Shellenberger: Why Biden’s Attacks On Energy Are “Absolutely Insane”

President Joe Biden appears to be doing everything in his power to lower energy prices.

Last month, Biden officials eased sanctions on Venezuela with an eye to increasing oil imports. Next month, Biden will travel to Saudi Arabia with the intention of improving relations and increasing oil production. And yesterday, Biden sent a harshly-worded letter to Exxon and other oil companies, urging them to increase production.

“At a time of war,” Biden wrote, “high refinery profit margins being passed directly onto American families are not acceptable… companies must take immediate actions to increase the supply of gasoline, diesel, and other refined product.”

President Joe Biden speaks at AFL-CIO Convention in Philadelphia on June 14, 2022. (Photo by Nicholas Kamm / AFP)

But none of those actions will lower energy prices. Increasing oil production in Venezuela would take years and it wouldn’t be nearly enough to make up for the reduction of oil imports from Russia. Even Saudi Arabia and United Arab Emirates together could not produce enough oil to offset declining supply from Russia.

And it’s not clear how antagonizing American oil and gas companies will result in more production and lower prices. U.S. refineries are already operating at 94% of their capacity and Exxon invested $50 billion over the last five years to expand oil production by 50%. And, said the CEO of a large, publicly traded energy company, who asked to remain anonymous, “Biden’s attacks on the industry have created an uncertain environment that prevents investment.”

In what might be perceived as the extending of an olive branch, the Biden Administration last night invited oil and gas executives to the White House for talks about how to lower energy prices. And on CNN, Energy Secretary Jennifer Granholm emphasized that the administration is not seeking to destroy oil and gas companies but rather re-tool them. “We are asking the oil and gas companies to diversify,” she said, “and become diversified energy companies.”

But these gestures pale in comparison to the overarching hostility the Biden Administration has directed toward oil and gas companies since taking office. In March, it revoked a permit by a refinery on the U.S. Virgin Islands to expand production. Last month, the Biden administration canceled a massive, one-million acre oil and gas lease in Alaska. And earlier this week, Senator Ron Wyden proposed a large new tax on oil industry profits, which Biden officials say the president may support.

A senior executive at a major U.S. bank that finances oil and gas exploration yesterday told me, “If you were an oil company, why would you invest hundreds of millions of dollars into expanding refining capacity if you thought the federal government or investors would shut you down in the next few years? The narrative coming from the administration is absolutely insane. ”

As a result, mainstream journalists are increasingly calling out Biden officials for the glaring contradiction at the heart of their energy policy. “Are you telling me you want them drilling for more oil?” asked CNN host John Berman of Secretary Granholm yesterday. “You want the refineries putting out more gasoline in five or ten years?”

Energy Sec. @JenGranholm demands energy companies to make massive investments to increase oil supply while simultaneously saying they want to shut them down over the next 5-10 years.

“Of course, in five or ten years — actually in the immediate — we are also pressing on the accelerator, if you will, to move toward clean energy, so that we don’t have to be under the thumb of petro-dictators like Putin, or at the whim of the volatility of fossil fuels. Ultimately American will be most secure when we can rely on our own clean domestic production of energy through solar, through wind —”

“These companies are saying, ‘You’re asking me to do more now, invest more now, when, in fact 5 or 10 years from now, we don’t think that demand will be there, and the administration doesn’t even necessarily want it to be there.’”

The result of the Biden Administration’s hostility toward the energy industry is skyrocketing inflation.

Where energy prices rose 35% over the last year, all prices rose just 8%. In Europe, higher energy prices are responsible for at least half of all inflation.

There are certainly other factors causing inflation, including the ramping up of supply chains following the pandemic, the $1.7 trillion stimulus last year, and China’s lockdown in response to the omicron coronavirus variant. But the non-energy factors behind inflation were temporary, and none explain consistently higher energy prices, which are a major factor in the higher prices of everything, from food to consumer products.

“When you strip out of the [Consumer Price Index] all the items that are linked to energy (air fares, moving/freight, rental cars, delivery services, new and used vehicles),” noted economist David Rosenberg, “the core was +0.36% and the [year-over-year] steadied near 4%. ”

The numbers speak for themselves. In the U.S., the monthly price change in May for all items was 1% but for fuel oil, airline fares, piped utility natural gas, and gasoline the price changes were 17%, 13%, 8%, and 4% respectively.

Some say there’s nothing Biden can do to increase energy production but my sources say that Biden could significantly increase oil/gas production within 12 – 18 months. How?

