GoLocalProv | Fixing America’s Incoherent Energy Policy
Monday, June 27, 2022
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Energy costs for US consumers will only decline when global supply begins to match global demand. In the face of the energy crisis, voters shouldn’t blame President Biden for the hand he was dealt, but they can criticize how the administration is playing that hand. As William Galston of the Brookings Institution wrote in the Wall Street Journal, “We need something we haven’t had in a long time: a comprehensive energy strategy based on realistic premises about supply, technology and politics.
Unfortunately, President Biden’s energy policies have been both inconsistent and inconsistent. His administration has failed to articulate an “all of the above energy strategy” dealing with fossil fuels, nuclear power and renewable green energy. He declared a “climate emergency” but failed to present the American people with a transition program that was affordable, technologically possible, and aligned with public needs.
Since his first days in office, the president has effectively ignored closing the gap between gasoline demand and supply. As this challenge is exacerbated by Russia’s invasion of Ukraine, the Biden team has canceled the Keystone XL pipeline, stopped new leases in the Alaska Arctic Wildlife Refuge, and limited new oil and gas leases. gas companies on federal lands and waters, and increased regulatory burdens on the construction of energy infrastructure. These initiatives limited and reduced domestic oil and gas production and contributed five dollars per gallon of gasoline.
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The figures confirm this conclusion. Daily oil production in the United States fell from 12.3 million barrels in 2019 to 11.9 million this year, as demand accelerated as the economy woke up from the pandemic-induced shutdown . While the war in Ukraine has impacted gasoline prices, in January 2021 the average price at the pump was $2.33 per gallon. In May 2022, the average price was $4.44, suggesting that 56% of the price increase predates Russian aggression.
In response to escalating energy costs, the administration has come up with some short-term gimmicks that might boost demand but don’t impact oil and gas production. The shift in the Strategic Petroleum Reserve may have increased global fuel demand. When the strategic reserve was first tapped, the price of a gallon of gasoline was $3.50 per gallon. More recently, the president asked Congress to suspend the federal gasoline tax of 18.4 cents per gallon for three months. Assuming one uses two gallons of gasoline per day, the savings would be about thirty-three dollars for ninety days. A compromise for the three-month federal gas tax exemption, as the Wall Street Journal wrote, would ‘steal’ the Highway Trust Fund of about $25 billion intended to fund the Bipartisan Infrastructure. Bill.
Recently, Energy Secretary Jennifer Grandholm said, “We need to ramp up production, so ordinary Americans don’t feel the pain they’re feeling right now.” To his credit, President Biden has asked the oil industry to increase production and refinery output. But has the president considered the next obvious question? Why would the oil industry be willing to invest millions of dollars in production in the short term if the administration’s goal is to limit its ability to do business? The Biden administration should challenge the oil and gas industry not only to fight climate change, but also to create warp speed in the operation of energy production, as has been done to facilitate development vaccination against COVID.
To untangle our confused energy policy, the President must put ideology aside and work with the oil and gas industry to rapidly advance the next generation of environmentally responsible oil and gas production, affordable energy-efficient products and geothermal and nuclear technologies. The nation is waiting for President Biden to recommend a realistic and affordable energy plan based on what former Treasurer Larry Summers called “a comprehensive approach to energy supply.”
Gary Sasse is the founding director of the Hassenfeld Institute for Public Leadership at Bryant University