Biden Delivers on Promise To Hamstring Domestic Energy Industry

This week’s Courier Herald column:

During a primary debate, President Joe Biden was asked “Would there be any place for fossil fuels, including coal and fracking, in a Biden administration?”  Then candidate Biden’s answer was “No. We would work it out…we would make sure it’s eliminated and no more subsidies for either one of those…any fossil fuels.”

You could take the first word, “No”, as a direct answer.  Or you can dance on the head of a pin and reach for the nuance of the additional comments.  Let’s be charitable here, and give him and his administration credit for what they’ve been trying to achieve.

The Biden Administration has taken steps to shift the costs of fossil fuels higher and renewable energy lower.  These are market forces, but the federal government has the ability – and frequent actions – to put its very large thumbs on the market’s scales.

In his first days on the job, President Biden began to do just that.  A broad executive order on climate change was among his first actions in office.

The Keystone XL pipeline was cancelled, because we were told we didn’t need the oil from Canada. 

A Budget proposal from May 2021 would have eliminated $35 Billion in fossil fuel industry tax benefits.  The now-on-life-support Build Back Better Plan included $325 Billion in green energy subsidies.  A clear shift in priorities for those in the market to read explicit tea leaves, and vote with their investment dollars.

President Biden paused new leases on federally owned land.  Federal land currently counts for about one quarter of US domestic fossil fuel use, according to the US geological survey.  Leases already granted in Alaska by the Trump administration were cancelled. 

Just two weeks ago, as gas prices were already beginning to make parabolic moves upward, the Biden Administration paused new oil and gas leases because a federal judge ruled they could not increase the embedded environmental cost factor from $7 per ton to $51 per ton – an increase of more than 700%.  Economic signals, even as world-wide supply is being diminished, are still being sent from the Biden Administration that new drilling for oil is to be discouraged via market forces.

Just in case these signals were missed, Cabinet members have filled in the gaps.  On March 4th, U.S. Labor Secretary Marty Walsh told Fox Business that more domestic drilling has not been on the table of discussion to this point.

Energy Secretary Jennifer Granholm was asked by Bloomberg TV in November what her plan was to increase energy production.  Her response was extended laughter followed by “That is hilarious.” and added a wish that she had a magic wand.  This administration doesn’t need a magic wand, they just need to understand what the “invisible hands” of economics are doing because of their very visible, very consistent anti-fossil fuel actions.

It’s interesting to see the quick 180 degree turn from this administration who seems to want a federal government hand in every issue to suddenly believe the “free market” is the only one who can solve this problem, and continues to release talking points that the President is powerless to help beyond possibly releasing strategic oil reserves.  It shouldn’t be a surprise from a President who chided private industry in response to inflation in his State of the Union speech to “Lower your costs, not your wages” as if employers haven’t seen virtually all of their costs – wages, energy, commodity inputs – spiraling upward.

Suddenly, Secretary Granholm is demanding producers invest capital in more energy production – without, of course, mentioning in any way the methodical year of putting every road block imaginable into ensuring this doesn’t happen.  White House Press Secretary Jen Psaki dismissed a permit question as “What additional permits do they need?  I don’t think they need an embroidered invitation to drill?”

Perhaps she or someone from her administration should actually talk to those who say they would like to drill, but have found the capital to do so unavailable from banks and investors, or permits unavailable?  CNBC has spent this week in Houston at a conference with industry leaders, and CEO after CEO has admitted they have had little to no contact from the White House.

This administration is willing to go hat in hand to murderous dictators in Iran, Venezuela, and other OPEC+ producers to replace Russian oil, but somehow finds it too difficult to make a few phone calls to Texas.  They won’t, because their policies are working exactly as they designed.

The domestic oil producers are working with the “rational expectations” they have been given.  It’s clear that the Biden Administration, Congress, and partisan primary voters demanded the costs of petroleum go up to account for negative environmental externalities.  It’s unfortunate for the rest of us that they refuse to balance these costs against those of national and economic security.

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