Biden’s Oil Tantrum
https://www.nationalreview.com/2022/06/bidens-oil-tantrum/
Joe Biden isn’t mad. He’s just disappointed.
You see, gas prices have risen during his presidency, and that’s making him unpopular with one of the most important voting blocs in America: people who purchase gasoline. Gasoline prices are largely out of Biden’s control, with prices determined on global markets and various industrial factors limiting supplies.
In past attempts to seem like he’s doing something about the problem, Biden has ordered releases of oil from the Strategic Petroleum Reserve, pushed electric vehicles, and invoked the Defense Production Act to produce more renewable-energy components. As anyone could have predicted, gas prices were unaffected by those actions.
So now he’s just firing off notes to energy CEOs on White House letterhead threatening them with government action if they don’t do what he wants.
“Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis and respect the critical equities of energy workers and fence-line communities,” Biden wrote.
First of all, no, they don’t. No company in the United States needs to work with any presidential administration on anything if it does not want to. This remains a free country, and loyalty to politicians is not a prerequisite to doing business.
Second, it’s almost sad that Biden can’t get through a threat without genuflecting to his woke, environmentalist base. Whatever “critical equities” are, we’re pretty sure they aren’t part of the refining process.
As for “fence-line communities,” environmentalist activism is one of the reasons for declining refinery capacity in the U.S. In 2019, the largest refinery on the East Coast shut down permanently after a fire. Its closure was hailed as a victory for “environmental justice” as it was located near an African-American neighborhood in South Philadelphia.
There’s a case to be made that refineries, which produce unavoidable and harmful pollution, should not be built too close to densely populated areas regardless. But if companies try to build in less populated areas, the wildlife activists, in concert with environmental bureaucrats at all levels of government, are there to block them.
Since refineries can’t be built in places where people live, and they can’t be built in places where people don’t live, they simply don’t get built. And no large refinery has, since 1976. The last time a large refinery was built in America, Rocky was the top-grossing movie, the Eagles’ Hotel California was the top-selling album, and Joe Biden was only in his first term as a senator.
By and large, energy companies don’t even try to build new refineries. An attempt in 2005 to build a refinery in a remote part of Arizona failed. And Biden isn’t helping. As the Institute for Energy Research finds in a recent article, “New refineries are unlikely to be built in the United States due to daunting environmental standards and policies that the Biden administration has been implementing to reduce petroleum product consumption in the future.” Building a new refinery costs billions of dollars and takes years. For that investment to yield a decent return, domestic demand for gas and for diesel will have to be strong for quite some time to come, but unless there is something we have missed, that’s not the fossil future that Biden has in mind.
The administration’s biofuel standards, which require refiners to add biofuels to petroleum products in increasing quantities, essentially guarantee that investment in petroleum refining will not pay off. If refiners don’t meet the biofuel requirements, they have to pay the government large sums of money to offset their failure. That encourages exactly what Biden claims to abhor, industry consolidation, by putting smaller refiners who can’t afford the penalties out of business.
And for the refiners who are left, Biden decries their profits, writing in his letter, “At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable.” First, if the Biden administration believes the United States is at war right now, it needs to be more up front with the American people about it. Ukraine and Russia are at war, and the United States is supplying Ukraine, which the administration has insisted does not mean the United States is at war. If the U.S. isn’t at war for the purposes of foreign policy, it can’t be at war for the purposes of domestic policy, either.
As for profits, this is exactly the wrong time to be decrying them. Extraordinary profits should be attracting investment and encouraging expansion. With gasoline above five dollars per gallon and diesel even higher, refiners would absolutely love to get in on that action. That they haven’t been able to is demonstration of how high the regulatory hurdles the government has set for them are.
To review, Biden’s position on oil refining is that new refineries should not be constructed, the ones that exist should be regulated with increasing stringency if not closed down, and even if they do stay in business, they shouldn’t be allowed to make too much money — but please do me a solid and refine more oil, or else.
That “or else” is especially concerning and goes beyond the ordinary incoherence we’ve come to expect from the president on energy. He writes, “I am prepared to use all tools at my disposal, as appropriate, to address barriers to providing Americans affordable, secure energy supply.”
ExxonMobil responded to his letter with some proposals: suspend the Jones Act to make it easier to transport petroleum products, lay off the biofuel standards, and “promote investment through clear and consistent policy.” The American Fuel and Petrochemical Manufacturers and the American Petroleum Institute wrote a letter describing how regulations from a variety of different agencies influenced industry decisions to close and convert refineries. There’s plenty the government can do by getting out of the way and letting American refineries do their jobs.
But that’s not what Biden means when he says “all the tools at my disposal.” He means abusing his emergency powers as president (as he already has in the past) to single out the energy industry and punish it for his falling approval ratings. Biden has every right to be upset that his presidency isn’t going as well as he’d hoped, but he does not have the right to lash out at industries his party hates in response.
Comments are closed.
