Biden Didn’t Do This
I am tired of seeing “Biden Did This” stickers on gas pumps. So here is my point of view that doesn’t fit on a sticker.
For me, there is no question the Biden administration has mishandled the economy by initially treating the spike in inflation as a temporary phenomenon related to the supply chain issues. Now the fed is taking dramatic action which is never a good thing. But …
… the president’s policies have little to no direct impact on cost of oil/gasoline. Never has. Never will. The three main arguments you hear that Biden is the cause of the spike in gas prices are as follows:
- He canceled the construction of the Keystone pipeline.
So what? The pipeline wasn’t online and wasn’t going to be online in time to have any impact on this crisis so clearly has no immediate impact on price of gasoline.
- Biden’s policies restrict ability for oil companies to lease and drill on federal lands.
Thanks to the courts, one year after announcing a halt to any new federal oil and gas leasing, Biden has outpaced the Trump administration in issuing drilling permits on public lands. Including the largest offshore lease sale last year in the Gulf of Mexico.
- Biden is browbeating banks into reducing capital lending to oil companies and restricting their ability to ramp up production.
Big oil has made record profits from the spike in crude oil. For 2021, cash from operations increased from $10 billion to over $25 billion. Capital spending has increased from $6 billion to over $15 billion.
But the truth is in the numbers. If Biden has been so negative to Big Oil, we should see an impact in the US oil production figures. Nope. Here are the facts per US Energy Information Agency (EIA).
- We remain energy neutral as of end of 2021 (this doesn’t mean what a lot of Trumpers thinks it means).
- US Oil Production is above levels prior to Biden taking office:
Jan 2021 monthly production (thousands of barrels per day) was 11,056 and as of March 2022 it is 11,655.
- US Oil Production was dropping well before Biden took office:
March 2020 – 12,816 but by Dec 2020 it had dropped to 11,084. (Peak production was 12,966 in Nov 2019). It is expected to reach peak levels again in 2023 per the EIA.
- Oil Imports haven’t spiked due to lack of US production and are well below peak levels under Trump.
Pre-Pandemic Imports (Jan 2019) were 234,307 (thousands of barrels) and total post pandemic (March 2022) is 198,883. So still not back to pre-pandemic levels.
If Biden’s policies have had any impact that would increase prices (read restrict production), the numbers are not showing much if any negative impact to US oil production at a level to explain any part of the increase in gas prices.
So where are the price increases coming from? Oil is a global market, so price is impacted by global supply and demand.
- War in Ukraine disrupting oil markets. Russia as the 2nd largest in crude oil production (US is 1st). With many countries blocking oil imports from Russia, it has had the effect of reducing global supply.
- Spiking demand. Demand fell sharply during covid pandemic lock downs. Demand is returning to pre-pandemic level faster than producing countries are able or willing to increase production.
- OPEC Slashed Production: OPEC’s oil exports represent about 60 percent of the total petroleum traded internationally. In 2020, OPEC reduced production by over 20 percent. They have increased production during the last two quarters but remain below peak production of 2019.
- US isn’t helping with production enough as Big Oil likes the $. For example, Exon announced a $30 billion share repurchase plan, far more than the $21 billion to $24 billion it expects to spend on all capital investment, including searching for new oil. They don’t seem in a rush to ramp up production, do they?
Republicans can name all the reasons to blame Biden but are completely unable to show any correlation to reductions in US production or increases in US imports as a result. Why? Because the correlation doesn’t exist. Never has. Never will. It makes great talking points for mid-term elections which is all any politician cares about. They certainly don’t care about the truth.