Since day one, he’s tried to limit fossil-fuel supplies, and
we’re all paying for it.
Wall St. Journal
June 22, 2022
Trying to limit the political damage of skyrocketing
gasoline prices, the Biden administration on Sunday trotted out Energy
Secretary Jennifer Granholm. They’d have been better off if she’d gone to Mass.
Appearing on CNN’s “State of the Union,” Ms. Granholm said
“we need to have increased production, so that everyday citizens in America will
not be feeling this pain that they’re feeling right now.”
The context of the discussion was President Biden’s upcoming
visit to the Gulf Cooperation Council, where he’ll ask the Saudis to increase
oil production. Ms. Granholm got the general principle right: The answer to
high prices is increased supply. What she got wrong was locating the solution
some 7,500 miles away in Middle Eastern oil fields.
She didn’t have much of a choice. Since taking office, Mr.
Biden has labored hard to make American fossil-fuel production more costly so
green energy alternatives become more attractive. He succeeded, and the result
is record prices.
On his first day in office, Mr. Biden canceled the Keystone
XL pipeline and halted new leases in Alaska’s Arctic National Wildlife Refuge.
A week later, he banned new oil and gas leases on federal lands and waters, and
in June he shut down exploration on existing leases in ANWR. In October, he
increased the regulatory burdens on building pipelines and other
infrastructure. This February he limited leasing in Alaska’s National Petroleum
Reserve. At every turn Team Biden has worked to restrict and reduce domestic
oil and gas production.
Almost a year after a federal judge enjoined the White House
from implementing its pause on leases in federal lands and waters, the
administration in April finally offered 144,400 acres for exploration—only 20%
of the acreage originally slated for this tranche of leases. The administration
also raised the federal royalty by 50%, increasing the cost on American
consumers. It nominated regulatory officials hostile to fossil fuels and issued
climate disclosure rules that made lenders skittish about providing capital.
Team Biden got what it wanted: Daily U.S. oil production
dropped from 12.29 million barrels in 2019 to an estimated 11.85 million in
2022, well after demand had rebounded from the pandemic.
Mr. Biden blames Vladimir Putin, but prices rose quite a bit
before Russia invaded Ukraine. In January 2021, the average price of regular
gasoline was $2.33 a gallon. By February 2022, it was up to $3.52. As of May,
the average price was $4.44; so 56% of that price rise predated the invasion.
After doing everything in his power to constrict American
supply, Mr. Biden is now threatening a windfall-profits tax, even though oil
and gas production saw only a 4.7% net profit margin last year. Compare that
with Microsoft’s 39% net margin, Facebook’s 33%, Google’s 30% and Apple’s 27%.
Yet Mr. Biden won’t confiscate tech company profits.
The president now proposes a three-month holiday from the
18.4-cent-a-gallon federal gasoline tax. But this would raise demand and
increase the deficit while doing nothing to boost production.
If Mr. Biden were serious about lowering fuel prices, he’d
follow the advice of President Clinton’s Treasury Secretary Larry Summers, who
suggested Sunday “an all-in more- energy-supply approach that emphasizes freeing
up fossil fuels.” That means undoing all of Mr. Biden’s earlier decisions that
pushed oil and gas prices up. It’s important to start now. It took a year and a
half of bad actions to get here; it’ll take time to increase supply and thereby
produce downward pressure on prices.
To begin, Mr. Biden should stop the Environmental Protection
Agency’s assault on small U.S. refineries, which produce roughly 30% of
America’s gasoline and diesel. Longstanding EPA regulations require them to
blend renewable fuel into their product or purchase special credits in a
marketplace, but most can’t blend in ethanol because it’s too corrosive to be
moved through pipelines. The EPA has long solved this problem by routinely
granting these refiners exemptions if no credits are available, as provided by
Earlier this month, the EPA announced it is essentially
ending exemptions and punishing refiners by retroactively denying exemptions
back to 2016, requiring the industry to pay billions. Even the EPA admits
consumers will have to cover these costs. Industry leaders fear some refineries
won’t be able to operate under the new regime and will instead shut down,
reducing the supply of gasoline and diesel still further.
In pursuit of climate goals, Mr. Biden’s policies raised costs
for oil and gas and reduced supply. The result is higher gasoline and diesel
prices at a time when inflation is already driving up the price of everything
else. Mr. Biden got what he wanted, and it’s making life harder for ordinary
Americans. Because of that, there will be hell for Democrats to pay come