The Real Reason for Record Gas Prices

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3 Things Biden Has Done That Increased Gas Prices

Average gas prices recently passed $5 per gallon nationwide, setting a new record. This is bad news for workers' budgets, and since it's happening under President Joe Biden’s watch, it's bad news for the Democratic Party’s electoral prospects.

The White House has tried to deflect blame for the insane surge in gas prices onto Russian President Vladimir Putin’s invasion of Ukraine. And, to be fair, gas prices are definitely not completely within any president’s control. They absolutely are influenced by global factors, and the disruption in the global energy market caused by Putin’s invasion certainly has contributed to higher prices.

But Biden isn’t off the hook. Gas prices started rising long before the invasion, and the president still has direct responsibility for how his policies have contributed to this problem.

Here are three specific things Biden has done that have led to increased gas prices.

1. Canceling Drilling Leases and Limiting Domestic Production
Since taking office, Biden has taken too many steps to count to limit domestic production. These include halting federal permits for oil and gas drilling and leasing shortly after taking office and blocking drilling in a major oil-rich Alaskan region.

To be clear, these decisions will mostly affect future production. But that does still significantly affect gas prices because companies factor in their expectations about the future into the decisions they make today.

“Some say that new leases … would have taken time and would not yet be online, but even so, there is evidence that expectations of increased future supply has a beneficial impact on current prices and expectations of future supply drying up has a negative impact on current prices,” the Competitive Enterprise Institute’s Ben Lieberman said.

“At a day-to-day level, I am hearing from drillers that they are having a very hard time getting all the approvals they need from [the Environmental Protection Agency] and other agencies in order to produce on existing wells, and of course, new federal leasing has come to a halt,” Lieberman added.

It’s just basic economics that when the government throttles future supply in an industry, that will lead to higher prices both now and in the future. Biden was warned by many critics at the time that this would happen, but he proceeded anyway.

2. Choking Regulations that Impose Big Costs and Lead to Higher Prices
Speaking of basic economics, it’s well established that when businesses’ costs rise, that puts upward pressure on the prices they charge consumers. The oil and gas industry is no exception.

And unfortunately, the Biden administration has both proposed and implemented a wide array of regulations on the energy sector, inflicting billions in direct financial costs and incalculable indirect compliance costs — plus further harming expectations for the future.

“The regulatory chokehold imposed by the Biden administration on oil production in place of a Green New Deal has drastically raised gasoline prices, thereby hurting lower-income people the most,” said conservative economist Vance Ginn, who served in the Trump administration.

“This is yet another example of the high cost of big-government environmentalism when the better approach is to remove government barriers so that free markets can better let people adapt to changes in the environment at a much lower cost,” Ginn concluded.

3. Anti-Energy Rhetoric that Discourages Investment
Rhetoric matters. While words don’t literally do anything to change gas prices, the signals coming from policymakers absolutely do affect the long-term investment decisions businesses make.

And even as a presidential candidate, Biden sent very negative messages about what his leadership would mean for the gas industry.

In just one example, as Americans for Tax Reform pointed out, Biden said during a campaign stop: “We are going to get rid of fossil fuels. … We’re going to phase out fossil fuels.” Then, upon taking office, the president followed these words with actions such as canceling the Keystone XL pipeline, blocking leases, restricting imports, and pursuing regulations.

In general, Biden’s open hostility toward the oil and gas industry has almost certainly curbed investment into production that otherwise would’ve occurred.

“Such extinction rhetoric, coming from the now-president, has an unprecedented chilling effect on investment,” Lieberman said. To put it simply, less investment means less supply — which means higher prices.

It’s absolutely true that our high gas prices aren’t entirely Biden’s fault. But the president is not the helpless bystander his defenders would have you believe.
 
Trump had gas cheap, prices down, energy flowing, and Trump made us a net energy exporter - not an importer - for the first time in decades, and Senile Joe just threw it all away.
 
