Biden Mistakes Demand For Supply

Gas prices continue to average around $5.00 per gallon nationally, which is a major factor in our ongoing issues with inflation. Democrats, with the upcoming midterm elections in mind, are freaked out. And all the more because President Biden's approval rating, according to two new polls, is down to 32 percent. Glenn "Instapundit" Reynolds predicts that that number will continue to drop, commenting "He has only begun to fail."

How, you ask, could a Democratic president, in our hyper partisan age, with the media always in his corner, fall much further than 32 percent? By refusing to address this problem in any meaningful sense. That's exactly what we're seeing -- the president's response to rising oil prices thus far has been to blame "greedy" oil executives (we're meant to believe that they were overwhelmed by greed only after Biden took office, and not during the plutocratic Trump administration) and Vladimir Putin's aggression in Ukraine (never mind that prices had been rising steadily for months before Russian hostilities began), while maintaining the same anti-oil and gas policies he's held to since the day he entered the White House.

No one is buying it, of course, so Team Biden has moved onto gimmicks which they hope will distract the voters. Earlier this week, the president called for a temporary suspension of federal gasoline and diesel taxes. Such a move would shave somewhere in the neighborhood of 15 or 20 cents per gallon off of your local fill-up price.

Now, we'd all like to pay less for gas, but this isn't going to work. We've even seen the same play fail not long ago. As Saagar Enjeti recently explained,

On June 1st, New York suspended its motor fuel tax of eight cents a gallon, as well as its four cent sales tax on up to two dollars a gallon. The average price of gas that day was $4.93 cents. Two weeks after what is, in effect, a .16 cents per gallon tax holiday went into effect in the State of New York, the price of gas was $5.04 per gallon!

Fundamentally, the problem we're facing now is one of supply, and that is being choked off both by our limited refinery capacity (which is itself a product of environmentalist policies that make it nearly impossible to build new refineries) and Biden's anti-resource-sector positioning. By goosing demand -- people will drive somewhat more if gas prices are somewhat lower -- Biden's proposal arguably exacerbates the problem.

And no federal taxes!

As things stand, the opposite is happening. The Wall Street Journal reports that the demand for gas this spring and summer is down between 5 and 8 percent from the pre-pandemic average, a significant drop. "Drivers have begun consolidating trips or filling up their tanks with only as much fuel as they need to get by for a few days. Some are carpooling or taking mass transit, while others are working from the office for fewer days each week, analysts said."

This might not be such a bad thing -- the WSJ quotes OPIS head Tom Kloza as saying, “You have to have some demand destruction to give supply a chance to catch up.” It is, essentially, a case of the market adjusting to demand outstripping supply. But the less driving there is, the fewer goods and, especially, services are consumed. An economic slow-down will be the consequence of this, and very likely, a recession.

Pray that our house of cards doesn't tumble from the shock, and that our leaders -- Biden included -- correct course before things go too far. But don't count on it.

Success: Biden Gets the High Gas Prices He Promised

For decades now, the Democrats have painted gas and oil producers as whipping boys for the failure of their own party’s policies. This year as pump prices have skyrocketed and every single facet of our economy is suffering from the shortfalls in production, they once again seek others to blame. Sticking with their playbook that nothing is ever their fault, despite the fact that the record is clear that it is, President Biden casts the blame on Putin and the producers.

The record is clear, however, that the shortfalls are the direct result of the administration’s policies. And Exxon’s response to Biden’s blame shifting is telling but incomplete. Noting that the company has been in “regular contact with the administration” it describes the steps it has taken to increase production and expand refinery capacity, something the administration has obviously ignored:

We increased production in the Permian Basin by 70 percent, or 190,000 barrels per day, between 2019 and 2021. We expect to increase production from the Permian by another 25 percent this year. We’re spending 50 percent more in capital expenditures in the Permian in 2022 vs 2021 and are increasing refining capacity to process U.S. light crude by about 250,000 barrels per day – which is the equivalent of adding a new medium sized refinery.

We reported losses of more than $20 billion in 2020, and we borrowed more than $30 billion in 2019 and 2020 to support our investments in production around the world. In 2021, total taxes on the company’s income statement were $40.6 billion, an increase of $17.8 billion from 2020.

The Forbes writer, David Blackmon, goes on to note:

The president of the United States is simply lying to us. The reality is that Exxon and other oil companies are drilling and investing, on a massive scale, both in the United States and worldwide. They pay many billions in local, state and federal taxes. And if the government doesn’t think it’s enough, then Congress can change those laws.

Penury by design.

