After reaching all-time highs this summer, gas prices have recently fallen modestly from their peak. The Biden administration has of course tried to take credit for the relief, but it had apparently forgotten that as prices were rising, President Biden said that he couldn’t “click a switch” to “bring down the cost of gasoline” in the “near term.”
Which is it, then? Can the administration manage fuel prices, or is it merely a bystander, and even a victim of outside, uncontrollable events, as Joe Biden has claimed to be?
The truth is that elected officials can’t directly control gas prices, but their policies -- both proposed and enacted -- can have a real impact on the market through which the forces of supply and demand determine prices.
At a 2019 New Hampshire event, Biden told a supporter to “look me in the eyes” and promised that if elected, “I guarantee you we’re going to end fossil fuels.”
It was more than an empty campaign promise.
Once in office, Biden set off a series of policy bombs that clearly told energy companies that he was going to shackle their industry. Almost immediately, he shut down new oil and gas leases on federal lands and waters, even as prices were rising. A federal judge blocked the pause a few months later, but the administration challenged the decision last summer – even as prices were climbing. The White House lost that round, but tried again in February, delaying decisions on new lease and enacting a de facto shutdown – again, as prices continued to go up.
Biden also moved quickly to kill the Keystone XL pipeline project, which would have pumped as much as 900,000 barrels of crude into the U.S. for refining, and, at roughly 300 miles, was about one-fourth completed. In another first-day edict, this president put the U.S. back in the chains of the international Paris climate agreement only months after President Donald Trump had withdrawn from it. Though it satisfied much of the global political class, the decision would do anything but lower energy costs.
Then a little more than a year ago, Biden “suspended all activities related to the implementation of the Coastal Plain Oil and Gas Leasing Program in the Arctic National Wildlife Refuge,” reversing a previous approval by Trump.
More recently, on almost the very day that prices peaked, Energy Secretary Jennifer Granholm told CNN that “we need” gasoline supplies to increase. But within an instant, she added that “of course in five or 10 years, actually in the immediate, we are also pressing on the accelerator if you will to move toward clean energy so that we don’t have to be under the thumb of petro-dictators.”
So, the administration was asking oil companies to boost their output at the very same time signaling that there is no long-term benefit in doing so
It’s not just the administration. House Democrats dragged the CEOs of Exxon Mobil, Chevron, BP and Royal Dutch Shell before the House Oversight and Reform Committee in part for the purpose of bullying them into cutting production. Democratic Rep. Ro Khanna of California went so far as to badger Chevron CEO Michael Wirth, asking if he was “embarrassed as an American company that your production is going up while European counterparts are going down?”
Investors and oil company executives, who plan ahead for not just years but decades, are not unaware of the administration’s policy goals. Incentives to invest in an industry that the White House says it wants to put out of business have been devalued. Capital markets respond to public policy by shifting money away from the affected sectors. When a president tells the world “we’re going through an incredible transition” that will lead us to be “less reliant on fossil fuels,” as Biden has, resources for expensive, long-term repairs; facility upgrades; and new construction tend to disappear. When supplies fall, as they inevitably will, prices have to rise.
In lawmakers’ blind rush to eliminate fossil fuels, they can’t see that these conventional resources still have important roles. JPMorgan CEO Jamie Dimon, however, has noticed. “Because of high oil and gas prices, the world is turning back” to dirtier coal plants, he said. So if we’re to “solve climate [change], it is not against climate [change] for America to boost more oil and gas.” It’s a reasonable proposition which would have the opposite effect on prices than the Biden policies have had.
