Nationalize 'Big Oil'? Are You Crazy?

Since the Biden regime is busy reviving every bad idea from the late 1970s such as stagflation, the energy crisis, price controls, and weak foreign policy, it was inevitable that one of the worst ideas from that era is also trying to make a comeback: nationalizing “big oil.”

Back in the 1970s the proposal to nationalize the oil industry found support from some otherwise sober-minded figures such as Sen. Henry “Scoop” Jackson, while today the idea is being flogged mostly by predictably radical figures such as Bernie Sanders and Elizabeth Warren, and deep green climate alarmists, such as William S. Becker. But with President Joe Biden, surrounded in the White House by true believers in the climate mania, menacing the oil industry with demagogic charges of “profiteering,” it is not hard to see the idea gaining traction with the progressive left desperate to avoid electoral disaster in November.

And help us freeze to death.

Back in the 1970s, the premise behind nationalizing “big oil” was that the federal government could manage oil production better than private industry in the interest of consumers by stopping “profiteering” and smoothing out production epicycles. The proposal never got very far for the simple reason that most Americans didn’t think the same people who run the Post Office monopoly would be competent at running the oil industry. The record of foreign nations that have government-owned and run oil industries is pathetic. Consider for example the 75 percent decline of Venezuela’s oil production since Hugo Chavez expropriated private and foreign oil companies. The steady decline in production of Mexico’s ample oil reserves under Pemex finally prompted Mexico to open its oil industry to foreign private companies.

It is an unappreciated fact that over 90 percent of the world’s oil reserves are government-owned, rather than privately owned, and this contributes to instability in the long-wave oil price cycles. It is not the oil majors that manipulate oil for political reasons; it is governments. The world and the oil market would be better off if it privatized oil resources.

The argument today is quite different. Writing in The Hill, Becker deserves credit for being explicit: his purpose is nationalizing oil companies is to put them out of business: nationalizing the oil industry “would allow the government to manage the industry’s drawdown, a process the private sector is ignoring... The federal government typically nationalizes companies to save them. In this case, it must nationalize Big Oil to save us all from a future we don’t want.” Translation: the oil industry isn’t committing suicide fast enough to suit the environmental fundamentalists.

Windfall profits? What windfall profits?

To be sure, the major oil companies invited some of this with their ill-considered pledges to be “carbon-neutral” by 2050, no doubt thinking that the latest climate policy euphemism for “we don’t really mean it”—“net-zero emissions”—leaves plenty of wiggle room for creative emissions accounting. Rather than thinking they could appease the climate campaign with these virtue signals, they’d be better off straightforwardly defending their industry in the manner of Chris Wright, CEO of Liberty Oilfield Services. Wright argues: “If you look at the bigger picture, our industry causes a dime of damage to the world and a dollar of benefit. The benefits versus the costs are enormously larger.” Or the oil industry could simply cite all of the official international government forecasts that conclude that the planet will still depend substantially on oil, natural gas, and coal in 2050.

The plight of Europe since the outbreak of the Ukraine War shows the folly of suppressing our own oil and gas sector and making ourselves wholly dependent again on foreign suppliers to fill the gap when “green” energy inevitably falls short of its extravagant (and extravagantly expensive) promises. Europe is already looking for face-saving ways to back away from its sanctions against Russian oil and gas while cranking up coal power, the most hated energy source. Germany faces a non-trivial possibility of running out of natural gas next winter. Meanwhile President Biden is groveling cap-in-hand before the oil sheiks of the Middle East, who may be no more inclined than Putin to help out the person who the day before, in the case of Saudi Arabia, labeled them human rights monsters. It doesn’t take much imagination to realize how much worse off the U.S. would be if we forcibly shut down our own oil companies.

"Fracking Damages Our Beer." OK, then!

To the contrary of claims that the oil industry is reaping “obscene” profits, we should entertain the proposition that the industry needs much bigger profits. It is tedious, but necessary for the slow learners on the left, to repeat some elementary facts about the oil industry. Its profit margin is close to the average for all manufacturing companies (and less than half the profit margin for tech companies like Apple), and often sees its profit margin collapse in the regular epicycles of global oil prices. Given that the Biden Administration and woke Wall Street have been constricting the oil industry’s access to capital, the industry is more reliant than ever on generating internal capital—not only for continued exploration and production, but for the investment necessary to develop new technologies that actually mitigates emissions, such as carbon sequestration or carbon air capture.

The oil majors, especially ExxonMobil and Chevron, did push back politely against Biden’s oil demagoguery. Chevron was the most candid: “Unfortunately, what we have seen since January 2021 are policies that send a message that the Administration aims to impose obstacles to our industry delivering energy resources the world needs.” If they really want to make progressive heads explode, they should follow up with the argument that they need larger profits.

