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 Try as they might to mitigate the severe energy
crisis plaguing the U.S., the Biden administration’s attempt to shore up supply
is a few wellheads short of an oil rig.
With gasoline prices averaging over $4.60 per gallon and several electric grid
operators warning of rolling blackouts, increasing the supply of America’s most
critical energy sources is vital. Fossil fuels account for 80% of America’s
energy usage, yet the administration is intent on curbing oil and gas supply,
cutting gasoline refining capacity, and making it more challenging to meet
rising electric demands.
Oil prices are hovering around $100 per barrel, and millions of barrels per day
of Russian oil are exiting the market due to unwilling buyers, international
sanctions, and contracted Western oil companies abandoning drilling sites. With
this dip in the international oil market, the U.S. ought to be preparing to
increase domestic oil supply, but the Biden administration is simply not
interested in that. Instead, it’s moving to block oil and gas production on
federal lands, where roughly a quarter of American oil is produced. The Interior
Department’s recently proposed five year offshore lease plan would block
offshore drilling in the Pacific and Atlantic oceans and offer a small number
(possibly zero!) of leases in the Gulf of Mexico. Onshore, the administration
cut available leased land by 80% and significantly increased royalty fees.
The situation is no different for drilling on private land. The Environmental
Protection Agency (EPA) lacks the authority to ban fracking, but is considering
regulating America’s most productive and cost effective oil field into
irrelevance. The Permian Basin in Texas and New Mexico accounts for 40% of
America’s oil production and 15% of its natural gas production. Undeterred by
the Supreme Court’s recent rebuke of its industry-remaking regulations, the EPA
is contemplating using ozone standards to force Texas and New Mexico to curb oil
drilling, potentially jeopardizing 25% of America’s gasoline supply.
And yet even if the administration encouraged more domestic drilling (in
contrast to the president’s repeated calls for OPEC to pump more oil), that oil
must be refined to turn it into gasoline and diesel fuel. However, in the face
of increasing renewable fuel mandates, gasoline and diesel refining capacity in
the United States has been declining for years, as many refineries are either
closing or converting to biofuel refineries.
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No large refinery has been built for 46 years, in part because of the EPA’s
ratcheting up of biofuel blending requirements to unsustainably high levels.
Moreover, the EPA’s recent decision to end its longstanding practice of granting
biofuel waivers to small refiners will only lead to more refineries closing
under those mandates’ costly weight. Regulating refineries out of business is
not the way to lower gasoline prices.
Nor is the electric grid immune from attention. A new EPA power plant emissions
proposal is so aggressive that four of the nation’s seven electric grid
operators have opposed it citing threats to grid reliability. Without changes,
the rule would force reliable fossil fuel generation out of service at a time
when ready-at-hand electric generation is rapidly declining throughout the
country. With rising electric demands as the economy electrifies, shutting down
needed power plants will make it harder to keep more than just the lights on.
Nor is this challenge a far-off possibility. Several grid operators and
regulators have issued warnings that maximum electric generation may not be
enough to meet this summer’s demands in more than half the country due to early
coal and gas plant closures. Incorporating clean energy is important, but going
too green too fast means summer blackouts may no longer be confined to
California.
Despite the urgency of the situation, there are few policy moves that would
bring down energy prices overnight. In industries where billion dollar
investments take years to pay off, long term certainty and consistency of the
kind the Biden administration refuses to provide are needed.
Fossil fuels are vital for economic activity and global power projection, and
the administration should strategize accordingly. Periodically releasing oil
from the Strategic Petroleum Reserve is not a strategy, especially when that oil
ends up in China. Nor is the EPA’s consideration of eliminating half of
America’s liquified natural gas (LNG) exports or federal regulators slowalking
permits for a new LNG terminal, at a time when increasing more environmentally
friendly, less emissions-intensive American exports can help wean European
allies off Russian gas.
But these strategic and economic casualties are not accidental. Across the
board, the Biden administration has placed fossil fuels in its crosshairs.
Americans stuck with high energy prices are simply collateral damage.
Jakob Puckett is an energy analyst and a Young Voices
Contributor. Follow him on Twitter at @jakobrpuckett.
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