Here are some significant specific actions the administration has taken to reduce gasoline supply, something they expressed pride about as it in their words, will speed the transition to “renewables.” And this cockamamie plan certain to raise gas prices was cheered on by the major media 

  1. Cancelled the Keystone pipeline  bringing crude oil from Canada to U.S. refineries
  2. Pulled three offshore oil lease sales and curbed new drilling this year
  3. Failed to appeal a judicial ruling revoking drilling leases in the Gulf of Mexico
  4. Limited fracking
  5. Issued regulations that strained our already too-limited refinery resources
  6. Promoted new taxes on oil and gas production

Last month, before the consequences of this lunacy became fully apparent to voters, Biden bragged about these deliberately destabilizing policies. Try diagramming this jumbled thinking:

Out of touch as ever, President Biden celebrated record-high gas prices Monday, gushing that the pump pain was part of “an incredible transition” of the US economy away from fossil fuels. “[When] it comes to the gas prices, we’re going through an incredible transition that is taking place that, God willing, when it’s over, we’ll be stronger and the world will be stronger and less reliant on fossil fuels when this is over,” Biden said during a press conference in Japan following his meeting with Prime Minister Fumio Kishida.

The president then insisted that his administration’s actions, rather than increasing the price of gas, had actually been able to “keep it from getting worse — and it’s bad.” Only then did Biden pay lip service to millions of Americans who have found themselves spending thousands of extra dollars to fuel up their vehicles.

The oil industry is fighting back. On Wednesday, the American Petroleum Institute sent the letter below directly to the White House, rebuffing Biden's disgraceful demagogic attacks with facts. Have a look:

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Oklahoma senator James Lankford is one who does understand what the major media do not, and smashes the ball right back into Biden’s court:

Twenty-four percent of the oil that we get in the United States comes from those federal leases. So when he has now, still, not re-opened the short-term moratorium on federal leasing, he’s cutting off the future of oil into our country. And it continues to accelerate prices….. And literally, this week, the Biden Administration announces that they want more American companies to do more production, but then this week they release they’re budget after saying to American companies, ‘Why aren’t you producing more oil,’ the Biden Budget has 15 brand-new tax proposals that they’ve got on the production of oil and gas.

And the production is just part of the picture. The petroleum has to be refined. Forty-two years ago I co-authored a book, noting the refinery shortfalls and the need to upgrade and build more refinery capacity. Spoiler alert: we didn’t.

No worries, I'm off to Delaware for the weekend.

As the editors of the Wall Street Journal report, the president has finally noticed we are short of refinery capacity to process crude, and “a major culprit is U.S. government policy.” When the government insists on an abrupt shift from fossil fuels to tackle a largely imaginary problem of "climate change," it’s hard to justify spending more to upgrade refineries to process crude oil. And then there’s the EPA, which has tightened permitting requirements and demanded steeper mandates for biofuels. But there’s more: having to blend more ethanol requires that refiners must purchase regulatory credits to comply and those credits have increased in price driving some refineries out of business.

If the President wants “concrete ideas” to immediately increase capacity and production, maybe he should reverse policies that are designed by his administration to put producers and refiners out of business? Well, that’s just a thought. The people in this crowd who can’t master the simple math of supply and demand are unlikely to be able to follow this line of reasoning.

Weaponizing the Government Against the People

To assert that Washington D.C. is a political place is as obvious as asserting Twitter opposes free speech. It’s empirical. However, in the case of a bill the House recently passed, there is no doubt that legislators have reached a desperately new level of political gamesmanship. Whether rooted in blind ignorance, willful oblivion, or good old fashion partisan jackassery is not entirely clear. What is clear, however, is that there are specific tactics being integrated into many pieces of legislation introduced by House Democrats. Since taking office the Biden administration is keen to stitch investigatory powers into the authority of many agencies, even in defiance of political or constitutional reality.

Known as The Consumer Price Gouging Prevention Act of 2022,this bill passed largely and unsurprisingly along party lines, with the exception of four Democrats who joined their Republican colleagues and voted against it. The bill gives the president the power to issue an emergency declaration that would make it unlawful to hike gasoline and home energy prices, “...in an excessive or exploitative manner." It would also give the Federal Trade Commission (FTC) more tools to crack down on (punish) alleged price gouging, allowing the FTC to prioritize enforcement action on big oil and gas companies.

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There are, however, a couple notable problems with this legislation and the corresponding vote on the House floor. Responding to price gouging doesn’t work if the people allegedly gouging don’t actually control the price of the products for which gouging is being alleged.

The oil and gas industry is divided into well-delineated sub-sectors. They include "upstream," focused on drilling and extracting oil and gas from out of the ground; "midstream," which broadly constitutes processing, storing, transporting and marketing the oil and gas extracted by the upstream companies; and "downstream," which represents the refining, distribution and retail sale of petroleum products.