First, they say, he should invoke the National Defense Act for Oil and Gas. This will enable the acceleration of required permits for oil and gas projects, they say.

Second, he should announce a national commitment to purchase oil to fill the Strategic Petroleum Reserve (SPR) at a floor of $80/barrel. That will, they say, be a powerful incentive for the oil guys.

Third, he should announce trade agreements with the international community to supply them with LNG (liquified natural gas) Doing so will incentivize natural gas production and create a surplus of energy for exports with an “American-First asterisk (keep nat gas storage full while exporting).

Biden’s doing none of that. As a result, Biden’s hostility to expanded energy production could result in recession. The Federal Reserve yesterday raised interest rates more than at any point since 1994 and could raise them again next month in an increasingly desperate battle against inflation.

“It may take a recession to stamp out inflation,” concludes Bloomberg, “one that may cost Biden a second term.”

Why is that? Politicians are famously self-interested, focused on their own preservation at all costs. Why, then, is Biden not only wrecking the economy, by failing to take action to lower energy prices, but also destroying his own presidency?

An awkward exchange between Biden and Jimmy Kimmel on ABC’s “Jimmy Kimmel Live!”

Compare it to Carter’s speech in 1979 on the oil crisis.

On July 15, 1979, President Carter outlined his plans to reduce oil imports and improve energy efficiency in his “Crisis of Confidence” speech (sometimes known as the “malaise” speech). In the speech, Carter encouraged citizens to do what they could to reduce their use of energy.

Per Carter’s speech:

“So, I want to speak to you first tonight about a subject even more serious than energy or inflation. I want to talk to you right now about a fundamental threat to American democracy.

I do not mean our political and civil liberties. They will endure. And I do not refer to the outward strength of America, a nation that is at peace tonight everywhere in the world, with unmatched economic power and military might.

The threat is nearly invisible in ordinary ways.

It is a crisis of confidence.

It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation.

The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America.

The confidence that we have always had as a people is not simply some romantic dream or a proverb in a dusty book that we read just on the Fourth of July. It is the idea which founded our nation and has guided our development as a people. Confidence in the future has supported everything else — public institutions and private enterprise, our own families, and the very Constitution of the United States. Confidence has defined our course and has served as a link between generations. We’ve always believed in something called progress. We’ve always had a faith that the days of our children would be better than our own.

Our people are losing that faith, not only in government itself but in the ability as citizens to serve as the ultimate rulers and shapers of our democracy. As a people we know our past and we are proud of it. Our progress has been part of the living history of America, even the world. We always believed that we were part of a great movement of humanity itself called democracy, involved in the search for freedom; and that belief has always strengthened us in our purpose. But just as we are losing our confidence in the future, we are also beginning to close the door on our past.

In a nation that was proud of hard work, strong families, close-knit communities, and our faith in God, too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns. But we’ve discovered that owning things and consuming things does not satisfy our longing for meaning. We’ve learned that piling up material goods cannot fill the emptiness of lives which have no confidence or purpose.

The symptoms of this crisis of the American spirit are all around us. For the first time in the history of our country a majority of our people believe that the next five years will be worse than the past five years. Two-thirds of our people do not even vote. The productivity of American workers is actually dropping, and the willingness of Americans to save for the future has fallen below that of all other people in the Western world.

As you know, there is a growing disrespect for government and for churches and for schools, the news media, and other institutions. This is not a message of happiness or reassurance, but it is the truth and it is a warning.

These changes did not happen overnight. They’ve come upon us gradually over the last generation, years that were filled with shocks and tragedy.

Looking for a way out of this crisis, our people have turned to the Federal Government and found it isolated from the mainstream of our nation’s life. Washington, D.C., has become an island. The gap between our citizens and our government has never been so wide. The people are looking for honest answers, not easy answers; clear leadership, not false claims and evasiveness and politics as usual.

What you see too often in Washington and elsewhere around the country is a system of government that seems incapable of action. You see a Congress twisted and pulled in every direction by hundreds of well-financed and powerful special interests.

You see every extreme position defended to the last vote, almost to the last breath by one unyielding group or another. You often see a balanced and a fair approach that demands sacrifice, a little sacrifice from everyone, abandoned like an orphan without support and without friends.

Often you see paralysis and stagnation and drift. You don’t like it, and neither do I. What can we do?

First of all, we must face the truth, and then we can change our course. We simply must have faith in each other, faith in our ability to govern ourselves, and faith in the future of this nation. Restoring that faith and that confidence to America is now the most important task we face. It is a true challenge of this generation of Americans.

