Few presidents have garnered so many self-inflicted wounds in only a year’s time. On President Joe Biden’s long list of unforced errors, energy policy is near the very top, and Americans are paying dearly for it.
The benchmark for crude oil in America has crossed $85 a barrel, a seven-year high. Despite being one of the world’s most richly endowed nations in terms of oil and natural gas deposits, America’s energy output seems to have stagnated. Domestic oil production is still 1.4 million barrels a day below where it was in March 2020. Sadly, the decline of American energy production can be laid directly at the White House’s doorstep.
The president’s latest move has been to reverse the Trump policy which opened additional Alaskan land to drilling. The Bureau of Land Management has effectively closed off 11 million acres from energy producers.
Yet in an almost schizophrenic response, the White House has repeatedly gone to OPEC on bended knee asking for those nations to pump more oil while simultaneously doing everything it can to hamstring domestic production. It has canceled pipelines, curtailed and banned leases for new drilling, pressured banks not to lend to reliable energy producers and campaigned on a plan to eliminate fossil fuels, thus discouraging investment.
Much fanfare was made of the decision to release 50 million barrels of oil from the strategic petroleum reserve (SPR), but that did not address the problem of bottlenecks throughout the energy supply chain. More crude oil did not solve the problem of limited refining capacity and regulations on gasoline blending standards. Much like the administration’s promises to unclog the nation’s ports, the SPR release did not have the desired effect.
The price of crude oil only decreased at the end of 2021 because of fears of economic effects of the omicron variant, not because of the SPR release. Now, oil prices are waxing as those fears are waning.
The White House has previously warned Americans to lower their expectations with Biden at the helm, and the SPR release was no different — the president himself said so. Biden conceded that the action would not “solve high gas prices overnight.” A month and a half later, with oil prices are even higher than when Biden made that admission.
America’s energy problem does not stem from inadequate resources or reserves, but from political malfeasance.
Set against the backdrop of inflation driving up the price of everything, the White House’s impolitic energy policies are truly hampering energy markets, causing prices to ratchet up even faster for consumers.
Since energy impacts every aspect of life, these higher energy prices will quickly trickle down to all other goods and services, making everything more expensive. As if the pain from Biden’s Federal Reserve’s easy money policy was not enough, the White House’s energy policies are delivering the second blow of this one-two punch to Americans’ wallets.
As oil prices continue their relentless climb, gasoline prices are following skyward. Regular unleaded rose 50.8% in 2021 and is poised to go higher still as oil rallies and inflation continues. Home heating oil climbed 41.0% over that same time, ensuring millions of Americans will have to fit substantially higher heating bills into budgets already mauled by inflation.
Not only did this not have to happen, but it does not have to continue. If the White House would just annul its anti-energy policies and abandon its antagonistic rhetoric, oil and gas producers would have the confidence to invest in more production, and prices would naturally fall.
Given the White House’s hostility to reliable energy, however, the unforced errors will likely continue — at America’s expense.
E.J. Antoni is an economist at Texas Public Policy Foundation and a visiting fellow at the Committee to Unleash Prosperity.