It’s no secret that the Biden Administration is trying desperately to reduce inflationary pressures. The administration faces special scrutiny in the energy sector, which has seen prices increase over 30 percent compared to this time last year. However, while the president has called on oil producers to lower gas prices, his policies have consistently contradicted this goal and in many instances have made it harder for producers to provide energy to Americans. This mixed messaging makes it difficult to discern how seriously the executive branch is taking the issue, which cuts disposable income and raises prices throughout the economy.
The U.S. is a major global energy producer, second only to China as of 2019. In fact, 2019 was the first time in 62 years that the U.S. produced more energy than it consumed and exported more energy than it imported. Ordinarily, this trend should have placed the United States on a stable energy footing, but recent inflationary trends have shown the industry is unable to meet consumer demand. Contradictions in the Biden White House are the cause.
Inflation reached a record 9.1 percent in June 2022, a high not seen since 1981. Inflation is particularly noticeable in the energy sector, with prices rising over 30 percent. In comparison, the average cost of electricity increased by over 12 percent since last year. While retail gasoline prices dipped in July to an average of $4.56 per gallon, this still represents an increase of over 45 percent compared to last year. High energy prices not only impact those who drive but those who need to heat or cool homes. They also force businesses to raise prices as the cost of producing goods and services increases.
Prior to tweeting at gas companies to lower their prices, the administration displayed overt hostility toward fossil fuels, even though nonrenewable sources supply 60 percent of the country’s energy. While the administration ran on a campaign promise of zero drilling on federal lands, Biden’s first years actually topped former president Trump’s first year by almost 900 more permits. The tides turned once again in 2021, with a permitting slowdown.
Biden boasted this March that his administration had approved 9,000 drilling permits and pointed to them as evidence of his pro-energy bona fides. In the same speech, however, Biden blamed energy companies for not using the existing permits. Last-minute efforts are too little too late to change the tide in an industry that been subjected to such hostility.
According to the American Petroleum Institute, oil production is “not as simple as turning on a spigot” but requires significant capital investment and labor. Oil companies make drilling plans based on economic forecasts for at least a year out.” Therefore, decisions about where and when to drill are heavily influenced by perceptions of future policy. The American Petroleum Institute has further stated it can take up to 5.5 years from discovery to the first energy production. Unlike the administration’s energy policy, which has been full of contradictions, these companies cannot turn on a dime.
This delay from policy to impact comes into focus through the infamous example of the 1,700 miles of Keystone XL Pipeline, which was supposed to carry oil from Alberta, Canada to Oklahoma, and for which Biden revoked the permit on his first day in office.
Fast forward to 2022, and Biden issued an executive order banning the import of oil from Russia. While geopolitical realities prompted this decision, the fact remains that the U.S. had been importing 700,000 barrels of oil a day from Russia. The Keystone XL pipeline, which was forecasted to carry 830,000 barrels of oil a day, would have been able to make up the difference, allowing the country to better absorb the supply shock.
While the Biden Administration claims to want to lower energy prices, the reality remains that hostile rhetoric, permitting delays and a desire to radically disrupt the country’s relationship with fossil fuels represents a contradiction between goals and reality. Unfortunately, American consumers are forced to bear the brunt of this contradiction in the form of higher energy prices. Rather than constraining supply, the administration must unleash the energy sector and allow it to meet consumer demands.