Primer: Six Actions That Will Lower Gas Prices Immediately
Summary
The Biden administration has declared war on American families and households through the imposition of extreme anti-energy policies and the adoption of radical green initiatives intentionally designed to increase energy costs. When President Biden took office on January 20, 2021, the national average for gasoline was $2.38 per gallon. That price has now risen to $5.01 per gallon as of June 15, 2022.
The Biden administration has attempted to blame Vladimir Putin’s invasion of Ukraine for the spike in gas prices, but data shows that the national average at the time of the Russian invasion on February 24, 2022, had already increased 51 percent to $3.60 per gallon. Now, the administration seeks to blame oil companies for “gouging” consumers while posturing that they should be “patriots” and not use the war in Ukraine as a reason to “not put out production.”
However, it is the policies of the Biden administration that are overwhelmingly to blame for the pain Americans are experiencing at the pump. It is therefore incumbent on the administration to take the actions needed to remedy the crisis that they have caused.
Policy Approach: How to Immediately Lower Gas Prices
As the national average for gasoline eclipses $5.00 per gallon for the first time in American history, the need to relieve the pressure on families and households is urgent. Below are a series of executive and deregulatory actions that can be taken immediately to alleviate the suffering that tens of millions of working and middle-class Americans are experiencing.
1. Announce Oil and Gas National Security Initiative: Oil is a futures market and relies on high degrees of certainty for energy developers to justify capital-intensive expenditures necessary to expand production and capacity. President Biden announced during the Democratic presidential primary his promise to “end fossil fuel.” His administration should instead seek a reversal of this destructive policy and promise to expand domestic oil and gas development as essential for America’s national security.
The United States should not beg dictators like Nicholas Maduro in Venezuela or Ayatollah Khamenei in Iran to increase their oil exports to the United States. Supercharging America’s oil and gas development as a centerpiece of bolstering our security posture and diminishing the power of dictators must remain a cornerstone plank of America’s policy posture.
Furthermore, when the United Arab Emirates announced a potential rise in production in early March, oil prices dropped by nearly $20 a barrel in a single day. A single and clear statement by the Biden administration outlining the prioritization of long-term domestic oil and gas leasing and development certainty would have an immediate and potentially transformative impact in lowering prices for American families.
2. Lift Drilling Prohibitions on Federal Lands: On his first day in office, President Biden issued Executive Order 13990 which halted oil and gas exploration in the Arctic National Wildlife Refuge (ANWR) and ended the Keystone XL pipeline. These reckless policies eliminated thousands of jobs and hamstrung America’s energy development ahead of rising inflationary pressures.
Furthermore, the administration issued a statement of policy in support of efforts to curtail energy production on roughly 1.5 million acres of federal land on February 22, 2021, in a show of support for legislative efforts to impose national green energy mandates. Following this announcement, the national average for gasoline increased by 23 cents per gallon within a month.
According to the U.S. Geological Survey, the North Slope contains an estimated 10.4 billion barrels of oil. Reinstating the drilling and exploratory activity in ANWR would create the potential for up to 1.45 million barrels of domestic oil production per day, offsetting imports from nations like Saudi Arabia and alleviating future price pressure points. Rescinding support for curtailing energy production and drilling on federal lands would create immediate downward pressure on oil prices.
3. Restore and Expedite Oil and Gas Leasing: On January 27, 2021, President Biden signed Executive Order 14008 which placed a moratorium on all new oil and gas leasing on federal lands and offshore waters. Given the significant lead-time and development resources necessary for oil and gas exploration–to say nothing of the onerous leasing regulations–this EO effectively cratered American energy development.
Rescinding this self-destructive EO and proposing a rule to expedite the oil and gas leasing permitting process at the Department of Interior is something that can be done in a single afternoon that would have an immediate and positive impact on oil prices that would likely be reflected in lower national gas prices within days.
4. End the SEC’s Mandatory Climate Disclosures: On March 21, 2022, the Securities and Exchange Commission (SEC) issued a proposed rule that would require all public companies to issue public evaluations of their greenhouse gas emissions and their estimated “exposure” to climate change. This new approach stands to significantly increase environmental compliance costs for industries across the nation when it comes to project development and operations. For the oil and gas industry, the SEC’s rule serves as a crippling barrier–predicated on the prevailing political notion that reliable sources of energy are the chief culprit of greenhouse gas emissions and climate change–to further development needed to expand production and capacity.
The administration should immediately end this extreme rule. Additionally, Congress should pass a Congressional Review Act resolution to roll this regulation back if the administration refuses to accede to the best interests of the citizens it is supposed to be representing.
5. Roll Back Social Cost of Carbon Regulations: Executive Order 13990 also promulgated a restoration of the so-called “social cost of carbon” metric designed to quantify the economic impacts of climate change. This regulatory framework underpins guidance across all agencies in the executive branch and despite being predicated on empirically flawed modeling and analysis, is used to impose additional layers of bureaucracy under the misguided belief that each metric ton of CO2 emissions inflicts damage on the economy.
In February 2022, a U.S. district court in Louisiana blocked the Biden administration from using “social cost of carbon” evaluations when making regulatory determinations for reliable energy industries. In response, the administration froze new oil and gas leases and permits for months.
This came on the heels of the Bureau of Land Management (BLM)’s decision on October 25, 2021, in which the agency adopted the “social cost of carbon” framework to justify the creation of additional regulatory barriers for oil and gas leasing and permits. The administration should abandon this faulty metric in its regulatory determinations. Such a move would take a needed pressure point off reliable energy development initiatives and signal to the futures market that America is serious about reducing energy costs for consumers.
6. Rescind Onerous NEPA Regulations: The National Environmental Policy Act often serves as an impediment to project development due to onerous and tedious environmental review and approval requirements. Analysis conducted in 2017 utilizing public information revealed that NEPA regulations imposed $229 billion in costs on 148 infrastructure projects. The Trump administration later streamlined the NEPA review process to expedite project approvals and lower costs for new project developments.
Unfortunately, the Biden administration rolled back the streamlined NEPA environmental review processes and reimposed cumbersome bureaucratic barriers regarding the length and scope of project application submissions. The Council on Environmental Quality (CEQ) should rescind these onerous NEPA requirements and instead adopt a uniform approach to reviews that also limits the review process to no more than two years. This will provide oil and gas developers with additional certainty on potential capital expenditures and investments while incentivizing the development of production facilities needed to meet future consumer demand.
The result will be downward pressure on oil price futures.
Conclusion:
Americans are suffering from historic inflation, skyrocketing gas prices, and unsustainable increases in the overall cost of energy. When it comes to pain at the pump, there are numerous actions that the Biden Administration by itself can undertake to provide immediate relief to hardworking citizens and households. Families should not have to watch helplessly as their purchasing power and savings dwindle from extremist policies that can be reversed through executive action. The truth is that the Biden administration is currently waging an economic and cultural war on its own citizens. Government weaponized against the very citizens in whom it derives its legitimacy is one that will not–and should not–last.
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