President to reduce gas prices by reducing supply. Hey wait a minute? What the f-ck?
Does Biden Want Higher Gas Prices?
The Administration cancels offshore oil lease sales, despite surging global prices.
By The Editorial Board, WSJ
Updated May 13, 2022 7:05 pm ET
Another week, another example of the Biden Administration’s energy incoherence. On Tuesday the President blamed record gasoline prices on Vladimir Putin. The next day the Interior Department announced the cancellation of three offshore oil and gas lease sales, setting up the possibility that there won’t be any during his Presidency.
It’s been nearly a year since a federal judge blocked President Biden’s oil and gas leasing ban on federal lands. Yet the Administration has interpreted the injunction as merely hortatory. After dragging its feet, Interior last November held an offshore sale in the Gulf of Mexico under a five-year leasing plan finalized by the Obama Administration.
A liberal federal judge vacated those sales in January, on the legal stretch that the government didn’t consider the greenhouse-gas emissions of the oil that would be produced by the leases and consumed abroad. The Administration chose not to appeal, and it now blames the judge for its decision to cancel three auctions that were scheduled this year under the Obama five-year plan.
Interior also cites a lack of interest from industry, but the November sale drew strong demand. Two lease sales would have been in the Gulf of Mexico and the other in Alaska’s Cook Inlet. Alaskan producers filed comments with Interior supporting the sale. It seems Interior simply didn’t care.
The Gulf of Mexico has among the lowest break-even production costs (about $30 per barrel) and greenhouse-gas emissions of any oil field in the world. But offshore production, unlike shale drilling, requires substantial up-front investment and thus regulatory certainty.
Liberals say offshore sales won’t immediately increase oil production or reduce gasoline prices. But the cancellation creates more uncertainty and sends another signal that the Administration wants to keep U.S. oil and gas investment in the ground.
Russian production may be headed for long-term decline owing to sanctions and the departure of Western producers. This makes it more likely that oil prices will stay high even if there is a cease-fire in Ukraine—that is, unless U.S. investment and production ramp up. The Saudis have repeatedly rebuffed President Biden’s pleas to pump more.
His Administration is nonetheless doing everything it can to limit U.S. investment and production. The Obama five-year offshore plan expires in June. Yet the Administration’s budget indicates it doesn’t plan to hold another sale in the Gulf until at least fiscal year 2024.
Some investors are starting to rethink their aversion to fossil fuels as prices and producer profits climb. BlackRock has been a climate scold. But this week the financial firm said it is unlikely to support shareholder resolutions that seek to limit oil and gas investment “as we do not consider them to be consistent with our clients’ long-term financial interests.” Nor are they in consumers’ interest.
Now would be the time for Mr. Biden to pivot as well, but he refuses. The only explanation is that he and his advisers are unwilling to challenge the climate dogmatists in his party. The gentry left trumps the middle class. As a result Americans could be paying higher energy prices long after he leaves the White House.