One crisis after another—it seems like Biden can’t catch a break. But what if Biden’s failure to act was just that? An act to ensure his Green New Deal was the only option left on the table when all else failed. We’ll look at global events taking place and policies coming out that seem to either point to brilliant strategy or outright insanity.
Setting the Stage: Biden’s War on Oil
The U.S. State Department issued a statement in 2014 that the American energy system desperately needed heavy crude from Canada to supplement declining imports from Mexico and Venezuela. The report was published under the Obama-Biden administration and said that without safe and secure pipeline capacity to get more heavy crude from Canada, the industry had to rely more on trucking and rail shipments. As you might surmise, moving by truck and rail is far more harmful to the environment than a pipeline. The Keystone Pipeline XL would have served just such a purpose of environmentally-sensitive, safe, and secure transport.
Unfortunately, Biden canceled the cross-border permit literally on day one in office. If Keystone XL hadn’t been canceled, the US could have been pumping up to 900,000 barrels of crude oil into the U.S. economy. Instead, Biden has made pleas for oil to the authoritarian dictatorship in Venezuela and to Saudi Arabia, where he vowed to punish the kingdom after the brutal assassination of Jamal Khashoggi.
Biden also continues to restrict access to new drilling on federal lands and waters. The Administration just released a five-year plan that aims to block all new offshore oil drilling in the Atlantic and Pacific oceans, with only limited drilling in the Gulf of Mexico and a small portion off the coast of Alaska. The plan also allows the Administration to conduct zero lease sales for five years. As we’ll see, the radical shift merely sets the groundwork for global energy insecurity.
“As Long as it Takes”—Biden on Americans Paying More for Gas
At the NATO Summit in Madrid, Biden was asked how long Americans should expect to pay high gas prices at the pump. Biden’s quick response—” as long as it takes.” From the top down, the policies of the Administration prioritize politics over bringing real relief to struggling Americans.
Biden’s economists are not running models for a solution; they are modeling for “doomsday scenarios” like the price of oil skyrocketing to $200 a barrel and what that would mean for the average American.
States like democratically-led California are following party lines with the President, with Governor Newsome announcing a timeline to end the sale of gas vehicles by 2035 and many California cities banning new gas stations. Again, this highlights a radical approach during a time when the average American family is struggling under record high gas prices and the highest inflation rate in 40 years.
Not fixing the issue or alleviating prices for consumers, the President and those wishing to emulate his policies are doubling down to restrain oil and pushing forward with a green agenda regardless of the cost to the American consumer.
Forgetting the Millions Who Work in Oil and Gas
The Biden Administration has not been shy in its distaste for oil and gas. It has repeatedly brought up the idea of a “transition” away from fossil fuels—something Biden campaigned heavily on. They shut down Keystone XL on day one, snubbed top oil executives in a highly-publicized White House meeting, and Biden was widely mocked for a Tweet in which he called on companies running gas stations to bring down the cost at the pump. But all of these antics fail to recognize the incredible contribution the oil and gas industry makes to the U.S. economy.
A study commissioned by the American Petroleum Institute found that some 2.6 million Americans are directly employed in the oil and gas industry, with another 9.8 million supporting it. The Bureau of Labor and Statistics (BLS) pegs the employed portion of the civilian labor force in June 2022 at a little more than 158 million. That means that the oil and gas industry accounts for 7.8% of the total U.S. employment. The API estimates the overall contribution is as much as 8% of America’s GDP.
On another side of the same coin, funds that have touted “sustainability” as their focus have been historically underweight in oil and gas stocks, but that trend is reversing course. These funds have been underperforming, and investors are waking up to the fact that oil and gas companies are the real leaders in the “decarbonized economy”, with huge investments made towards net zero. Earlier this month, the European Parliament changed rules to label investments in gas and nuclear power plants as “climate-friendly.”
Simply put, reckless abandonment of the industry is the abandonment of more than 12 million Americans who go to work every day to ensure the nation has the fuel it needs to live, work, play, and defend itself when necessary. These Americans are the true pioneers in a safe and sustainable energy future. Turning your back on them is a slap in the face of the progress the Administration purports to hold so dear.
Setting Putin Up with a Monopoly
The “Putin Price Hike” is a popular moniker to explain high gas prices, but any economist can tell you that the war alone is not the sole driver in such a volatile commodities market. However, the war has showcased just how effectively Putin is gaining control of global energy. With one “hand on the valve,” Putin has masterfully brought fear to international markets.
Just last week, Russian gas giant, Gazprom, cited force majeure as the reason they couldn’t deliver gas to Germany. Doing so voids contractual obligations when a business faces an event beyond its control. The world held its breath as Russia seemed to hold all the cards. At the 11th hour, Gazprom finally resumed gas flows to Germany via the Nord Stream 1 pipeline. At a time when Germany is having brownouts and all across Europe record heat is producing rampant wildfires, Russia showed just how easily it could turn the tap on and off.
In a global economy, the actions of one nation affect all nations. The U.S. has done little to ensure domestic energy security, which means ripples in the market like this one in Germany will be felt in the U.S. and, ultimately, by the U.S. consumer.
Non-Strategically Tapping Out the SPR
Even though President Biden initiated a series of releases from the SPR, remember that large portions are being sent to other nations like China, India, and Europe. The Administration touted the unprecedented move as a means to “lower domestic fuel prices” while at the same time making plans to export outside the U.S.
As predicted, even though a myriad of factors—such as yet another lockdown in China (the world’s number one oil importer), less domestic travel, and excess supply—have all decreased demand and therefore decreased the price per barrel of oil, the White House was lightning fast to start a victory lap touting Biden’s actions as the main reason. “This is so exciting, guys,” WH Press Secretary Karine Jean-Pierre can be heard gushing about falling gas prices in a video released on Twitter.
Global Unrest—Dominos Fall in Sri Lanka & Panama
The truly spine-tingling events that need to draw concerned readers’ attention are what’s happening in Sri Lanka and Panama, where civil unrest has led to violent mobs rioting and even seizing control of government assets. Both of these incidents have a variety of socio-economic forces that contributed, but they also hold in common a resounding theme – desperation.
As food and fuel costs become untenable, and the populace can no longer support themselves, what choice do they have? These events, surprisingly, have received only limited coverage on mainstream news outlets. However, they both seem to underpin the point that little is being done on a global scale to alleviate the real-world issues that a lack of affordable energy is creating today. Civil unrest threatens to disrupt vital shipping through the Panama Canal in Panama, which would only further disrupt our global logistics woes. Remember cargo ships sitting moored off the coast of California for months during COVID? All rhetoric aside, disruptions are costly, and they have real repercussions.
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Tyler Reed began his career in the world of finance managing a portfolio of municipal bonds at the Bank of New York Mellon. Four years later, he led the Marketing and Business Development team at a high-profile civil engineering firm with a focus on energy development in federal, state, and local pursuits and picked up an Executive MBA from the University of Florida along the way. Following an entrepreneurial spirit, he founded a content writing agency servicing marketing agencies, PR firms, and enterprise accounts on a global scale. A sought-after television personality and featured writer in too many leading publications to list, his penchant for research delivers crisp and intelligent prose his audience continually craves.
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