Setting aside the lack of a definition in the bill of what  "excessive or exploitative” might mean in the context of free markets, the more disconcerting element is that the legislation was specifically written to impugn the upstream oil and gas sector instead of to actually bring relief to consumers. These legislators know the upstream sector doesn’t control the prices consumers pay at the pump or for home heating oil. That wasn’t the point of introducing the legislation. Intentionally misleading their constituents while doing nothing to mitigate the market conditions was the point.

Beware of the regulatory monkey.

After having called for hearings last month about the causes of increasing fuel prices, the Democrat sponsors of the bill and those who voted for it, desire to conflate the activities of the oil and gas industry with the Biden administration’s failed energy policies and objectives, which these legislators support. It is a feckless effort that wastes time and resources, and diminishes the confidence of the electorate in their elected representatives. Their constituents, after all, are experiencing real economic hardship because of high consumer prices for fuel. Engaging in political stunts that achieve no tangible end is disrespectful and lazy.

Rep. Lizzie Fletcher, (D-TX) is one of the four Democrats who voted against the bill. "The Consumer Fuel Price Gouging Prevention Act would not fix high gasoline prices at the pump, and has the potential to exacerbate the supply shortage our country is facing, leading to even worse outcomes," Fletcher said in a statement. "For these reasons, I voted no on this legislation today."

While the legislation passed 217-207 in the House, it is ultimately expected to fail in the Senate where it would need 60 votes to overcome a filibuster the Republicans and Senator Joe Manchin (D-WV) will undoubtedly use to defeat it. More insidious than eye-rolling, however, is not the outcome of this round of legislation but rather, the integration of a tactic that has become increasingly common under the Biden administration and should be concerning to voters of both parties.

Whether dealing with gasoline and home heating prices, the integration of the environmental, social, governance (ESG) construct into the Security and Exchange Commission (SEC), or the formation of a new division for ‘environmental and social justice’ at the Department of Justice (DOJ), this administration unceasingly tries to codify investigative authority by various agencies into their legislation. They seek this power so they can punish political adversaries whom this administration views as enemies. When the idea fails to persuade, the administration immediately turns to heavy-handed investigatory overreach.

Big Congress is watching you.

Perhaps its historically abysmal approval ratings are an indication of how few people agree with the Biden administration’s approach. Regardless, the willful misrepresentation of issues, followed by a barrage of administratively created investigatory powers feels more "Stasi-esque'" than demonstrative of serious political acumen. The ultimate objective of the administration, it seems, is to politicize every challenge and use it to take greater control of every aspect of American life. This "gouging" bill is merely another example. The relief that a genuine policy change would bring is ignored and in its place are disingenuous attempts to gain control of the direction of the country through intimidation.

With the mid-term cycle now under way, the miscalculation this cynical tactic represents could prove more damaging to the extreme progressive wing of the Democrat party than even Republicans anticipate. Independents and even moderate Democrats are realizing that they are being treated like Monopoly pieces on the playing board of politicians committed to the entrenchment of their own power. Where post mid-term legislation can’t role back the investigatory tactic, judicial challenges will assuredly be employed. The American people, of broad political underpinning, are growing weary of the disrespect of the disingenuous in D.C.  

Banks Line Up to Join ‘ESG’ Mob

In the last year, the cost of energy has increased significantly. Gasoline, diesel, and domestic electricity and natural gas prices are now past the point that many people can bear. The problem affects businesses too, including manufacturing and agriculture, with consequences for the wider economy, jobs and the cost of living. It has led to a new word, “greenflation.” Greenflation is harming those who, literally, can least afford it.

However, instead of discerning what is behind these problems, what caused them, what role the federal government had and what it can do to ease the problem, the government is simply blaming others and pressing on. Treasury Secretary Janet Yellen is not only in denial but serially insists that the problem is that the administration just hasn’t proceeded on the “climate” front fast enough.

This is governmental malpractice. But the perpetrators are not without accomplices. The investor class, and big banks foremost among them, share equal responsibility. One of the chief culprits is a pernicious and destructive concept called Environmental, Social, and Governance investing.

Yellen: in "climate" denial.

A 2016 email suggests that modern “ESG” began as anti-energy campaigning against financial institutions in 1999 focusing on hydropower, then morphed into anti-coal advocacy then soon expanded to opposing all abundant energy sources.

Bank of America seems to have been captured first, vowing to not finance hydrocarbon energy (beginning with coal). Freedom of Information Act litigation showed the bank's enthusiasm for the "climate" agenda. A senior bank official, Jim Mahoney, hired former Clinton hands as consultants to get the bank close to then-Secretary of State John Kerry with offers to sponsor as much of the 2015 Paris climate talks as it could.