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.

THE COLUMN: Dead on Arrival

At the opening of the 1950 classic film noir, D.O.A., Edmund O'Brien strides purposefully into a big-city police station, proceeds down long, endless corridors, and finally arrives at a door marked Homicide Division. "I want to report a murder," he says to the head detective. "Who was murdered?" asks the cop. "I was," replies O'Brien.

In this, year two of the dreadful administration of Joseph Robinette Biden, Jr., we Americans know just how he feels. From the moment this blustering blowhard of a United States senator of no accomplishment from a meaningless state took office in January 2021, he has been busily poisoning the country for the simple reason that he can, he wants to, and there is no one to stop him.

The beneficiary of the hinkiest election in modern American history thanks to the illegal changes in balloting occasioned by the unnecessary Covid panic, and given the narrowest possible margins of control in both the House and the Senate, the superannuated chief executive has done everything in his power to show his contempt for the American people, to damage our patrimony, and make our lives increasingly miserable. 

And yet, like O'Brien, we're not quite dead yet, and still staggering around trying to catch our murderer before time runs out. Barring the hand of God, the first opportunity we'll have to put Biden out to pasture won't come until November 2024, and while the congressional elections this fall could possibly remove both houses of Congress from the geriatric clutches of the bibulous Nancy Pelosi and the baleful Chuck Schumer, that can only stanch but not stop the country's internal hemorrhaging. Like the hapless Frank Bigelow, desperately searching in his last hours for the psycho killer who poisoned him before the "luminous toxin" kills him, we're unsure whom to trust, with both friends and foes suspects alike. 

"This can't be happening," we think, but it is. Under the cloak of Covid "emergency"—the punitive lockdowns, the destruction of our education system, the loss of social contact, the delusion that our fellow humans were carriers of a deadly disease who needed to be shunned or even imprisoned—Americans' constitutional freedoms were summarily abrogated without a shot being fired, and we were consigned to effective house arrest (and worse in places like Australia and Canada). Our freedom of movement—essential to life in a country as large as the United States of America—was drastically curtailed and our transportation system deliberately wrecked. Meanwhile the "climate change" canard continued apace, and the push for electric vehicles was intensified, even as the nation's electric grid was tangibly collapsing.

Since Robinette took office, gas prices have more than doubled, part of the Strategic Petroleum Reserve has been emptied, our hard-won energy independence achieved during the Trump era has been frittered away, and we've been reduced to begging erstwhile enemies like the "kingdom" of Saudi Arabia to do the jobs Americans just can't be allowed to do. If this looks like a conspiracy to you, don't worry: it is. And one that the conspirators have been quite open about for decades. They're a suicide cult, hell-bent on killing us as well as themselves:

Analysis has now shown that the carbon embedded in existing fossil fuel production, if allowed to run its course, would take us beyond the globally agreed goals of limiting warming to well below 2˚C and pursuing efforts to limit to 1.5˚C. The global carbon budgets associated with either temperature limit will be exhausted with current fossil fuel projects, and in fact some currently-operating fossil fuel projects will need to be retired early in order to have appropriately high chances of staying below even the 2˚C limit, let alone 1.5˚C.

Therefore, we, as over 400 civil society organizations from more than 60 countries, representing tens of millions around the world, call on world leaders to put an immediate halt to new fossil fuel development and pursue a just transition to renewable energy with a managed decline of the fossil fuel industry.

The first step in this effort is a simple one: Stop digging. No additional fossil fuel development, no exploration for new fossil fuels, no expansion of fossil fuel projects. We need to keep fossil fuels in the ground.

Just about every word in this screed is either a false premise or an outright lie. The notion of keeping global temperature increases to under 2℃ is purely arbitrary, while the idea of carbon being a pollutant is anti-humanism at its most pernicious, since we are carbon-based life forms who breathe in oxygen and exhale carbon dioxide—the very stuff of life for the green trees and fields the Left constantly celebrates, the concept of symbiosis being apparently beyond them. The unsightly forests of Brobdingnagian windmills currently uglifying landscapes around the world testify to the success of their monomania. 

