Biden Attacks Oil Industry Even as He Demands More Production
Biden Attacks Oil Industry Even as He Demands More Production
“We’re changing people’s lives!”
By Joseph Klein
“I don’t want to hear any more of these lies about reckless spending,” President Joe Biden shouted out in remarks that he delivered to AFL-CIO union members in Philadelphia on June 14th. “We’re changing people’s lives.”
President Biden sure has changed Americans’ lives since he took office. Americans are far worse off today on his watch.
As Republican Senator John Kennedy from Louisiana put it, “Forty-year-high inflation, [baby] formula shortages, and $5 gas are changing lives.”
President Biden promoted his green energy proposals during his AFL-CIO conference remarks. He claimed, for example, that a “tax credit for modernizing the homes…would help finally make America truly energy independent.”
America was already energy independent when former President Donald Trump left office. President Biden’s war on the fossil fuel industry changed all that, helping to bring about record high gasoline prices at the pump. And prices were rising way before Vladimir Putin invaded Ukraine.
President Biden’s own fossil fuel energy killing policies have forced him to go hat in hand to the Saudi regime’s dictators and beg them to produce more oil.
After doing everything he could to follow through on his campaign promise that “we’re going to end fossil fuels,” President Biden is now blaming the domestic oil industry for not producing enough oil at home.
Abraham Lincoln defined such a hypocrite this way: “The man who murdered his parents, and then pleaded for mercy on the grounds that he was an orphan.”
President Biden sent a letter dated June 14th to several oil companies calling upon them to “ take immediate actions to increase the supply of gasoline, diesel, and other refined product.”
But instead of seeking a mutually agreeable path forward to help relieve the oil product supply crunch, Biden attacked the oil companies once again.
“At a time of war – historically high refinery profit margins being passed directly onto American families are not acceptable,” the president said in his letter. He threatened to use “all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term.”
What “time of war” is President Biden talking about? If the Commander-in-Chief is referring to the war in Ukraine, he needs to be reminded that the United States is not at war in Ukraine – at least not at the present time.
Moreover, the president has done everything in his power since taking office to disincentivize investments to increase oil production in the United States, including investments in refinery infrastructure to expand refinery capacity, output, and transport.
Now President Biden is browbeating oil refinery companies to produce more gasoline and diesel while telling them that they must make less profit in doing so – the hallmark of centralized government planning rather than free enterprise.
President Biden is a globalist at heart who ardently supports the United Nations, including the UN Paris Agreement on Climate Change. Yet President Biden’s demands for more immediate oil production fly in the face of the climate change alarm bells rung just recently by United Nations Secretary General Antonio Guterres. Secretary General Guterres said that new funding for fossil fuel exploration and production infrastructure is “delusional.”
Oil production and sales of refined products respond to the market forces of supply and demand, from the price of crude oil to the wholesale prices of refined oil products and finally to the retail prices charged at gas stations. It is basic Economics 101.
The Biden administration’s own Department of Energy explained how this works in the context of refining crude oil.
As the U.S. Energy Information Administration (EIA) forecasted on June 10th, the “EIA expects high refinery margins to contribute to increasing fuel production this summer… we forecast that U.S. refinery utilization will be relatively high this summer in response to strong wholesale prices for petroleum products, such as diesel and gasoline, which have increased more than the price of the crude oil used to make them.”
“The price difference between the price of crude oil and the wholesale price of a refined petroleum product reflects the value of refining crude oil,” the EIA went on to explain. “This difference, known as the crack spread, can indicate refining margins and profitability. In response to these high prices, we expect that refinery utilization will reach a monthly average level of 96% twice this summer, near the upper limits of what refiners can consistently maintain.”
It took over a year from the onset of the COVID-19 pandemic for U.S. oil refiners to make a profit. Most oil companies experienced losses of billions of dollars during 2020, when demand plummeted.
Now that demand for gasoline is soaring and oil companies are doing well again, Biden is lashing out. He attacks the profit margins that are incentivizing oil refineries to increase capacity to their upper practical limits.
The American Petroleum Institute (API) sent a letter to President Biden asking him to change the direction of his anti-fossil fuel policies for the good of the country.
“While members of your administration have recently discussed the need for additional supplies to solve the energy crisis,” the letter noted, “your administration has restricted oil and natural gas development, canceled energy infrastructure projects, imposed regulatory uncertainty, and proposed new tax increases on American oil and gas producers competing globally.”
API’s letter outlined a 10-point plan with suggested steps that “we recommend your administration and/or Congress take to help address our current energy challenges by increasing supply and underscoring the connection between energy security and national security.”
The plan would require the Biden administration to reverse course and adopt a more collaborative relationship with the fossil fuel industry that removes regulatory barriers – precisely the opposite of what President Biden campaigned on and has done so far.
For example, API’s plan calls for lifting development restrictions on federal lands and waters. The API plan asks the Biden administration to streamline the National Environmental Policy Act permit review process.
The Federal Energy Regulatory Commission, the API said, should “end permitting obstruction on natural gas projects.”
Instead of choking off the fossil fuel industry’s access to needed capital, the API plan urges the Securities and Exchange Commission to “reconsider its overly burdensome and ineffective climate disclosure proposal.” Also, the API recommends that “the Biden administration should ensure open capital markets where access is based upon individual company merit free from artificial constraints based on government-preferred investment allocations.”
The chances that President Biden will heed this advice are virtually nil. The president is trapped by his own anti-fossil fuel positions that his left-wing Green New Deal activist base demands he continue to pursue to the bitter end.