Yes, financial institutions sponsoring treaty negotiations. More recently, FOIA litigation produced still more craven correspondence, this time to Yellen from, among others, Wells Fargo. In a March 2021 email to a senior Treasury official, former Clinton Treasury official turned Wells lobbyist Elisabeth A. Bresee laid out the bank’s “climate” plan:

I'm reaching out to share an exciting climate change announcement. Wells Fargo just announced that we're setting a goal of net-zero greenhouse gas emissions, including in its financed emissions, by 2050. Wells Fargo believes that climate change is one of the most urgent environmental and social issues of our time and, as one of the largest financial institutions, we are committed to taking action, including aligning our activities to support the goals of the Paris Agreement.

In recent years, we've made tremendous progress in meeting and exceeding sustainability goals in our operations, working with NGOs and other stakeholders on climate-finance strategies, enhancing our transparency and disclosure, and partnering to advance clean technology innovation, community resiliency, and green jobs. We've also put in place a strong foundation and processes for managing climate risk across the enterprise and accelerating sustainable finance in our lines of business, including providing financing for utility-scale renewables and clean technologies, underwriting sustainability bonds. and innovating in ESG-linked lending.

Our path forward includes five focus areas:

The email closed by checking every box in the woke liturgy, about being—

committed to fostering an inclusive recovery from Covid-19 and to building a more inclusive and sustainable future for all.… includ[ing] supporting greater racial equity across our business and philanthropic giving and addressing evolving issues like climate change,” with a nod to the bank’s “clients and stakeholders.

This week, the bank announced it was demanding Paris-like emission cuts from companies it lends to.

This inherently conflicted, inane equivalence between and even preference for “stakeholders” (pressure groups and political interests) over shareholders and clients is, according to the Wall Street Journal, "using the ethical-custom concept to impose a progressive agenda on American businesses. It will have negative implications for investor returns.” 

Yet the costs of this public-private tag-team are far greater. For example, in late 2021 some U.S. traditional energy producers, particularly coal and related industries (e.g., rail), were unable to affordably access capital markets to purchase (or, in some cases, re-purchase) equipment to ramp up production and transport in the face of a looming energy crisis (which continues today), leading to serious energy security concerns. The companies were informed by lenders that loaning money to, e.g., coal, gave the banks an “ESG problem.” 

Wall Street, we have an ESG problem.

This resulted not from regulation but pressure campaigns including from a Biden administration that has made clear it has targeted hydrocarbon energy interests for extinction and that assisting them would not be well-received in Washington. 

Such a policy directly threatens U.S. national security. The broader consequence of greenflation has pushed prices and the cost of living upwards, and destabilized manufacturing sectors in the U.S., U.K. and Europe. It has been a major contributor to European dependence on Russian energy, undermining the West’s geopolitical position and global security. 

It has made firms worldwide increasingly dependent on China’s so-very-not-ESG manufacturing and materials. What this agenda demands of targeted industries is strongly contrary to America’s interests but is precisely as countries who wish us ill would have things.

Financial institutions draw from the same talent pool from which the Biden administration staffs itself, with the same woke priorities. This misguided partnership poses a grave danger to the U.S.

ESG and the Road to Fiscal Hell

Over at The American Conservative, Kevin Stocklin has a disturbing piece on state pension fund managers investing workers' pensions in progressive ideological projects under the guise of ESG (Environmental, Social and Governance). That's the hot trend in money management, wherein money is invested based on supposedly "ethical" criteria, rather than solely on profitability projections. In other words, the ethical evaluations of the elitist liberals working in finance are being funded in part with the hard earned money of police officers, firemen, bus drivers, garbage men, and other city employees, and all without their consent. Of course, environmentalism is a key consideration for these E.S.G. enthusiasts. Here's Stocklin:

State pension fund managers who have declared that they will include environmental and social justice goals in their investment decisions collectively control more than $3 trillion in retirement assets and include the five largest public pension plans in the U.S.... Perhaps their most high-profile success came in June 2021, when CalSTRS, CalPERS, and NY State Common Retirement Fund joined three of the world’s largest asset managers, BlackRock, Vanguard, and State Street, in voting to elect clean-energy advocates to the board of Exxon and divert its investments away from oil and gas and toward alternative fuels. All of these pension fund and money managers except Vanguard are members of Climate Action 100+, an initiative dedicated to making fossil fuel companies “take necessary action on climate change.”