Their blatantly dishonest attempts to link "climate" with weather, however, have had their intended effects on public opinion, pushed largely by propagandistic media outlets such as NPR and the New York Times, which has a whole "hub" devoted to the subject as well as a regular section on "climate and environment." It's important to note here that the Times's reach extends far beyond its direct readership, since its news judgment sets the table for every other media outlet in the country, while your tax dollars subsidize NPR's increasingly deracinated fixations on "climate change," race, and trannies. And naturally you know who's on board with the whole thing:

So those high prices for gasoline and the long, chaotic lines and canceled flights at the airports are not a bug, they're the lynchpin of the whole scheme, which is itself part and parcel of the entire Great Reset project (about which much more tomorrow; watch this space). In order for the Lords of Davos to control you they must first curtail and control your freedom of movement, and what better way to do that than to make the price of oil prohibitively expensive? First your cars stop moving, then the trucks that deliver almost everything of value, including food, to the stores. An inability to move freely and without government oversight will vanish as computers take over your automobiles and which, when they are fully electric, can be disabled at will. As they like to say: You'll own nothing, and you'll be happy
 
What better metaphor, then, for the parlous state of our national affairs than the sight of Biden on his keister after toppling off his bike over the weekend. This frail, thoroughly nasty man with some very peculiar tendencies and an immediate family that might best be described as Caligulan in its behavior, not only embarrassed himself but the country he pretends to lead. "I'm good," he said after his tumble, which may be his biggest and most brazen lie of them all.
 
In the the meantime, we keep rushing around in the dark, trying to figure out why this happening and who is doing it to us. We know the answer, but feel there's nothing we can do about it. Like Bigelow, we'd like to see the man in charge, but nobody is, not really. We can breathe and we can move, but we're not alive because we took that poison, and nothing can save us. We know who the psycho killer is, half our fellow countrymen voted for him, and the murder is taking place in full view from sea to shining sea.
 
Unless a miracle happens, we're D.O.A. and our final destination is dead ahead. 

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.

Loader Loading...
EAD Logo Taking too long?

Reload Reload document
| Open Open in new tab

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.  

Seven-Dollar Gas Just Around the Corner

We've just passed Memorial Day, the unofficial start of summer, and most Americans have already begun to map out their vacation plans for this year. After two summers lost to the Wuhan coronavirus there seems to be a widespread desire to make up for lost time by packing the kids into the car and heading out for an adventure.

Unfortunately, the price of gasoline figures to take up a significantly larger chunk of the vacation budget this year. The Energy Information Administration's average gas price tracker has been helpfully demonstrating the fact that, with more-or-less every update, we set a new record for prices at the pump. That record for the week ending on May 30th is $4.727 per gallon, with prices in some places in California topping the federal minimum wage of $7.25 per hour according to CBS News. These are almost unimaginable sums considering the fact that the price was $2.464 when Joe Biden took office.

And it's going to get worse. Fuel price analyst Patrick De Haan predicts that the price of gas will hit $5 per gall by June 17th. JPMorgan analyst Natasha Kaneva predicts that we will be paying $6.20 nationally by August. Both of those projections came out before the announcement that the European Union would ban Russian oil and gas imports by the end of 2022, which led to a significant increase in the per-barrel price of oil. Which is to say, those might be underestimates. We could be close to $6 per gallon by the Fourth of July. Maybe by Labor Day we'll be nearing $7.

Speaking of Russia, Ed Morrisey deftly counters the ridiculous White House spin that this is a crisis of Putin's making, saying "Gas prices have escalated by 91% under Joe Biden … so far. They went up 43% before Vladimir Putin began positioning troops around Ukraine, in fact." Had Biden not declared war on the oil and gas industry right out of the gate, we would have been better able to absorb Putin's blow to oil markets. Indeed, we would have been well positioned to step into the role of Europe's preferred energy supplier, likely bringing about a Russian energy embargo much sooner and possibly preventing the war from dragging on as long as it has.

Luckily Biden's attempt to pass the buck doesn't seem to be fooling anyone--  a new poll by the Trafalgar Group found that 60 percent of Americans believe Biden's policies are primarily to blame for our current economic woes. That bodes well for the midterm elections and, if it holds, for the elections in 2024.

Maybe those will lead to the types of policy changes that will turn this crisis around. Unfortunately they won't happen soon enough to keep gas prices from ruining our summer.

All Part of the Plan

It's almost as if President Biden has generously agreed to film opposition-research ads for the RNC in the lead-up to the midterm elections:

That was Biden's response when he was asked during a press conference in Japan earlier this week about the possibility of an American recession. The obvious implication of this statement is that high gas prices are not an unfortunate byproduct of events that are beyond the Biden Administration's control, but in fact are the intended outcome of the president's policies. Of course, this conflicts with Biden's defensiveness about gas prices in the same statement, as when he said,

And what I’ve been able to do to keep it from getting even worse — and it’s bad.... But we have released over two hundred and, I think, fifty-seven thousand — million barrels of oil, I should say. Us and the rest of the world we convinced to get involved. It’s helped, but it’s not been enough.

