Joe Biden banning Russian energy imports is fine. But here’s an even better plan…
Declare that the Biden Admin will support the development of US oil and gas. Rescind all regulations designed to curb production, development and consumption. Announce a moratorium on new ones. Expedite permits, and encourage investment. Our guess is the price of Brent crude would fall $20 a barrel in anticipation of higher production.
Yet Biden is doing precisely the opposite. He even blamed US companies—not his policies—for not producing more. There are 9,000 available unused drilling permits, he claimed, and only 10% of onshore oil production takes place on federal land.
Talk about a misdirection play.
First, companies have to obtain additional permits for rights of way to access leases and build pipelines to transport fuel. This has become harder under Biden. Second, companies must build sufficient inventory of permits before they can contract rigs because of the regulatory difficulties of operating on federal land. It takes 140 days or so for the feds to approve a drilling permit versus two for the state of Texas.
What’s more, companies can’t explore and drill, or build pipelines, without capital. Biden financial regulators allied with progressive investors are working to cut it off. The Labor Department has proposed a rule that would require 401(k) managers to consider the climate impact of their investment holdings.
Ergo, large energy producers are buying back stock and redirecting capital to renewables because they see the writing on the wall. Small independent producers are eager to take advantage of higher prices but can’t get loans.
Progressive outfit Global Energy Monitor gleefully proclaimed that $244 billion in US LNG projects are stalled because they are struggling to find financiers and buyers amid pressure from cheap renewables with subsidies.
Bottom Line: It’s a miracle any oil and gas production is occurring in America amid this political hostility. The Ukraine crisis ought to be an inflection point that causes the Biden Admin to do an energy reset. Instead, he says it should motivate us to accelerate the transition to clean energy and reduce our dependence on fossil fuels.
Our Take 1: Biden bemoans today’s skyrocketing gas prices, yet he remains hostage to the green-energy donors whose policies guarantee higher prices. In the end, reality and markets will force a change in course. But the longer this animosity toward the domestic oil and gas industry holds court in Biden’s head, the more punishing the eventual correction will be for all of us. The same is true for Canada under Trudeau, by the way.
Our Take 2: Things are likely going to get worse—with difficult conditions persisting for a while—before they get better. So buckle up… and please stay safe.