As big as that $3 trillion figure sounds, it is just the tip of the iceberg:

Many state pension funds outsource asset management to firms like BlackRock, State Street, and Vanguard, which are among the 236 asset managers who signed on to the Net Zero Asset Management Initiative. These signatories, which collectively control $57 trillion in assetspledged to achieve “emissions reductions” and to cast shareholder votes that are “consistent with our ambition for all assets under management to achieve net zero emissions by 2050 or sooner.” Signatories also pledged to “create investment products aligned with net zero emissions.” True to their word, they created a lucrative industry of Environmental, Social and Corporate Governance (ESG) investment funds, ESG rating agencies, and ESG consultants.

That's a lot of scratch backing green energy projects that already have the financial and regulatory might of the federal government in their corner. You'd think that that might give them the ability to successfully compete with oil and gas, but that is not the case. Not by a long shot. The biggest problem with this, from an investment point of view, is that these ESG funds haven't done particularly well relative to the market:

A study by the Boston College Center for Retirement Research in October 2020 found that for state pensions, ESG investing reduced pensioners’ returns by 0.70 to 0.90 percent per year.... In addition, an April 2021 report by researchers at Columbia University and London School of Economics found that... that “ESG funds appear to underperform financially, relative to other funds within the same asset manager and year, and charge higher fees.”

Moreover, the Columbia/L.S.E. study also concludes that "ESG funds have 'worse track records for compliance with labor and environmental laws, relative to portfolio firms held by non-ESG funds managed by the same financial institutions.' So much for ethics.

These are big problems, especially as the states are in the midst of an unfunded pension liability crisis, a slowly unfolding disaster. To remain solvent, the states need these funds to grow. Consequently, some states, like Florida, have been working hard to impose rules which "clarify the state’s expectation that all fund managers should act solely in the financial interest of the state’s funds," in the words of Governor Ron DeSantis. Hopefully others follow suit.

Luckily for us non-public workers, Congress passed the Employee Retirement Investment Security Act (ERISA) in 1974, which banned exactly this type of misappropriation of private pension funds. However, says Stocklin, while some lawmakers have called for ERISA to be extended to public funds, the Biden administration has announced that it will cease the enforcement of ERISA rules on managers who use private pension funds towards, "environmental and social goals."

Which is to say, we're screwed.

The 'Putin Price Hike' Show Flops in D.C.

The House Committee on Energy & Commerce has held hearings on high gas prices, known as downstream prices, to which they invited upstream oil and gas industry executives to testify.  While certainly not worthy of any Broadway accolades, the theatrics were nonetheless on full display. Missing only a marquee, the hearings were even given a name: "Gouged at the Gas Station: Big Oil and America’s Pain at the Pump." The dramatic title and alliterations aside, the event was a bust.

Led by Chairman, Frank Pallone (D-NJ), the upstream oil executives were one by one peppered with disingenuously framed questions regarding the industry and questions steeped in innuendo intended to buttress the most recent White House narrative about high retail gas prices. Instead of the administration unwinding what has proven to be an expensive and dangerous energy policy, the White House and congressional members have doubled down on their assertion that upstream oil and gas producers are gouging consumers. But there’s a problem. It simply isn't true.

Oil and gas producers have no control over the prices for which gasoline is sold at the downstream consumer level. It’s like blaming the owner of a gold mine for the price of jewelry. It’s a fundamentally flawed assertion, and something that Pallone certainly understands because there are refineries, part of the down stream segment of the industry, currently operating in New Jersey, the state he represents. As Chevron CEO Mike Wirth noted: “We do not control the market price for crude oil or natural gas or refined products like gasoline and diesel fuel.” 

The Honorable Frank Pallone.

Had congressional representatives even a modicum of intellectual honesty, they would’ve described the energy industry, like most industries, as multi-faceted. The upstream segment, made up of exploration, drilling and production, focuses on finding and extracting oil and gas from out of the ground. The midstream segment encompasses facilities and processes--think processing, storage and transportation via pipelines, rail, tankers and trucks. Finally, the current bane of the White House's existence is the downstream segment. This includes refining, marketing, transporting, and selling refined products made from crude oil. Downstream products are used globally and include gasoline, diesel, jet fuel, heating oil, and asphalt, among many other products.

The administration is attempting to conflate the activities and prices downstream with the activities of upstream companies and the executives that lead them. While related, neither segment controls the other, and all are needed in order for consumers to enjoy full access to the products and services that make up the U.S. economy.

Since Russia’s advance into Ukraine, the administration has floated a series of narratives attempting to explain away the high prices of oil and gas, including gasoline. While White House and congressional surrogates have offered tips ranging from, "buy electric vehicles" to "it’s the Putin’s price hike," they have failed to make headway with adult Americans. They tried spoon-feeding the Putin narrative to TikTok teenage influencers who, not unsurprisingly, ended up being more interested in Ukrainian-themed emojis than energy policy.

