After waging war on the industry, Biden wants its help to reduce gas prices.
Wall Street Journal Editorial Board October 15, 2021
Falling poll numbers concentrate the presidential mind, and the result can be startling. Look no further than this nominee for headline of the year from Politico this week: “ Biden team asks oil industry for help to tame gas prices.”
Stranger things have happened, but we can’t recall one. For nine months President Biden has been pursuing policies to squeeze oil-and-gas producers to limit production and eventually go out of business. Having begged OPEC in vain to boost oil production, Mr. Biden is now having to suffer the humiliation of beseeching an American industry he vilifies as destroying the planet to save the day.
This is the politics of falling job approval. Crude oil prices have doubled since the November election, and this week closed above $80 a barrel. This has flowed into gasoline prices paid by voters, with the national average for a gallon up more than $1. A federal agency is warning that Americans who use natural gas for heat could pay 22% to 50% more this winter.
A Reuters report says the White House is now “speaking with U.S. oil and gas producers” about “helping to bring down rising fuel costs.” Politico adds that this “outreach” to the oil industry is “an awkward shift.” No kidding, and it’s worth going down the list of ways this Administration has tried to punish U.S. producers.
At a presidential debate last year, Mr. Biden said he would “transition away from the oil industry.” His first day in office, Mr. Biden revoked the permit for the Keystone XL pipeline, which was supposed to carry oil from Canada and the Bakken Shale to refineries on the Gulf Coast. A week later he issued an order placing a moratorium on new oil-and-gas leases on federal lands and waters.
A court blocked that moratorium, but the Interior Department got the presidential message. It approved a mere 171 drilling permits on federal lands in August, down 75% from April. The Biden Administration also moved to suspend existing leases in Alaska’s Arctic National Wildlife Refuge, and it initiated a fresh review of Alaska’s National Petroleum Reserve that could put it off limits as well. Get it—a “petroleum reserve” will be off limits for petroleum.
Mr. Biden also signed a Congressional resolution that vitiated the Trump Administration’s regulation on methane leaks from fossil-fuel production. The White House probably will replace it with a stringent standard that will make fracking more expensive.
The Administration is also unleashing financial regulators against the industry. The Federal Reserve and other bureaucracies are looking to impose new rules on “climate-related financial risk,” as a May order from Mr. Biden put it. The purpose is to close off sources of funding and raise the cost of capital for the industry, and it’s succeeding.
The Federal Energy Regulatory Commission, which oversees natural-gas pipelines, has signaled it probably will start requiring a climate study before approving even the smallest infrastructure upgrades. That will raise the bar for worthy projects, while creating costs for climate mitigation. As one sign of the regulatory gantlet, two different proposed pipelines in the past two years have won a case at the Supreme Court and then been canceled anyway.
Progressives in Congress, meantime, want to use the Democratic reconciliation bill to punish the industry by doing away with expensing for intangible drilling costs, the oil depletion allowance and more. The bill’s Clean Electricity Performance Program is expressly designed to punish fossil fuels, including natural gas. Mr. Biden and his party have sent signals that are loud and clear, in accord with the larger cultural message that fossil fuels are the new tobacco and the world doesn’t need them.
That isn’t true, as Mr. Biden is finding out the hard way. Despite all the subsidies for renewables, fossil fuels provide about 80% of America’s energy, and high prices weigh on consumers and the economy. The White House says rising energy costs are a global problem, and that’s true in part. As the economy began to revive from the pandemic, it was only natural, and in fact a good sign, that demand for energy would rebound.
But the U.S. has been the world’s leading oil producer and thus a major player in global supply and demand. American crude-oil production in March 2020 was 12.8 million barrels a day, per the Energy Information Administration. That fell sharply when Covid hit, and now it’s barely inching back up. July’s output was only 11.3 million barrels a day, more than 10% below the pre-pandemic trend.
In other words, this is Mr. Biden’s energy crisis. Given the pressure from his wealthy climate donors and the left, he is never going to yell “drill, baby, drill.” But if Mr. Biden is serious about wanting U.S. producers to help reduce prices at the pump and at home, he will change his punitive policies. Progressives will be upset, but his poll numbers might go up.