OPINION:
Earlier this week, President Biden just couldn’t resist exposing either his ignorance about energy, his hostility to affordable energy, or both.
He threatened oil companies with a tax on their profits. Such a tax would, of course, be paid for by consumers and — rather than increase production and reduce prices, like Mr. Biden says he wants — would do the exact opposite and reduce production and increase prices of gasoline and other oil products.
Here’s a news flash: The president and his team don’t care.
The call for a tax on profits is the just like the proposed suspension of the federal gas tax, the very real emptying of crude oil from the Strategic Petroleum Reserve or the limits on exports that are currently being considered. All of these actions — and the associated tiresome rhetoric — are all intended to convince the voters that Team Biden really cares about high gasoline prices.
They don’t. They are perfectly content to have you pay high gas prices. There’s no way any of their fantasies about climate change can happen without high energy prices, specifically high oil and natural gas prices.
They just don’t want you to blame them for those prices. So, naturally, they are looking around for someone else to blame. It is no surprise that they’ve landed on oil companies.
Unfortunately for them, oil companies don’t set the price of oil. Neither does any one particular producer or consumer. The price is set in a global market with lots of buyers and lots of sellers who agree on a price and then exchange cash for oil. This sort of thing happens in all kinds of markets all over the planet each day.
Prices of oil are going up because demand is high relative to supply. Despite the lie the president tells you, this is not because of the war in Ukraine. That conflict has not prevented any Russian oil from coming to the global market.
The imbalance between demand and supply is primarily because of underinvestment in oil fields over the last decade. For example, Josh Young, the chief investment officer at Bison Energy, notes that investment in U.S. oil fields peaked in 2012 at about $16.5 billion dollars and dropped as low as $3.9 billion in 2021.
Last summer, the International Energy Agency concluded: “Our estimates for 2022 suggest that today’s aggregate fossil fuel investment is broadly aligned with the near-term needs of a scenario in which countries hit their climate pledges.”
In other words, the IEA acknowledges the reduced investment in oil and gas projects and considers it a good thing because that lack of investment will ultimately mean less oil and natural gas and, consequently, help countries meet their climate pledges. The IEA — like Team Biden — is mostly unconcerned about high energy prices.
While they are not responsible for global markets, Team Biden is responsible for the relentless downward pressure on American production of oil. Their emphasis on environmental, social, and governance-based investing means that investors are steered away from investments in oil and natural gas. The now routine propaganda — mostly from the government — about the mythology of net-zero greenhouse gas emissions and an energy “transition” that has destroyed Europe’s energy system and is chewing through its economy further drives underinvestment in oil and natural gas.
Is there a different answer?
Well, the Committee to Unleash Prosperity has estimated that American oil production would be about 30% higher (or about 3 million barrels a day more) if Team Biden had just kept President Donald Trump’s policies in place.
That would be too easy. Team Biden has no intention of addressing the underlying problem of national and global underinvestment in oil and gas production and refineries over the last few years. To the contrary, their actions — weaponizing financial regulators like the Securities and Exchange Commission against affordable energy, not allowing production on federal lands, even something as trivial as canceling the Keystone pipeline — indicate that they intend to make the problem worse.
If he were serious about the problem, Mr. Biden — or whoever is president nowadays — would clearly and directly reject notions of net zero, let go of the fantasy of banning gasoline-powered cars, and cease the jihad against oil and gas being waged by its own financial regulators.
The chances of all that happening are zero.
Mr. Biden and his crew want high gas prices. Those prices serve their purposes. All of the hand-waving and hand-wringing about oil companies and their profits, and all of the show associated with draining pretty much all of our strategic reserves, is a dangerous charade.
When you go to vote, remember that there is a big and obvious difference between what Team Biden says they care about and what they do care about. Here’s a quick voter guide: They don’t care about you.
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