I’ve been reading some very disturbing things about the energy policies of the Biden administration. The corporate news media is telling everyone that Biden is trying to lower gas prices. How? By threatening producers at home, and begging Venezuela and Saudi Arabia to produce more abroad. None of this will work, and the administration’s other actions are making gas prices rise.
Here is the Wall Street Journal:
President Biden has suddenly discovered that a refinery shortage is driving up fuel prices. Naturally, he’s blaming refiners, even as his Administration doubles down on the policies that created the shortage.
In a remarkable and threatening letter to oil and gas CEOs this week, Mr. Biden seems stunned to learn that prices rise when supply doesn’t meet demand.
[…]A major culprit is U.S. government policy. Some older refineries have closed because companies couldn’t justify spending on upgrades as government forces a shift from fossil fuels. They also have to account for the Environmental Protection Agency’s tighter permitting requirements… and steeper biofuel mandates.
The article notes that our refining capacity is being targeted by the Biden administration’s regulations. Smaller refining companies have to purchase “regulatory credits”, or apply for an exemption, but “the biofuels lobby opposes these exemptions, and the EPA just denied 69 waiver requests”.
Chevron CEO Mike Wirth said recently that refineries are shutting down or being repurposed for renewable fuels because “the stated policy of the U.S. government is to reduce demand for the products that refiners produce.” When companies are told that demand for their product will become obsolete, it’s no surprise that they don’t invest in supply.
Energy policy expert Michael Shellenberger notes:
Last month, the Biden administration canceled a massive, one-million acre oil and gas lease in Alaska. And earlier this week, Senator Ron Wyden proposed a large new tax on oil industry profits, which Biden officials say the president may support.
A senior executive at a major U.S. bank that finances oil and gas exploration yesterday told me, “If you were an oil company, why would you invest hundreds of millions of dollars into expanding refining capacity if you thought the federal government or investors would shut you down in the next few years? The narrative coming from the administration is absolutely insane. ”
Shellenberger quotes Climate Change Barbie (Energy Secretary Jennifer Granholm) saying that she wants companies to invest in oil refining now, even thought the Democrats intend to shut them down in “five or ten years”. Jennifer Granholm has no earned degrees or work experience in anything remotely related to energy policy.
What’s the effect of attacking oil refining capacity? Higher gas prices, and higher inflation, across the board:
The result of the Biden Administration’s hostility toward the energy industry is skyrocketing inflation. Where energy prices rose 35% over the last year, all prices rose just 8%.
There are certainly other factors causing inflation, including the ramping up of supply chains following the pandemic, the $1.7 trillion stimulus last year, and China’s lockdown in response to the omicron coronavirus variant. But the non-energy factors behind inflation were temporary, and none explain consistently higher energy prices, which are a major factor in the higher prices of everything, from food to consumer products.
And energy’s role could be even larger than economists can detect. “When you strip out of the [Consumer Price Index] all the items that are linked to energy (air fares, moving/freight, rental cars, delivery services, new and used vehicles),” noted economist David Rosenberg, “the core was +0.36% and the [year-over-year] steadied near 4%. ”
Remember, the Biden administration has already cancelled pipelines, leases and drilling permits. They are re-evaluating previously granted leases and drilling permits. There is a real risk of blackouts this summer because we aren’t producing enough energy. Biden can run around ranting and raving about high gas prices, but he’s causing it with his reliance on global warming radicals.
Shellenberger writes about policies that Biden could be implementing to reduce inflation and lower energy prices:
[M]y sources say that Biden could significantly increase oil/gas production within 12 – 18 months. How? First, they say, he should invoke the National Defense Act for Oil and Gas. This will enable the acceleration of required permits for oil and gas projects, they say. Second, he should announce a national commitment to purchase oil to fill the Strategic Petroleum Reserve (SPR) at a floor of $80/barrel. That will, they say, be a powerful incentive for the oil guys. Third, he should announce trade agreements with the international community to supply them with LNG (liquified natural gas) Doing so will incentivize natural gas production and create a surplus of energy for exports with an “American-First asterisk (keep natural gas storage full while exporting).
Biden’s doing none of that. As a result, Biden’s hostility to expanded energy production could result in recession.
Doing things that would actually work would make Biden’s eco-terrorist handlers angry. So, we’ll keep getting policies that raise gas prices and increase inflation. And a lot of ineffectual squealing from an elderly man who should be retired and enjoying his old age.