The American people, it turns out, have refused to swallow any of these explanations, fully understanding that downstream gas prices aren’t set by upstream executives, and that  prices began rising for all sectors of the economy shortly after Biden took office, not merely six weeks ago when Russians entered Ukraine. The "gouging" narrative is merely the latest effort to deflect from the costly reality the administration’s own energy policy have created for Americans.

When Biden took office, he began manipulating the supply of domestic energy through regulatory overreach, including most recently via the Security Exchange Commission (SEC). Using the dubious, "environment, social and governance" standard known as "ESG," and with assistance from investment bank Goliaths who are divesting from the industry, domestic energy production has been impeded by the Biden administration directly. Its efforts have resulted in supply scarcity driving up the cost of energy for business and consumers alike. The average national retail (downstream) price of a gallon of gas on April 9, stood at $4.12 per gallon. Because of the changes Biden has made to domestic energy policy since taking office, prices are approximately 45.32 percent higher than a year ago.

You voted for it, sister.

So where does that leave "gouging"? Enter federal and state gas taxes. The federal government charges an 18.4-cent tax on every gallon of gas Americans buy. The federal diesel fuel tax is similar, representing 14 percent of the price of every gallon of diesel purchased. A suspension of these federal taxes would represent an immediate and substantial tax cut for all Americans, helping to invigorate economic activity across the country.

So popular an idea is the federal gas tax suspension, that six democrats have even suggested that it’s time for Biden to lead the effort. Last month a bill proposing a federal gas tax suspension was sponsored by Sen. Debbie Stabenow (D-Mich.), and Michigan Democratic Reps. Elissa Slotkin and Dan Kildee. They were hoping the administration would realize how negatively Biden’s high fuel prices are affecting the health of the larger economy.

The gas taxes at the state level offer even more potential relief. States levy gas taxes in a variety of ways, including per-gallon excise taxes collected at the pump, excise taxes imposed on wholesalers (which are necessarily passed along to consumers in the form of higher prices), and sales taxes that apply to the purchase of gas. According to the American Petroleum Institute, as of January, 2022 California has the highest tax rate at $0.6815 per gallon, followed closely by Illinois at $0.591, Pennsylvania at $0.5870 per gallon, and Washington and New Jersey around $0.50 per gallon. Alaska, by contrast, has the lowest rate at $0.1513 per gallon.

Since entering office Joe Biden has sought to fundamentally change America through manipulation of the economic, social, and political constructs essential to a thriving economy and a free society. Key to their effort is increasing the price of oil and gas for everyone. Charades like those on display last week on Capitol Hill seek to demonize the energy industry. Americans, however, are now fully aware of the depth of deception to which this administration will go, are keen to remind it that oil and gas aren’t the only things that are expensive. Miscalculations are too.

Biden Resumes Drilling Leases, but With a Catch

Sixteen months into Joe Biden's term in office, with soaring energy prices due to demand exceeding supply, inflation eating away at state and family budgets alike, and very much against its will, the White House has decided to change course and start selling oil and gas leases again.

The Biden administration announced Friday that it would resume selling new oil and gas leases on federal lands.... The announcement comes as Republicans pressure President Joe Biden to expand U.S. crude production and rein in higher gasoline prices contributing to record inflation.... Leases for 225 square miles (580 square kilometers) of federal lands primarily in the West will be offered for sale in a notice to be posted on Monday, officials said.

There's a catch, of course.

The Interior Department on Friday said it's moving forward with the first onshore sales of public oil and natural gas drilling leases under President Joe Biden, but will sharply increase royalty rates for companies as federal officials weigh efforts to fight climate change against pressure to bring down high gasoline prices.

The royalty rate for new leases will increase to 18.75% from 12.5%. That's a 50% jump and marks the first increase to royalties for the federal government since they were imposed in the 1920s. Biden suspended new leasing just a week after taking office in January 2021. A federal judge in Louisiana ordered the sales to resume, saying Interior officials had offered no "rational explanation" for canceling them.

The announcement came on Good Friday, with Biden safely hidden away at Camp David for his Easter vacation, and therefore unavailable to answer questions, so was delivered by Interior Secretary (and devoted environmentalist) Deb Haaland, who had to sugarcoat the news for her fellow Green New Dealers, sprinkling into her speech standard lefty nonsense:

For too long, the federal oil and gas leasing programs have prioritized the wants of extractive industries above local communities, the natural environment, the impact on our air and water, the needs of tribal nations, and, moreover, other uses of our shared public lands.

She neglected to mention the fact that Native groups have begged for an exemption to the original leasing ban, which they felt violated their autonomy, and were eventually granted one. Unfortunately the "local communities" who lost out on their lease revenues weren't so lucky.

