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President Joe Biden delivers remarks on the economy, Wednesday, June 28, 2023, at the Old Post Office in Chicago. (AP Photo/Evan Vucci)
With rising gasoline prices once again threatening U.S. consumers — and Joe Biden’s approval ratings — the president is upping his attacks on domestic energy production. Most recently, the White House canceled oil and gas leases on hundreds of thousands of acres in Alaska’s Arctic National Wildlife Refuge (ANWR) and extended protections against future drilling to millions more.
It is almost unimaginable. Voters give Joe Biden extremely low marks on his handling of the economy, and even lower grades on how he has dealt with inflation. Almost nothing hits consumers harder or makes them angrier than soaring gasoline prices. When Biden took office, the average price of regular gas was $2.39 per gallon; today it is $3.80 — almost 60 percent higher.
You would think that in the interest of self-preservation, if not the welfare of the country, the president would soften his antagonism to our domestic energy industry. If oil prices remain high or move up going into next year’s presidential election, Republicans will blast Biden for having deliberately restricted U.S. oil and gas production. In fact, most GOP candidates are already promising to restore the “Drill, baby, Drill” approach taken by the former president, which led the country to energy independence.
The cancellation of the Alaska leases is just the latest salvo against the oil and gas industry. In July, the White House rolled out higher royalty rates on leases and increased “more than tenfold the cost of the bonds that companies must pay before they start drilling,” reported The New York Times. The regulation changes were estimated to cost the industry $1.8 billion over the next few years — money that otherwise could be going into new wells. The Times explains, “Interior officials characterize the changes as part of a broader shift at the federal agency as it seeks to address climate change by […] making it more expensive for private companies to drill on public lands.”
The number of drilling rigs operating in the U.S. today is 631, down 17 percent from a year ago. By contrast, the number of rigs operating overseas has increased. In addition, the U.S. is currently producing 12.8 million barrels of oil per day, still below the 13.1 million barrels each day we achieved under President Trump.
The ANWR is a potentially rich source of future U.S. oil and gas, with recoverable reserves estimated at as much as 16 billion barrels of oil and natural gas liquids. Potential daily peak production would be over 1 million barrels per day, a significant increment to current output.
It is hard to understand the political calculus here. Despite having green-lighted the large Willow oil project in Alaska, which angered some environmentalists, Biden arguably has the climate vote locked up. He does not need to pile on, but that is what he is doing. He is truly playing with fire; voters do not blame Vladimir Putin or “greedy” oil companies when gas prices soar, they blame Joe Biden.
A recent Pew survey showed a majority of Americans endorse investing in new energy sources and other measures to protect the planet. But fewer than one-third of Americans support abandoning fossil fuels altogether and another 32 percent say the U.S. is not ready to quit them now. An additional 35 percent think the U.S. should never stop using fossil fuels to meet its energy needs. The president must know he’s vulnerable on this issue; after all, in campaign speeches last year he lied about gasoline prices dropping under his watch. CNN, to its credit, forced the White House to correct his false claims.
Today the president tours the country bragging that the rate of inflation has come down, which it has. But voters are aware that Biden’s policies have made inflation worse.
First, Democrats spent too much money, beginning in 2021 with the $1.9 trillion American Rescue Plan, which drove demand for goods through the roof and sparked inflation. As a result, the Federal Reserve has stepped in, engineering one of the most aggressive rate hike cycles in our history. Though raising interest rates from near-zero to over 5 percent has cooled the economy, it has also meant that buying a home is less affordable that it has been in 40 years. Three of the America’s largest bank failures occurred this spring, leading banks to tighten their lending standards, making it tough for businesses to secure credit.
Second, Biden’s war on fossil fuels has handed pricing power back to Saudi Arabia, which cut production to raise prices. Normally, higher prices would ignite a U.S. drilling boom and higher output — under Biden, that won’t happen.
One thing that Biden did which did help curb inflation was to release a significant portion of oil from our Strategic Petroleum Reserve, taking the stockpile to its lowest level since 1983. Frantic over rising gasoline prices and his declining approval numbers, the president drained more than 40 percent of the oil held against an emergency in our SPR. In fact, the only emergency was Biden’s rising unpopularity. He can’t do the same thing again, making the current price rise even more threatening for the president.
Joe Biden and his climate zealots believe that reducing U.S. oil and gas production will save the planet. It is an idiotic premise. Oil demand globally is expected to grow by 2.2 million barrels per day this year, even as China’s economy is struggling, and there is no slowdown in sight. The Biden administration’s policies will require that increased demand be met from producing countries with far worse emissions standards than are in effect in the U.S. Not only will the climate suffer, so too will U.S. consumers, who may exact revenge on Joe Biden next year at the voting booth.
Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company.
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