Transcript of Lankford’s opening remarks

So there are obvious issues with gasoline prices across the country. You don’t have to go very far and you run into folks who are frustrated with the price of gasoline. I don’t know a single person that’s not filling up their tank across the country and saying, ‘This is killing my food budget, my housing budget,’ everything they have to be able to deal with. I asked some of my field team, just as they’re out and about this week across Oklahoma, to just snap a price of the gasses that’re going on right now this week in Oklahoma. And you can see in Kingfisher, just for regular unleaded here, Kingfisher, $3.99, and Tulsa, QT’s the winner here, at $3.53. We’d love to see that around Washington, DC, or many areas of the country. If you get into Marshall, Oklahoma, $4.29. If you get to El Reno, Oklahoma, $3.95, in Moore, Oklahoma, $4.00, and in Caney, Oklahoma, $3.99. This is just what’s happened in the last 24 hours around my state.

What’s interesting is people look at this and they fill up their tank, and they realize it’s $75 to $125 to be able to fill up their tank with gas. What that really means for them is they can’t travel more, they can’t get out more, they can’t do more because they understand, ‘I just can’t afford to be able to do that.’ That’s the real-life decisions of Americans as they process through all this.

Where did this come from? Well, currently the Biden Administration’s saying this is all Putin’s fault. We know that’s just factually not true. The price of gasoline rose from the day that President Biden came into office until the beginning of the war in Ukraine a dollar a gallon—a dollar during that time period. How did that happen? Was that because of oil companies, as over in the House of Representatives, they’re dragging in oil company executives and saying, ‘You’re gouging prices’?

Well actually let’s look at the math on this. Day-one of the Biden Administration, they stepped up and canceled the Keystone pipeline and people keep saying, ‘Why does that matter?’ Well, Canada produces heavy crude. The same type of heavy crude that comes out of Russia. So we’re either going to buy that heavy crude from Russia or from Canada, and day-one, President Biden said, ‘I want to buy that type of crude from Russia, not from Canada.’

The other factoid on this that’s interesting is the President’s just done a release of the Strategic Petroleum Reserve. The release he’s doing from the Strategic Petroleum Reserve for a short period of time for the next several months is almost exactly what would be coming from the Keystone pipeline every single day from here on out. So while he’s trying to manipulate the prices with the Strategic Petroleum Reserve, you can actually increase production and input into our country from an ally like Canada that’d be reliable and predictable that would actually bring prices down.

What else did the President of the United States do? Day-one, cancels out the Keystone pipeline. Day-one, he looks at all the Trump Administration policies that do anything with energy and said, ‘Let’s re-evaluate all of those.’ Day-one, he shuts down everything that’s happening on federal lands as far as federal leasing—no federal leases. And he steps out and says, ‘Well there’s 9,000 that’re out there. They’ve got plenty of options on it.’ He knows the math on this. Most of those are checkerboards, where they’ll lease just one section, test it out, but they’re not going to really do production in that area until they have all the leases around it. He knows the game on that. And so, he can say there’s 9,000 leases out there really know as well that nothing’s really going to happen with it.

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. We’ve dealt with nominees that have come across the floor in the Senate that were the selection from the Biden Administration, that their whole focus was: how are they going to take away access to capital for oil and gas companies? 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.

So at the time that they’re saying to companies, ‘Y’all should produce more oil. You’re the problem,’ they’re not looking in the mirror, seeing 15 new taxes that they’re releasing, trying to cut off access to capital, trying to be able to make us more focused on what’s happening internationally. There are lots of issues that the Biden Administration needs to look at. This is not a result of Putin’s war. This is a result of Biden policies, and everyone knows it. And they can try to change the subject all they want to, but everyone knows, this is a direct result of the Biden policies that are here. That’s our frustration. There is a way to produce more American energy. There is a way to be able to bring prices down. They’re just not willing to do it at this point.

 
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