Well "helped" is a strong word, Mr. President, as those "two hundred and... fifty-seven thousand — million barrels of oil," had only the slightest impact on the price of petroleum products, just as we predicted when their release was announced:

Meanwhile, the Strategic Petroleum Reserve, which exists for a true national emergency -- not to arrest the president's tumbling poll numbers -- is now emptier than it has been in nearly 40 years and the federal government will have to purchase oil at a much higher rate per barrel to replenish it.

Still, this seems like a shift in approach from the administration, of a piece with their decision to cancel already scheduled oil and gas lease sales. Those leases were announced with an eye towards tamping down on exploding gas prices. Canceling a not-insignificant number of them after their sale had been announced was likely done to placate Biden's environmentalist supporters, but it also demonstrated the White House's growing realization that none of its proposed half-measures were going to get pump prices down to an acceptable level. Nothing short of a total about-face would move the needle in the right direction, and their attempts to spit on an intensifying conflagration were just making them look weak.

So what solution did they come up with? Lean into high prices. This is Putin's doing, yes, but it is also part of the glorious green energy transition which will leave us all better off! That is to say: Don't worry, this was all part of the plan. It's a desperate move and it isn't going to help them in November. But it will result in a rough economic summer just as American's were gearing up for a post-Covid party.

Start prepping for that recession.

Welcome Back, Carter. Nixon, Too

It's almost a cliché at this point to mention this similarities between Joe Biden and Jimmy Carter. Not that that's stopped us, nor will it when the observation is accurate. But it is worth pointing out that the president isn't the only elected official who seems hell bent on recreating America's most disastrous decade since the close of the Second World War, that is, the 1970s.

The House's Democratic majority overcame some internal opposition to pass legislation on [May 19] addressing high gas prices by cracking down on possible price gouging from oil companies. The bill was approved along party lines in a vote of 217-207. Four Democrats -- Texas' Lizzie Fletcher, Jared Golden of Maine, Stephanie Murphy of Florida and Kathleen Rice of New York -- joined all Republicans in the chamber in voting against the legislation.

The Consumer Fuel Price Gouging Prevention Act, introduced by Reps. Kim Schrier, D-Wash., and Katie Porter, D-Calif., would give the president the authority to issue an energy emergency proclamation that would make it unlawful for companies to increase fuel prices to "unconscionably excessive" levels.

"The problem is Big Oil is keeping supply artificially low so prices and profits stay high. Now I think that when the market is broken, that's when Congress has to step in to protect American consumers," Rep. Frank Pallone, D-N.J., the chair of the House Energy and Commerce Committee, said in a hearing on Monday. "And that's what this bill does: It empowers the FTC to go after the gougers and empowers the agency to effectively monitor and report on market manipulation."

If you're old enough to have watched Rhoda or owned a record by Bread, this move might sound familiar to you. That's because the Nixon administration introduced price controls on gasoline and other consumer goods in the early '70s, while regulations grew up to strangle the expansion of the oil and gas industry throughout the decade. It was a spectacular failure, as anyone with any grasp on basic economics could have predicted. That's why one of the most recognizable images of the decade -- right up there with with the Bee Gees and John Travolta on the Saturday Night Fever soundtrack -- is motorists lined up for miles waiting for gasoline.

Loader Loading...
EAD Logo Taking too long?

Reload Reload document
| Open Open in new tab

The president of the United States is nearly 80 years old, the speaker of the House is 82, as is the House majority leader, while the Senate majority leader is a comparatively sprightly 71. They were all adults in the 1970s. Indeed, they were all working in politics at the time. You'd think they would remember what a disaster it all was. Isn't the purported advantage of a gerontocracy that the agèd rulers would be able to recall the mistakes of the past and, more importantly, how to avoid repeating them? Perhaps President Biden isn't the only powerful person in a state of cognitive decline.

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.

Desperate Times Mean Desperate Measures

One sign that the Democrats are getting increasingly concerned about their potential losses in the upcoming midterm elections is that they're frantically trying to find ways to, at least temporarily, deal with the soaring price of gasoline. The president's decision to further deplete the Strategic Petroleum Reserve is a prime example, but it isn't the only one. Here are a few others:

Da Mayor.

California deserves its own special mention here. Golden State governor Gavin Newsom recently unveiled an $11 billion relief package in the hopes of combating the state's highest-in-the-nation gas prices. The average price in California recently hit $5.88 per gallon, though it has passed the $6 mark in many areas. As the Wall Street Journal notes dryly, "Gasoline prices in California are often higher than in other states due to higher fuel taxes and stricter regulations." No kidding. More than $1 billion of the Newsom proposal comes from the gas tax reduction.

