"No more subsidies for fossil fuel energy, no more drilling on federal lands, no more drilling, including offshore. No ability for the oil industry to continue to drill. Period"! Candidate Biden, during a 2020 debate.
Give the President a little credit (and we mean little) for trying to keep his campaign promise. Just look at his record.
In January 2021, President Biden revoked approval for the Keystone XL pipeline and imposed a moratorium on oil and gas leasing on federal lands and waters. Note that roughly 25% of U.S. production comes from federal areas. Note also that by blocking "midstream" pipelines, you also effectively restrict "upstream" production.
In June 2021, the President proposed eliminating a slew of tax benefits for oil, gas and coal producers in favor of electric vehicles and other low-carbon energy alternatives as part of his $6 trillion budget for the next fiscal year. By eliminating these tax provisions, he sharply raised the cost of production, thereby reducing the incentive to produce more oil and natural gas.
In October 2021: President Biden proposed a "methane fee" in his proposed budget bill. The fee would start at $900 per ton in 2023 and increase to $1,500 in 2025. The fee structure would effectively serve as a tax on natural gas production, thereby increasing the cost for both producers and consumers. The budget request also explicitly opposed funding the construction or maintenance of projects that would lower the cost of gas, diesel, or energy derived from fossil fuels.
In March 2022, Congressional Democrats proposed to tax top U.S. oil producers and importers and direct the collected money to Americans. This "windfall profit" legislation would put a 50% tax, charged for a barrel, on the price difference between the current cost of a barrel of oil and the average cost for a barrel between 2015 and 2019.
In March 2022, Biden’s Securities and Exchange Commission (SEC) proposes landmark climate rules. If finalized, the rules would fundamentally overhaul how publicly listed companies divulge detailed information about their climate risks and mitigation strategies. The move is designed to divert investment away from fossil fuel producers.
In the President’s proposed Build Back Better act, there were provisions to increase domestic oil and gas production payments to 20%, increasing bonding and surety requirements to more than 15 times their current levels, imposing a new severance tax, and establishing new annual fees of $10,000 per mile for offshore pipelines.
According to the Wall Street Journal, the Biden administration has leased fewer acres of land for oil and gas drilling on federal lands and waters than any administration in the last 76 years. Biden’s Department of Interior estimated this July that offshore drilling cutbacks would force the U.S. to import more crude oil to plug supply gaps as well as hike energy costs. Halting offshore drilling leases would force over half (51%) of the country’s lost energy production to be replaced by foreign energy imports from abroad, should Biden refuse to issue new offshore leases from 2023 to 2028, according to a report produced by the Bureau of Ocean Energy Management.
If you look at the record, it is obvious to see that the President is doing everything he can to reduce the production of oil and natural gas by American companies. In response, those very same American producers – whether they be the behemoth oil companies or small wildcatters – are not too anxious to increase production in response to higher prices. Why is Biden doing this? The answer is obvious too. It is part of Biden’s broader climate agenda to reduce U.S. greenhouse gas emissions by 50% by 2030 and achieve net-zero emissions by 2050.
What does all this mean? You don’t have to be a long-time commodity trader to know that if you act to sharply decrease supply, the result will be sharply higher prices. Given the importance of crude oil and natural gas to the US economy, it translates into a much higher inflation rate. The big joke is that although the President has just stated that he is not worried about inflation, he is acting otherwise by asking (begging?) “friendly” countries like Venezuela, Saudi Arabia, Iran and other Mideast countries to increase their production, thereby increasing America’s reliance on foreign energy supplies.
Maybe he believes that these dictator-led counties have cleaner environmental records – although we are not aware that there are any effective Environmental Protection Agencies in those countries. Nor do we believe that these countries have an open court system in which citizens and environmental organizations can sue the national oil company in those countries. Then of course, there is Russia – the big bugaboo of the Democratic Party. Care to guess where the price of oil was when Russia invaded Georgia in August 2008; when Russia invaded Crimea in February 2014; and when Russia invaded Ukraine in February 2022? Each and every time, the price was over $100 per barrel.
Quite simply, higher oil prices like the ones we have now hurt the poor and middle class in The United States. It enables despotic countries all over the world to maintain their domestic policies that limit human and religious freedom, and also the trample basic human rights for homosexuals and women. It provides the revenue needed by countries to invade and make war upon their neighbors.
Our Take? The President’s energy policies are a disaster. Those policies, along with the failed energy policies of Europe, are leading to untold human suffering over the next few years.
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