With the average price of gasoline now at $4.24 per gallon nationwide, and with prices crossing $6.00 per gallon in some California locations, at least Americans can be reassured that this is an ephemeral problem created by Russia’s invasion of Ukraine and it has nothing to do with Joe Biden’s long-term energy policies. How do we know that? We know it because Sleepy Joe said it was so, and Sleepy Joe would never lie to us.
Or would he?
Biden made a strong statement recently that the soaring energy prices in the U.S. are not the result of his policy decisions in that area. He blames high prices at the pump (Gasoline gets all the attention because it’s easy to track on a per-gallon basis. Prices for all forms of fossil fuel energy are up across the board) exclusively on Vladimir Putin. In doing so, he is counting on the American people to be consuming steady amounts of Russian vodka, thereby impairing their brain’s ability to create and retain short-term memories. He’s hoping that they won’t remember any of the past twelve months.
Unfortunately for Sleepy Joe, the folks at the New York Post come to work sober and they have put together a timeline of gasoline prices since Biden took office. They have also matched the timeline with significant announcements on energy policy being made by the administration.
Since Biden took office, and just prior to the Russia invasion, gasoline prices across the country increased on average by 48.3%. The U.S., which had been a net exporter of oil as recently as 2019 is now importing more than it exports. We have quickly moved from being able to be “energy independent” to again being a nation that relies on those outside our shores to make our vehicles roll, keep our homes warm, and let our factories hum (no worries on the last one. We just let China take that part over).
Some of what Biden has done to drive up energy prices since taking office include:
• Halted oil and gas leases in Alaska’s Arctic National Wildlife Refuge
• Directed the Interior Department to stop oil and natural-gas leases on federal lands and in public waters.
• Signed an executive order requiring federal agencies to calculate the highly speculative risk of global warming
He also stopped work on the Keystone XL pipeline from Canada as soon as he took office. How does stopping the construction of something that won’t produce oil flow until a later date impact prices today, you ask? The simple answer is that like with other commodities, the price of oil today is determined by both its current availability and price, combined with its anticipated future availability and price. Biden stopping the future flow of lower cost fuel from Canada changed the calculus for current energy pricing.
Not only is Joe Biden responsible for the increase in energy prices, but he also actually told us he was going to increase energy prices before we elected him! Joe Biden is doing exactly what he said he was going to do.
As cited in the same NY Post article (other platforms have covered this. I’m just being kind as a writer and giving you a one-stop-shop for reference), Biden told New Hampshire voters on September 19, 2019, “I guarantee you, we’re going to end fossil fuels.” When asked by the moderator during the October 22, 2020 presidential debate, “Would you close down the oil industry?” Biden replied, “I would transition from the oil industry.”
This is a difficult thing sometimes for people to grasp but there are multiple forces at work which have led to this literal explosion in energy prices, and to price of all goods and services increasing across the board, in a manner we haven’t seen since the early 1980’s. Let me try to briefly explain and hopefully it will send you off to do some more digging on your own.
We have deliberately damaged the supply of energy from domestic sources: This is what I highlighted above. Biden’s policies have impacted both current production capabilities and future anticipated capabilities. This has the effect of decreasing supply and when supply decreases, prices increase. That is simple supply and demand.
We have greatly increased our money supply beyond our increase in goods and services: This is the actual definition of inflation. Increasing prices across the board (the Consumer Price Index jumped 7.9% in February, the largest single month increase in 40 years) are a symptom of inflation and a convenient way to try to measure its impact. But actual inflation is caused when the supply of money is increasing so fast that there ends up being too much of it chasing too few goods. This has been going on for a while. Biden did not start it, but he has added fuel to our monetary fire.
We were recovering from being locked down for a year-plus and people had started spending money again: Not only was the money supply increasing too fast in terms of available dollars, but prior to Russia invading Ukraine, the American consumer was coming out of their masked shell and beginning to spend money again. Some of that money got put into their pockets by the government printing it and handing it to them in the form of Covid relief payments. So, there was a combined effect of too much money chasing too few goods and chasing them faster.
The cost of energy is a component cost of virtually everything so the upward pressure on prices gets amplified: As Biden drove up energy prices through his polices to curtail domestic production, he was driving up the cost to every goods and service provider in the country (how do you get the merchandise to your store shelves? How do you pay for gas driving to work at the beauty shop? And so on). Biden’s energy policies did not cause inflation, but they have allowed inflation to flourish.
Joe Biden, with his combined ideals of “green energy” and “printing greenbacks”, has put America in a position where not just high gas prices, not just high energy prices, but high prices in general, are now with us for the near and intermediate-term future. Large domestic energy companies have been hamstrung in their ability to explore for and extract domestic oil and gas reserves. This means that even if the Russia-Ukraine war ends tomorrow, (and it won’t), the problem of US dependance on foreign oil and suffering the attendant higher prices associated therewith will not end.
A friend of mine told me that his father used to have a saying: When something that is supposed to be good news turns out to be bad news, you know that you really have a problem. Recently the Wall Street Journal ran a piece titled “Oil Markets’ Big Winners: Little Guys Who Are Willing to drill.” The article chooses as its focal point 84-year-old Autry Stevens, who owns Endeavor Energy Sources. His company, like other independents, has not been as hampered by the Biden administration’s new anti-energy policies. Stevens is now reportedly worth over $10 billion after having been in financial trouble just a few short years ago.
The article points out that independent energy firms are now operating 62% of our oil and gas rigs compared to 49% just a few years ago. That’s good news, right? The triumph of private business and the resourcefulness of free market capitalism are coming to the rescue. Here’s why the good news is bad news. The independent companies are not the ones with the greater resources and capabilities to extract oil from various US locations. The big companies can best do that. The gathering strength of the smaller independents, good news in an unregulated economy, here is a canary in a coal mine for American consumers.
Joe Biden did this and he did it on purpose. What’s worse than that is that he told us he was going to do before he was elected. But the greatest tragedy is that Americans either didn’t believe it, understand it, or care about it. They care now. Unfortunately, we have to wait until November to find out just how much they really care.