We’ve had Biden’s inflation and Biden’s recession; now we face Biden’s energy crisis. It didn’t have to be this way.
Twenty million Americans are behind on their utility bills, according to the National Energy Assistance Directors Association.
Who is surprised? Even as real wages tumbled 3.6 percent over the past year, electricity prices increased 16 percent, squeezing consumers. Unhappily, things are about to get worse.
Natural gas, used to create power and to heat almost half of America’s homes, is trading at prices nearly double those of last year, and the winter heating season promises to bring even higher prices.
The price of natural gas today is the highest since 2008, before the fracking revolution unleashed almost unlimited gas deposits trapped in tight formations that were previously inaccessible.
Why should the United States suffer a giant increase in costs if we have so much gas? In part, because President Biden pledged this year to double our exports of liquified natural gas (LNG), which means less natural gas available to American consumers.
Biden made that grand gesture to help our allies, who are increasingly cut off from Russian oil and gas because of the war in Ukraine. But he made that promise to send more U.S. natural gas overseas even though the price was already soaring and inventories were low.
Biden apparently did not discuss the plan with industry leaders, who were caught off guard by the announcement. One executive was quoted in the New York Times saying, “I have no idea how they are going to do this…”
It’s unlikely Biden does either. We are not shocked. The Biden White House has virtually no real-world, private-sector experience or expertise. It imagines that creating new energy resources can be done overnight, by waving a magic wand.
The truth is, we have at least a 100 years’ supply of natural gas; tragically, we do not have the political will to produce it. Climate ideologues, including those directing policy in the Biden White House, are bent on prematurely and recklessly standing in the way of drilling and producing the oil and natural gas we need even as we transition to renewable fuels.
The White House has slow-walked oil and gas leasing and the approval of drilling permits. In addition, it is leaning on banks, pressuring them not to lend to fossil fuel suppliers and pressuring investment firms not to buy their stocks.
It is madness. While Biden is happy to beg Saudi Arabia for more oil, he refuses to meet with energy producers here at home to discuss what it would take to bring on extra production.
Instead, he blames high gasoline prices (and will soon blame high natural gas prices) on a greedy industry, or on Russian President Vladimir Putin; he’ll do anything but admit that his policies have helped drive energy prices sky-high.
Biden takes credit for driving down gasoline prices, and it is true that releasing 1 million barrels of oil per day from our Strategic Petroleum Reserve has helped. But the real reason that gasoline prices have come down in recent weeks is that demand from two key markets has fallen. China’s economy is faltering and oil imports into that country have tumbled to the lowest level in four years. China is the world’s biggest importer of oil, which is a global commodity. When demand falls there or anywhere in the world, the price comes down.
Demand has also dropped here in the U.S. As the price of gasoline soared to an all-time high above $5 per gallon, families canceled their summer road trips and stayed home. The White House insists we are not in recession, but when the economy is contracting and demand for basics like gasoline declines, it sure smells like a recession.
Now we are at that time of year when attention shifts from gasoline to natural gas. Demand for natural gas will climb as we approach the winter months; prices, already at 14-year highs, will climb too.
Demand and supply are out of balance because the industry has backed off drilling in the wake of hostility from the White House, for sure, but also because of misguided efforts in various states to ban fracking and block pipeline construction. It’s all about appeasing the climate warriors.
In 2014, then-Gov. Andrew Cuomo proudly banned fracking in New York State, to the applause of liberal media outlets like the New York Times, which acknowledged that the state has “significant” natural gas resources trapped in the Marcellus Shale formation.
The Times noted the move contradicted Cuomo’s pledge to help economically-depressed upstate regions, where those resources lie, but would “help repair his ties to his party’s left wing.”
Meanwhile, New Yorkers in counties near the border with Pennsylvania were deprived of the income and jobs from the fracking boom that allowed their neighbors to thrive.
Cuomo didn’t just ban fracking. In 2016 he also blocked construction of a key pipeline meant to deliver natural gas to several existing pipelines in New England. Consequently, other local gas projects were dropped. The upshot was that on a cold day this past January, the New England grid was obtaining 20 percent of its electricity from oil and coal, which typically contribute less than 1 percent of the region’s power.
These dirtier fuels were dragged into service because New England’s natural gas system was operating at less than 30 percent of available capacity. The region cannot access gas elsewhere in the country, thanks to a shortage of pipeline capacity.
Remember that using natural gas creates only about half the emissions of competing oil; it is a relatively climate-friendly fuel that has helped the United States lower carbon emissions more than any other developed country. Ergo, blocking the use of natural gas is harming the environment, not helping it.
Democrats, including Joe Biden, risk everything for meaningless climate gestures like blocking pipelines and preventing oil and gas drilling. This winter, as utility bills go through the roof, American consumers will pay the price.
Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. Follow her on Twitter @lizpeek.