The Hill

29 Jul 2023

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Petroleum - Figure 1 — Photo thehill.com

Bidenomics Doomed By Soaring Gas Costs

President Biden faces another setback as gas prices continue to rise once more, leaving him without the option to rely on the Strategic Petroleum Reserve for assistance.

Biden's chances of winning another term are in danger not only because people don't like him and there are more and more accusations of corruption against him, but also because gasoline prices are going up. When voters notice the increase in pump prices, they will consider it as the most evident indication that Biden's economic policies are not benefiting them, and they will hold him accountable for it.

The amount of oil stored in the United States and around the world is decreasing, and at the same time, the need for oil is increasing. As a result, the price of oil that is commonly used as a standard in the United States has increased by 15 percent in the last month. In reaction to this, the futures contracts for gasoline prices have risen to $2.90 for each gallon, which is the highest since July 2022. Furthermore, the cost of fuel at gas stations rose by 4 cents per gallon just last week.

The U.S. Energy Information Administration has recently increased its prediction for the prices of Brent crude oil in 2024, expecting a 12 percent rise. Despite the slow recovery of the global economies after the COVID-19 pandemic, there has been an increase in the consumption of oil. Additionally, OPEC+, particularly Saudi Arabia and Russia, has been actively reducing their oil production to push prices higher. However, due to President Biden's persistent efforts to limit the use of fossil fuels, the United States' oil production has not returned to its previous levels before the pandemic.

Only a week ago, the Biden government suggested increasing the fees that oil corporations must pay for extracting resources from public lands by one-third. Specifically, the proposal suggests raising the current rate of 12.5 percent to 16.67 percent. Additionally, the administration revealed fresh regulations that would significantly inflate the expenses of leasing land and boost drilling insurance costs over ten times their current amount. According to estimations made by the Interior Department, these alterations, along with other rule adjustments, are anticipated to accumulate costs of approximately $1.8 billion throughout the coming years.

The Biden administration takes great satisfaction in inhibiting the growth of oil and gas industries within our country. According to a recent article in The New York Times, the Department of the Interior views these alterations as a component of a larger transformation at the federal agency. In its endeavor to combat climate change, the department aims to promote the expansion of renewable energy sources on public land and in federal waters, while simultaneously increasing the costs associated with drilling on public lands for private companies.

Oil companies in the United States are reacting to unfriendliness from the Biden administration by cutting back on drilling activities and directing their funds towards other ventures. The current number of active drilling rigs within the country has fallen by 12 percent compared to the previous year, resulting in a total of 669 rigs in operation. Conversely, the count of rigs operating abroad has increased by 17 percent. This is quite a significant decline when compared to July 2019, before the occurrence of the pandemic, where a substantial 955 rigs were actively engaged in the exploration and production of oil and gas resources in the United States.

In June 2022, the cost of fuel reached its highest point, surpassing $5 per gallon for the first time ever. As a result, the approval ratings for President Biden plummeted to their all-time lowest, at -20. However, as gas prices decreased, Biden's approval saw a slight improvement. Currently, according to the RealClearPolitics poll average, his approval rating stands at minus 11.

President Biden was swift to hold "[Russian President Vladimir] Putin's conflict" responsible for the sudden surge in oil and gas expenses in 2022. However, the electorate had a different understanding. Right from the outset of his term, Biden targeted traditional energy sources, scrapping the Keystone Pipeline, prohibiting lease sales for potentially fruitful land, prolonging the process of obtaining drilling permits, and amplifying the financial burden of exploring fresh oil reserves.

Consequently, the production of oil in the United States, which had been steadily rising during the tenure of former President Trump and reached 13.1 million barrels per day in February 2020, experienced a significant decline. This decline was worsened by the decrease in oil prices brought about by the pandemic, which led to a halt in global economies and a plummet in commodity demand.

However, the obstacles created by the Biden administration prevented the resumption of exploration efforts as the surge in economic activity, the Ukraine conflict, and the decline in American production led to another surge in oil prices in 2021.

Panicked by the significant decline in his popularity, Biden decided to use up the oil reserves kept in the Strategic Petroleum Reserve (SPR) in order to prevent the continuous increase in gas prices. At the beginning of this month, the reserve contained 346.8 million barrels of oil, the lowest amount since August 1983, which is a decrease of 291.3 million barrels, equivalent to 45 percent, since Biden assumed office in January 2021. The administration is not willing to utilize the SPR once more.

Currently, the oil production in the United States falls significantly behind its potential due to the lack of support from the current administration. This means that we have once again surrendered the power to control global oil prices to OPEC. In particular, we have given back authority to Saudi Arabia, a nation that Biden has needlessly offended and distanced, as well as Russia, with whom we are indirectly fighting. This decision was not wise.

The intellectuals in the Biden administration who are disconnected from reality believe that we can quickly transition to renewable energy sources, and are forcefully enforcing their "green" agenda by dictating the types of vehicles, stoves, water heaters, and lightbulbs that Americans can purchase. Our experts in the energy field are diverting massive amounts of money towards wind and solar power, despite the fact that many communities are refusing these options and our power grids are unable to handle it. Choosing to ignore the importance of investing in reliable fossil fuels, which currently make up 79 percent of our energy supply and are crucial during this period of transition, is both careless and hazardous.

Throughout the world, the significance of oil persists. Despite substantial financial commitments to alternative energy sources, fossil fuels still account for 80 percent of the global energy supply.

Warren Buffett has recently invested a substantial amount of $122 million into Occidental Petroleum, a company based in the United States. Additionally, he has recently acquired a Maryland-based LNG operations. One might question the reasoning behind Buffett's decision to invest in such industries that are deemed outdated. However, the answer lies in Buffett having access to certain information that the White House seems to be unaware of. It is clear to him that fossil fuels will continue to be prominent in the energy sector, and President Biden's misguided campaign against domestic energy only serves to push prices and values even higher.

Liz Peek used to collaborate with one of the prominent financial institutions on Wall Street known as Wertheim & Company. Feel free to stay updated with her on Twitter by following her handle @lizpeek.