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The secret sauce to the economy’s success and a sea change in foreign policy during the Trump administration was becoming an energy-independent nation. President Trump said during the campaign that Joe Biden’s Green New Deal policies would reduce domestic energy production and raise prices. Early indications are that he was correct.
The combination of low energy prices and pre-pandemic interest rates, paired with America’s traditionally high productivity rates were attractive for businesses and encouraged expansion. Yet with an economy struggling to recover from a pandemic and extended economic shutdowns, President Joe Biden began to roll back policies aimed at energy independence on day one of this administration.
In an interview on Mornings with Maria Thursday, former president of Shell Oil John Hofmeister said energy prices may continue to rise from the national average of $2.75 per gallon. This a $0.33 per gallon increase as compared to the same month last year. Part of the reason is a period of shutdown for the refineries. Still, President Biden’s green energy rhetoric and early executive orders regarding exploration and fracking leases have spooked the industry. According to Hofmeister:
But there’s something else that’s going on that’s more subtle. What that is, is that the industry, the producers, are practicing serious capital discipline and they’re not roaring back to produce more oil. And also, they’re getting squeezed by the administration.
So,the ban on leasing — the prohibition on new leases from the Biden administration — that’s going to create a psychology in the industry of, “There’s going to be less available,” and the psychology drives the pricing as well.
As long as we see this hostile administration, we’re going to have a problem with prices.
Governor Greg Abbott said these policies “are a job killer in Texas.” Members of the House wrote a letter to the president urging him to reverse the bans. It outlines how the executive order has created dangerous conditions that increase environmental hazards and gas flaring due to the suspension of permits for waste removal pipelines. Abbott said:
Regulatory overreach in the energy sector can damage the stability of the Texas economy and the livelihoods of countless Texans. The issue is this. it is not just the federal government that is threatening the energy sector. Local governments around the country and maybe even some here in Texas are acting to derail the oil and gas industry and raise energy costs for families.
People need to understand that regulations cost money. The more regulations there are, the higher your energy cost is going to be.
Higher energy prices hurt working and middle-class families the most. Not only does fueling up cost more, but higher prices also translate into food and other consumer goods becoming more expensive due to higher transportation costs. Home energy also becomes more costly. It also forces us to rely on countries in the Middle East and Russia to meet demand. A dependable green energy grid is a long way off, not because there is a lack of will. As we learned last summer in California and a few weeks ago in Texas, the technology is not ready for primetime.
Because of suspended permits or a lack of takeaway capacity, companies must burn off excess natural gas via flaring, harming the very environment these policies are supposed to protect. Add in a projection by the American Petroleum Institute of one million job losses and a $700 billion decrease in GDP by 2022, and the impact of the order creates a bleak picture.
The “green jobs” that climate envoy John Kerry and transportation secretary Pete Buttigieg have been promising are unlikely to materialize in a year—if they materialize at all. In Texas specifically, they already have more unreliable wind farms than the state needs. Solar panels require rare-earth metals, and the Chinese Communist Party produces and refines the vast majority of them and has already signaled they might reduce exports.
The transition to low-cost, reliable natural gas has helped the United States reduce carbon emissions more than any other innovations in the last decade. While it is likely that someday Americans will view the catalytic converter the same way we view a horse and buggy, the technology is not ready to support a high-density economy today. It won’t be for many years to come, and the push to transition now will hurt the Americans Democrats purport to want to help. President Trump was right.