The biggest chunk of money, however, is allocated to issuing $400 debit cards for all registered vehicle owners (with a two-car maximum). Unlike the Chicago gas card plan mentioned above, which is directed towards middle and lower income residents, Newsom's plan has no income cap. Neither is it targeted towards the owners of gas-powered cars. Electric vehicle owners are also eligible. For some reason. The cost: a cool $9 billion. Newsom also called for $750 million to be spent on free (at the point of service) public transportation for three months and, this writer's personal favorite, $500 million to "promote biking and walking."

Now, all of these plans are expensive workarounds which ignore more straightforward solutions. They're also transparently self-serving, temporary in nature, and of questionable efficacy -- as Jinjoo Lee recently argued, the degree to which these temporary cuts "translate to lower pump prices partly depends on the size of the market and how strained a region’s refining system is." Still, as vacation season approaches and the war in Ukraine drags on, it is better than nothing.

And, more important, it is a refreshing sign of politicians' accountability to the voters. To see the opposite response, here's Steven Guilbeault, former Greenpeace activist, and (God help us) Canada's current Environment Minister, explaining his opposition to proposed fuel taxes in that country. He said, "All of these crises will go, but climate change will still be there, and climate change is killing people." Guilbeault's party just made a deal that keeps them in power until 2025. He's not accountable to anyone.

Making a Bad Situation Worse

The Left has an unhealthy tendency to treat the economy -- a complex, organic system of human interaction -- as if it were a machine they can easily manipulate by means of a clever regulation or three. We caught a glimpse of this in the early months of the pandemic, when talk about "shutting down" and then "prudently restarting" the economy (once Donald Trump was safely out of office, of course) was ubiquitous in respectable leftist discourse. In fact, the economy never stopped running, lockdown or no. That's because it isn't like a computer which can be flipped off and on again. The economy is more like a human body, and when you seriously disrupt the function of a body, the consequences are dire.

Ordinary people are feeling the economic consequences of those lockdown disruptions right now in the form of soaring inflation and elevated prices for gasoline, consumer goods, and services. And despite their role in bringing these things about -- pumping out trillions of dollars of funny money long after anyone thought it made sense and declaring war on the resource sector as worldwide energy prices were exploding -- the Left is  now openly pondering further destructive interventions with the aim of getting things under control.

We've already reported on the White House's cynical decision to -- once again -- tap into the Strategic Petroleum Reserve, leaving it at its lowest level since 1984 and almost exclusively to combat high gasoline prices. Well, as the Daily Caller reports, things haven't played out exactly as the president hoped:

Oil prices shot up Monday despite President Joe Biden’s plan to curb gasoline prices by releasing a million barrels of emergency oil reserves daily. The Brent crude index, the global oil benchmark, increased to $108.07 per barrel Monday morning, surging more than 3.1 percent overnight. The U.S. WTI index skyrocketed more than 3.4 percent past $103 per barrel Monday.

In response to the White House's announcement, Institute for Energy Research President Tom Pyle said “It’s not a ‘strategic price reserve.’ It was never intended for this and it won’t do anything [for prices]." Thus far, he has been proven exactly right.

But perhaps even more concerning is the increasing openness of prominent Leftists like Elizabeth Warren and Bernie Sanders to attempt to right the ship by enacting 1970s-style price controls. Andy Kessler of the Wall Street Journal compiles several quotes suggesting that even Joe Biden is considering going down that road. He then explains why this would be disastrous:

Prices set by producers are signals, and consumers whisper feedback billions of times a day by buying or not buying products. Mess with prices and the economy has no guide. The Soviets instituted price controls on everything from subsidized “red bread” to meat, often resulting in empty shelves. President Franklin D. Roosevelt’s National Recovery Agency fixed prices, prolonging the Depression, all in the name of “fair competition.” Watch for the resurrection of that phrase to rationalize price controls.

In 1971 President Richard Nixon announced, “I am today ordering a freeze on all prices and wages throughout the United States.” We got new government entities: a Pay Board and a Price Commission. Americans paid for this mistake for another decade. Farmers drowned chickens rather than send them to market. Store shelves emptied. Price controls contributed to long lines at gasoline stations in 1973 during the Arab oil embargo. It’s pretty simple: When you freeze prices too low, producers stop producing. Price controls don’t work. Never have, never will.

Which is to say, the cures these people are proposing are worse than the disease. Even so, look for these hairbrained schemes to multiply until they're out of power. Unfortunately, they are sure to have knock-on effects for years to come, and we are going to be the ones who suffer for it.