Those communities will, however, benefit from the reported 50 percent hike on royalties for the new leases. Of course, this will likely have the effect of limiting the number of potential buyers. Moreover, the amount of land being offered for leases is substantially lower than that requested by the resource sector.

It didn't get as much publicity as the Keystone XL cancellation, but Joe Biden's executive order putting a moratorium on the sale of oil and gas leases on federal land was a very big deal. As we wrote at the time,

[Twenty-two] percent of American oil production and 12 percent of natural gas extraction occurs on federal land. Those numbers go up precipitously when you look at some of our western states -- according to the American Petroleum Institute, federal land production accounts for well over 92 percent of Wyoming's production, half of New Mexico’s, 42 percent of Colorado's, and 63 percent of Utah's.

Along with the likelihood of serious supply issues resulting from this order, we were also concerned about the financial angle -- according to Shawn Regan, “revenues from energy development on federal land... are a major source of federal income, second only to tax revenue.” As that revenue is split between the federal government and the states, this move was a direct attack on the budgets of western, resource heavy states who stood to lose as much as $1.6 billion per year on average.

 

'Slacktivism' from the Biden Administration

If you use social media at all, you've encountered "slacktivism." Urban Dictionary defines it as "The self-deluded idea that by liking, sharing, or retweeting something you are helping" a particular cause. It is among the laziest forms of virtue signaling. Thirty years ago you might spend ten bucks on a shirt that said "Free Tibet." Nowadays you don't even need to do that much -- you can just add a "frame" to your Facebook profile pic announcing to the world that you "Support Our Teachers," "Believe No One is Illegal" or -- a common one in the Covid era -- that you intended to "Stay Home to Save Lives" and expected everyone else to too.

Well, the ongoing crisis in Ukraine has brought the slacktivists out in full force. People who couldn't tell Ukraine from Uruguay or Uzbekistan a week ago now have now saturated their social media feeds with the country's blue and gold flag. Viral tweets and tik-toks go on and on about the supposed "hotness" of Ukrainian president Volodymyr Zelensky. And desperate celebrities have felt the need to get in on the act, (opening themselves to entirely justifiable mockery).

And then there's whatever the hell this is, from actress and now poet, AnnaLynne McCord:

As ridiculous as all of this is, it's somewhat understandable. People like to feel that they're doing something in a crisis, but in a situation like this there isn't much that civilians can do. What is infuriating, however, is when governments and politicians try to get away with slacktivism when actual action is what's called for.

The Biden Administration's position on Russian oil and gas is a good example. America purchases roughly 600,000 barrels of Russian oil per day at the moment, despite having achieved virtual energy independence just a couple of years ago. In 2018 the United States produced 95 percent of its domestic energy needs, the largest percentage in more than fifty years, and by 2019 we had become a net energy exporter for the first time in seventy years.

What has changed in the meantime? Well, Joseph R. Biden became president of the United States and declared war on the American energy industry right out of the gate. Upon taking office Biden commenced what the Associated Press called "a ten day blitz of executive actions" with the intent of "redirect[ing] the country in the wake of Donald Trump’s presidency without waiting for Congress." Killing the Keystone XL pipeline and banning oil and gas leases on federal land were at the top of his list. Since then, Russian oil imports to America have tripled, making us just one of the many western nations dependent on Russian energy. Revenue from that oil is now funding the Russian war machine, but we've been careful not to hit Russian petroleum products with sanctions because we and our allies are so dependent upon it.

This is insane, and people are starting to notice. Senator Joe Manchin pointed out that this is now a national security issue, and he called on the Biden Administration to change course and incentivize domestic oil production. This would have to include greenlighting Keystone and backing down on oil and gas lease suspensions. Which is to say, putting things back the way they were before Biden screwed them up.

Is such a move even being considered? Apparently not. When asked in a recent interview about these calls from Republicans and Democrats alike, White House press secretary/slacker Jen Psaki said they represent a "misdiagnosis of what needs to happen." She continued, saying "what this actually justifies in President Biden's view is the fact that we need to reduce our dependence... on oil in general ... and we need to look at other ways of having energy in our country and others."

Translation -- instead of fixing a real problem, we're opting to live in an imaginary lollipop land in the sky where all of our problems are solved by the sunshine. That hasn't worked for Germany and it won't work for us.

Biden Blows Up Yet Another Gas Pipeline

Are you baffled by an administration which, to take just one example, adopts an open border policy at home while mouthing platitudes about the sanctity of borders regarding Russian incursions in Ukraine? There’s an easy answer: its policy is to strengthen the hand and fill the pockets of  those who oppose and wish to weaken us at every turn while harming the interests of American citizens and our allies abroad.

