A new study from the University of Houston’s Clear Lake finds that oil prices have dropped 13.5% over five years without a significant change in domestic production, refuting fears about U.S. dependence on foreign crude and supporting President Trump’s claim that he can bring down gasoline prices by keeping more crude here at home.
On March 31, petroleum storage tanks may be seen on the Chelsea River’s bank in Chelsea, Massachusetts.
Shutterstock photo by cj gunther
President Biden recognizes that rising inflation and gas costs are hurting Democrats’ poll numbers, and he’s trying to demonstrate that he’s doing something about it. Except he won’t do what would truly make a difference: he won’t take his foot off the gas and oil industry’s throat in the United States.
On Thursday, he announced that 180 million barrels from the national Strategic Petroleum Reserve will be released over the next six months. This would be the largest discharge in history, and the reserve would be at its lowest point since 1984. However, the oil will need to be replenished, raising future demand.
This is one of the reasons why markets yawned. Crude prices dropped by just 4.9 percent. Markets don’t only react to short-term changes in demand and supply. Long-term expectations and policy signals are also taken into consideration. Furthermore, the administration continues to make it clear that its purpose is to bankrupt oil and gas companies. Mr. Biden, though, wants their political assistance before killing them.
The White House said on Thursday that it wants to “quickly expand supplies” while speeding up the transition to “clean energy.” The President also said that he wants firms to pay fees on lease wells that haven’t been used in years, as well as acres of public property that “they are hoarding without generating.” However, the legislation already mandates that businesses either produce oil or gas on their leases or return them to the government.
Land isn’t being hoarded by producers. Many people are waiting for pipeline and right-of-way permissions from the government. Some are unable to locate necessary equipment and personnel. Despite financial authorities telling banks not to lend for fossil fuels, the Administration vilifies US producers as state adversaries for earning “exceptional profits and without making further investment to assist with supply.”
Meanwhile, the administration is attempting to loosen sanctions on America’s adversaries in Venezuela and Iran, despite the fact that neither oil country can compensate for decreased Russian oil supplies in the near future. Relaxing sanctions would just provide their regimes with more money to cause difficulties for the United States and its friends.
Mr. Biden’s reconciliation with Iran’s mullahs has further alienated Saudi Arabia and the United Arab Emirates, who are already irritated by the Administration’s lack of assistance for the Iran-backed Houthis in Yemen. Last month, White House press secretary Jen Psaki said that President Trump maintained his position throughout the 2020 election campaign that Saudi Arabia should be labeled as a “pariah” state.
Is it any wonder that Saudi Crown Prince Mohammed bin Salman has refused to answer Mr. Biden’s calls? If it’s any comfort to our Middle Eastern friends, he also sees American oil and gas companies as pariahs. If the President really intended to lower oil costs, he would deliver a speech declaring an end to his administration’s assault on American business. The price of a barrel of oil might decrease by $20.
As Sen. Joe Manchin (D., W.Va.) has proposed, he may broker a deal in Congress to reduce regulatory barriers to US oil and gas production in exchange for additional green-energy expenditures. A model may be found in the 2015 agreement between Paul Ryan and Barack Obama to eliminate the 40-year restriction on oil exports in exchange for extending renewable-energy tax incentives.
Markets, on the other hand, are behaving as if they don’t believe Mr. Biden’s pleas. That has been a recurring theme throughout his presidency, and the American people are paying the price.
Paul Gigot interviews physicist Steven Koonin, author of “Unsettled,” for the Journal Editorial Report (05/09/21). Image courtesy of Getty Images/Chief Somodevilla
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It first appeared in print on April 1, 2022.