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Michael Jones of Brunswick is a retired economist.
Republicans and the right-wing media incessantly blame Biden’s energy policies for historically high gas prices. The attack is utter nonsense. Biden has accomplished little on the climate front, and what he has done can account for but a tiny portion of the increase in fossil fuel prices.
Since Biden’s inauguration, U.S. gas prices have roughly doubled, from about $2.50 per gallon to $5 a gallon. Among the many factors that drive oil and gas prices — the post-COVID surge in demand, pandemic related supply disruptions, the embargo of Russian oil and gas, energy policies internationally, and generalized inflationary pressures — how much is due to Biden’s energy policies?
Almost nothing! Think about these points:
The annual amount of U.S. crude oil supplied is now about 10 percent below its historical peak. U.S. crude oil production is less than one-fifth of worldwide production. Thus, the decline in U.S. oil supplied amounts to less than 2 percent of crude oil sold on the world market. Even if this decline were due to Biden’s climate policies, how could a 2 percent drop in production account for a 100 percent increase in price?
A truly aggressive and comprehensive climate policy, recommended by economists and climate experts, would impose a worldwide tax on fossil fuels equal to roughly $50 per ton of embedded carbon dioxide. This tax would increase gas prices by less than 50 cents per gallon. Since the world has hardly implemented any aggressive climate measures, much less the gold standard of a 50 cent increase, how can energy policies be blamed for the $2.50 per gallon increase?
Indeed, the Biden administration has delivered on little of its climate agenda. The centerpiece of Biden’s policies to mitigate greenhouse gas emissions was supposed to be in this year’s budget reconciliation bill (“Build Back Better”). That package, which fell short of the gold standard and would not have achieved the administration’s emissions reduction target over the decade, was emasculated to satisfy Sen. Joe Manchin from coal-producing West Virginia. The weakened measures, which would subsidize the development and adoption of renewables, have yet to see the light of day. What legislation to reduce greenhouse gas emissions has Biden actually enacted?
The critics, at best, identify small impacts of Biden’s policies; and are often simply wrong. For example, critics assert that the administration withheld leases to drill on federal lands. This claim is largely false, and also irrelevant: many of the sites now leased are not being harvested. Critics bemoan Biden’s cancellation of the Keystone XL Pipeline. But this pipeline, which would not have been operational until 2023 at the earliest, would have had almost no effect on crude oil prices: it would have transported a trivial amount of the world’s oil, and it would have expanded an already existing pipeline.
Finally, critics assert that the heavy hand of government prevents a rapid expansion of U.S. production. In fact, oil executives say that government regulation has little bearing on their cautious growth. To the extent that anticipated future competition from cheap renewables and low carbon energy — due in part to potential future climate policies — is dampening investment by the oil companies, the diminished capacity is not a cause of high future fossil fuel prices but, rather, a response to the likely lowering of future prices of energy and fossil fuels of a successful reduction in the future demand for fossil fuels. Indeed, if anything, the anticipation of lower future prices of fossil fuels will induce fuel suppliers to sell more today and, in the process, reduce the prices of fossil fuels now.
Politicians and pundits who blame high gas prices on Biden’s climate policies are gaslighting their audience. Make them clarify what policies are to blame and what portion of the historic increase In price is caused by the policy.