Now that it’s acutely aware of the political costs associated with inflation, the Biden administration is finally taking action. “How about some immediate help with gas prices?” White House Chief of Staff Ron Klain asked in a November 17 tweet. He answered his own question by linking to a CNN article advertising a forthcoming coordinated release of strategic petroleum reserves by the United States and other major energy consumers abroad. The article’s headline advised readers who are enthused by the declining price of petroleum products in futures markets to “thank China and Joe Biden.”
This episode illustrates the general absurdity of the Democratic Party’s energy policy, to the extent that it has one. The White House is hostile toward fossil fuels—indeed, per White House Press Sec. Jen Psaki, “the rise in gas prices over the long-term makes an even stronger case for doubling down our investment and focus on [a] clean energy option.” But the administration also seems to believe that energy should be as cheap and abundant as possible. Biden officials don’t want to encourage the exploration and exploitation of domestic natural-gas deposits or crude wells, but they also want foreign producers like OPEC to increase supply. They believe that major polluters such as China should limit their use of hydrocarbons but, apparently, not if those limitations contribute to rising consumer costs.
This is incoherent.
The administration’s decision to release 50 million barrels from the Strategic Petroleum Reserve into a nation that consumes roughly 20 million barrels per day isn’t an energy policy. It’s a publicity stunt. It comes on the heels of a truly shameless effort on the Biden administration to intimidate oil and gas companies into reducing energy prices by referring them to the Federal Trade Commission for potential “illegal conduct,” e.g. gouging Americans at the pump. This display of manic gesticulations won’t ease the financial burdens on Americans. Indeed, it showcases how little appetite there is in the White House for genuine solutions to the present energy crunch.
“We’re focused on the economic boom,” White House economic adviser Jared Bernstein told reporters in June. By then, Biden had already signed a nearly $2 trillion Covid relief bill into law, piling more stimulus atop the $4 trillion in emergency spending that Congress approved in 2020. The administration’s primary objective at the time was to secure yet another $4 trillion spending bill, this time focused on “infrastructure” spending.
Although Bernstein insisted that the administration’s members weren’t “sitting on our hands” when it came to the threat posed by inflation, their proposals for curing this “transitory” phenomenon involved more government spending to keep consumer demand high. In other words, more of the same. It somehow came as a shock when Washington’s efforts to subsidize consumer demand created more consumer demand—a phenomenon augmented by the easing of the pandemic’s artificial limits on Americans’ spending habits.
In the fall, consumer prices continued to rise well above expectations, and goods shortages resulting from the pressures of the pandemic on the supply chain only contributed to that condition. Energy is a consumer good like any other, albeit one that lacks the elasticity of other consumer goods that you don’t need to get to work or stave off hypothermia. A comprehensive energy policy that actively responds to these adverse conditions might involve the release of some strategic reserves, but only in concert with policies designed to bring more domestic energy to market. The Biden administration has forsaken the second half of that strategy to satisfy the Democratic Party’s environmental activists.
On the eve of the pandemic, in late 2019, the United States was producing a record 13 million barrels of crude oil and 93 billion cubic feet of natural gas per day. Demand for energy cratered with the arrival of COVID. Subsidizing Americans’ lifestyles and the industries they patronized amid that temporary crisis was, indeed, a worthy priority. But Joe Biden didn’t enter office determined to restore the status quo. He came to overturn it. So for the first several months of his administration, the president put the screws to energy producers.
Biden shut down oil and gas leasing on federal land. He directed executive agencies to eliminate spending that in any way served to subsidize fossil-fuel producers. He forced developers to abandon critical transit networks such as the Keystone XL pipeline. All of this has contributed to the skittishness of the investor class, which was paring back expensive and risky investments in new wells even before the onset of the pandemic. This, along with high energy demand abroad, the reluctance of foreign producers to ramp up production, and increased costs of operations associated with clean-energy mandates, has exacerbated the supply crunch. “All of those different moving pieces took U.S. energy production down by about 2 million barrels a day over the course of the last year, at a time when demand has surged based on the global reopening trade,” one market strategist told Axios reporters in October.
Taken together, this means real pain—pain for American consumers, pain for Americans in the energy sector, and political pain for the White House. And yet, the administration hasn’t curbed its addiction to quick fixes and clever messaging strategies. Rather than address the conditions contributing to the rising cost of consumer prices by closing off the spigot in Washington, Joe Biden’s White House is looking to change the subject again. The voting public doesn’t seem inclined to let them get away with it.