price controls on oil and gas:
That led to massive gas lines in the 1970s, because suppliers shut down when they realized they couldn’t make enough money to stay in business. There was no money to be made in producing energy, so energy companies just slowed down or stopped producing. Would you go to work if the government took 80% of what you earned?
People in America would line up around the block for gas, and they could only get a certain limited amount. Gas was only sold during certain hours of the day.
I’m sure that the young people won’t have heard about the results of setting price controls, but it’s in the first few chapters of Thomas Sowell’s “Basic Economics”. But if their teachers have no ability in economics, then how would the student learn it? They can’t.
One thought on “How the Biden administration raised oil and gas prices, and caused inflation”
Some people aren’t acquainted with how supply and demand works. They also don’t seem to connect the idea that restrictions to supply decrease supply and/or make supply more expensive.
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