Biden’s empty promise to ‘work like the devil’ on gas prices
In a rare press briefing on Thursday, President Joe Biden promised to “work like the devil” to cope with high gas prices at the pump. He said this as part of a response in which he also admitted, “I don’t know why they keep moving and stuff.” Thus, the president promises to work hard to solve the problem, but admits to having little understanding of its causes.
This lack of understanding on energy issues in general by this administration and members of Congress is certainly an assessment with which many leaders in the oil and gas industry would agree. At a recent industry conference, the CEO of a major upstream company called the Biden administration “energy ignorant.” Another CEO admitted that their company had “no relationship” with anyone in administration. Another told me in an interview that it was “impossible” for him to get even a meeting with the relevant officials from the Department of the Interior or the DOE. How can a government representative truly understand an industry they refuse to have a conversation with?
Biden and Energy Secretary Jennifer Granholm have spent most of the year pledging to do whatever they can to slow rising oil and gasoline prices, efforts that will are generally summed up as inducing OPEC to produce more oil. The net result has been an inexorable increase in energy costs. As of Friday’s close, the price of West Texas Intermediate increased by 65% from a year ago; AAA reports that the average price of a gallon of regular gasoline stood at an 8-year high of $3.48, up 40% from 12 months ago. If the president has worked like hell to tackle energy prices, everything he has done has not helped. If he has any new ideas, he didn’t choose to mention them at Thursday’s presser.
The situation between Russia and Ukraine didn’t help, of course, but neither did the administration’s rhetoric about the situation. Crude prices jumped 3.5% on Friday after National Security Advisor Jake Sullivan told reporters that an invasion by Russia was imminent and urged American citizens in Ukraine to leave within the next 24 to 48 hours. The promise made by the president himself earlier in the week of “end” the Russian Nordstream 2 pipeline in the event of an invasion also raised tensions in the market. How exactly the US would “terminate” a fully constructed Russian-owned gas pipeline that only requires final approval from Germany and the EU to start operations was unclear; the threat, however, was real.
It’s not just the administration that shows this lack of understanding about energy. Just as America’s booming liquefied natural gas industry is playing a major role in supplying Europe with natural gas in this time of crisis, 10 Democratic senators sent a letter dried up. Granholm recently to urge him to consider placing limits on America’s ability to export natural gas.
Their reasoning displayed the same “energy ignorance” that this CEO was talking about a few weeks ago. In the letter, the senators express the belief that LNG exports are forcing their constituents to pay higher prices for natural gas in electricity generation and home heating bills. But market realities do not support this assertion.
Over the past month, as U.S. LNG exports to Europe have increased significantly, the price of the domestic Henry Hub Index has remained essentially flat, closing at $3.91 per Mmbtu on Friday, as opposed to the price of January 13 close of $4.00. Two months ago, on December 13, 2021, the price was $3.79; again, mostly static.
Two of the senators who signed this letter represent Sec. The home state of Granholm, Michigan. It is a state whose governor, Gretchen Whitmer, has positioned itself as a staunch opponent of allowing new, upgraded pipelines and other oil and gas infrastructure to serve his state. Imposing artificial constraints on the ability to transport oil, natural gas and propane will inevitably impose higher costs on consumers.
Seven of these ten senators come from the New England states. It’s no mystery why their constituents pay more than the national average for natural gas and electricity prices: For more than a decade, their states have been denied access to cheap and plentiful natural gas. produced in the nearby Marcellus Shale Basin by New York State. Throughout his multiple terms, former Governor Andrew Cuomo served as a one-man blockade opposed to the construction of any new pipeline through his state, which lies between the Marcellus and New England. New Governor Katy Hochul shows no desire to change her predecessor’s policies.
As a result, we see the spectacle of LNG carriers sailing into Boston Harbor every winter, often bringing cargo from Russia, 4,000 miles away. This importation of natural gas from overseas means that, rather than bearing the relatively low domestic natural gas price, New England consumers are being held hostage by much higher international prices, which are currently 6 to 7 times higher in Europe. If these New England senators really want to help their constituents, they should lobby Albany, not Washington, DC.
President Biden is certainly far from the only politician in the nation’s capital who doesn’t understand why energy prices keep rising. To his credit, he even admits it. But if he really plans to “work like the devil” to solve the problem, then he, these senators and many other decision-makers should really study the matter before proceeding. Otherwise, it’s just another empty promise that would probably end up making the problem worse.