Take seven-billion-dollar Eastern Mediterranean Gas Pipeline. In August of 2020 I reported how the Greeks, Cypriots, and Israelis  had coordinated plans for a 1,200-mile undersea pipeline connecting Israeli and Cypriot gas fields to Greece and then to Europe. This is a huge, expensive project in which, following on the Abraham Accords engineered by then-President Trump, the United Arab Emirates has a substantial interest, including a 22 percent stake in the large Israeli Tamar gas field.

President Trump  supported the pipeline. But President Biden, in a “non -paper” (an unofficial communication), has notified the Greek government that we are no longer supporting the project, allegedly because it posed a security threat to the region. Except, of course, when Russia wanted waivers to build Nord Stream 2,  a non-green gas pipeline to Europe, it had no such qualms.

The Eastern Mediterranean pipeline would have benefitted our allies Greece, Cyprus, Israel and the UAE. It would as well, have provided desperately needed future  energy supplies to Western Europe which has been engaged in suicidal green policies. As a result, Western Europe at the moment faces a cold winter with insufficient energy, predictable shortages, higher prices, and potentially disastrous economic consequences, including manufacturing shutdowns.

It is hard to sympathize with a Europe whose leaders have made their lack of natural energy sources like coal and oil worse by adopting explicit anti-energy policies. Its governments have banned hydraulic shale fracturing of which it does have substantial amounts of technically recoverable shale gas. Coal-rich Germany has made itself dependent on outside sources of energy, primarily Russian gas, shutting down three nuclear plants and planning to mothball three more this year. It has allowed LNG import terminals to be snarled in permitting delays, cutting off another possible source.

But even if you have little sympathy for our allies on this score, the withdrawal of support for the pipeline will harm U.S. interests. If we wish to discourage Russian incursions into Ukraine, we are hamstrung by Europe’s dependence on Russian gas (about 40 percent of imports at present) and certain to rise. To tighten the screws, Russia has the capacity to inflict great damage by instituting a gas embargo or simply reducing gas supplies, reducing Europe to dependency. Additionally. Russia has had a large hand in fueling the "green" opposition to energy in western Europe.

Russia is not the only beneficiary of this volte face on the pipeline. Turkish president Recep Tayyip Erdogan sought to undermine the project from its inception because he gets no benefit from it. Why shouldn’t this latest Biden administration blunder give him more reason to crow?

Joe and Vlad: the Odd Couple

President Biden was roundly mocked last week for answering a reporter's question about a potential Russian invasion of Ukraine with a bowl of fully dressed word salad which began, "It's one thing if it’s a minor incursion." And rightly so -- it was a bizarre response that sent the wrong signals to all parties. I'm sure Ukraine's President Zelensky didn't relish having to send out this tweet in reply:

But this isn't the first time that Biden has broadcast mixed signals on Russia. Remember when his administration gave the go-ahead for construction of the Nord Stream 2 pipeline, which will allow Russia to transport natural gas to desperate western European nations like Germany without having to go through Ukraine? Team Biden had condemned the project in the clearest possible terms, saying Nord Stream was "a bad deal because it divides Europe, it exposes Ukraine and Central Europe to... Russian manipulation, and because it goes against Europe’s own stated energy and security goals." And then one day -- immediately after Russian hackers shut down a major American pipeline for several days, oddly enough -- he relented. Sorry, Ukraine!

Even seemingly unrelated Biden moves have redounded to Russia's benefit. The cancellation of the Keystone XL pipeline extension, for instance, was Biden's first attempt at undermining former President Trump's goal of American energy independence. Well, here we are a year later and American oil imports from Russia have more than tripled! Whereas thousands of oil and gas workers in the U.S. and our ally Canada have lost out, thousands of Russians (and their Putin-crony, ex-KGB, oil billionaire bosses) have gained.

What's in it for the Big Guy?

We've just had four years of frankly libelous accusations against Donald Trump, claiming that he was a Putin stooge who colluded with the Kremlin to (somehow) steal the 2016 election, that he might even have been a Soviet sleeper agent, or at least that he was desperate to prevent the leaking of whatever kompromat they had on him. The reality is that Trump came into office hoping to improve our relationship with Russia, just like every president since the fall of the Berlin Wall, but on the level of policy he was actually tougher on Putin than any of his predecessors.

Meanwhile, Biden is always happy to talk trash about Putin to American reporters -- he's recently taken to claiming, unbelievably, that he looked Putin in the eye in 2014 and said to him, "I don't think you have a soul" -- but somehow Putin always seems to come away the winner in every situation Biden involves himself in.

Is it just me, or is "America First" sounding like a much better foreign policy by the day? I bet they're starting to feel the same in Kiev right about now as well. In Moscow, well, maybe not so much.