Market Institute President Charles Sauer has a new piece in the Washington Examiner’s Restoring America series on climbing oil prices and the government’s policy response.
Here’s an excerpt.
“When gas prices climbed rapidly, the Biden administration blamed the oil companies and Russian President Vladimir Putin.
What the administration and Democrats in Congress cannot admit, at least not without pain at election time, is that it was their explicit intent to reduce domestic oil and gas production, and record-high gasoline prices have not altered that strategy. Democrats believe that higher gas prices will nudge people to buy electric cars and solar panels for their houses and drive less, reducing greenhouse gas emissions.
Some of that has indeed happened, but those who cannot afford a Tesla or rooftop solar panels are stuck paying more.
One part of the administration’s plan to make oil and gas more scarce has been to put a moratorium on oil leases in Alaska and the Gulf of Mexico, which the courts recently ruled was illegal. Drilling permits on public lands in the rest of the country have plunged in recent months, and in January, the Bureau of Land Management approved just 95 new permits, over 50% lower than a year ago.
The administration is boxed in on its energy agenda to some degree, as it remains beholden to a liberal Democratic Congress to pass legislation. The last congressional hearing dealing with energy prices and domestic exploration culminated in high-ranking Democrats asking U.S. energy companies to pledge to lower oil production.
The white-hot economy has come roaring back from the COVID-19-induced recession, and inflation has crept into the system. High gasoline prices are just one manifestation of this inflation, and it has responded by blaming businesses for price gouging, oil companies for deliberately underproducing, and Putin for creating the geopolitical crisis that accelerated the rise in oil prices.
While it’s true that the U.S. embargo on Russian oil raised prices, the reflexive antipathy toward private businesses is well off the mark. For starters, oil prices are set in a global market, and no producer has any ability to affect prices. Accusing them of price gouging is a rhetorical dog whistle for the party’s collectivist core.
What’s more, the White House’s accusations that oil producers don’t want to produce and that there are leased lands not being developed are nonsensical. The proportion of leases that are active is approaching all-time highs, which makes sense given current prices. Then there’s the tired leased land talking point — it takes time to explore land, conduct an environmental analysis, determine if it has oil and where it is, procure scarce equipment, workers, and resources needed to start production, and determine whether the project will be profitable for shareholders. There also happens to be thousands of existing leases frozen in litigation. None of the administration’s proposals solve the problem of high gas prices, but they do make the problem harder to solve.”