One of the visitors to Camp David last week put it this way: “We’ve got to stop crying and start sweating, stop talking and start walking, stop cursing and start praying. The strength we need will not come from the White House, but from every house in America.”

We know the strength of America. We are strong. We can regain our unity. We can regain our confidence. We are the heirs of generations who survived threats much more powerful and awesome than those that challenge us now. Our fathers and mothers were strong men and women who shaped a new society during the Great Depression, who fought world wars and who carved out a new charter of peace for the world.

We are at a turning point in our history. There are two paths to choose. One is a path I’ve warned about tonight, the path that leads to fragmentation and self-interest. Down that road lies a mistaken idea of freedom, the right to grasp for ourselves some advantage over others. That path would be one of constant conflict between narrow interests ending in chaos and immobility. It is a certain route to failure.

All the traditions of our past, all the lessons of our heritage, all the promises of our future point to another path — the path of common purpose and the restoration of American values. That path leads to true freedom for our nation and ourselves. We can take the first steps down that path as we begin to solve our energy problem.

Energy will be the immediate test of our ability to unite this nation, and it can also be the standard around which we rally. On the battlefield of energy we can win for our nation a new confidence, and we can seize control again of our common destiny.

In little more than two decades we’ve gone from a position of energy independence to one in which almost half the oil we use comes from foreign countries, at prices that are going through the roof. Our excessive dependence on OPEC has already taken a tremendous toll on our economy and our people. This is the direct cause of the long lines which have made millions of you spend aggravating hours waiting for gasoline. It’s a cause of the increased inflation and unemployment that we now face. This intolerable dependence on foreign oil threatens our economic independence and the very security of our nation.

The energy crisis is real. It is worldwide. It is a clear and present danger to our nation. These are facts and we simply must face them.

What I have to say to you now about energy is simple and vitally important.

Point one: I am tonight setting a clear goal for the energy policy of the United States. Beginning this moment, this nation will never use more foreign oil than we did in 1977— never. From now on, every new addition to our demand for energy will be met from our own production and our own conservation. The generation-long growth in our dependence on foreign oil will be stopped dead in its tracks right now and then reversed as we move through the 1980s, for I am tonight setting the further goal of cutting our dependence on foreign oil by one-half by the end of the next decade — a saving of over four and a half million barrels of imported oil per day.

Point two: To ensure that we meet these targets, I will use my presidential authority to set import quotas. I’m announcing tonight that for 1979 and 1980, I will forbid the entry into this country of one drop of foreign oil more than these goals allow. These quotas will ensure a reduction in imports even below the ambitious levels we set at the recent Tokyo summit.

Point three: To give us energy security, I am asking for the most massive peacetime commitment of funds and resources in our nation’s history to develop America’s own alternative sources of fuel — from coal, from oil shale, from plant products for gasohol, from unconventional gas, from the sun.

I propose the creation of an energy security corporation to lead this effort to replace two and a half million barrels of imported oil per day by 1990. The corporation will issue up to five billion dollars in energy bonds, and I especially want them to be in small denominations so average Americans can invest directly in America’s energy security.

Point four: I’m asking Congress to mandate, to require as a matter of law, that our nation’s utility companies cut their massive use of oil by fifty percent within the next decade and switch to other fuels, especially coal, our most abundant energy source.

Point five: To make absolutely certain that nothing stands in the way of achieving these goals, I will urge Congress to create an energy mobilization board which, like the War Production Board in World War II, will have the responsibility and authority to cut through the red tape, the delays, and the endless roadblocks to completing key energy projects.

We will protect our environment. But when this nation critically needs a refinery or a pipeline, we will build it.

So, the solution of our energy crisis can also help us to conquer the crisis of the spirit in our country. It can rekindle our sense of unity, our confidence in the future, and give our nation and all of us individually a new sense of purpose.

You know we can do it. We have the natural resources. We have more oil in our shale alone than several Saudi Arabias. We have more coal than any nation on earth. We have the world’s highest level of technology. We have the most skilled work force, with innovative genius, and I firmly believe that we have the national will to win this war.

I do not promise you that this struggle for freedom will be easy. I do not promise a quick way out of our nation’s problems, when the truth is that the only way out is an all-out effort. What I do promise you is that I will lead our fight, and I will enforce fairness in our struggle, and I will ensure honesty. And above all, I will act.

https://www.americanrhetoric.com/speeches/jimmycartercrisisofconfidence.htm

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