Hey, Joe, Look in the Mirror!

The White House continues to try its best to distract Americans from the impact of their harmful energy policies. The White House understands that the public is unhappy with the price of gasoline and they are trying everything they can think of to blame somebody, anybody, but themselves. 

We have chronicled Secretary Granholm’s desire to blame OPEC for high oil prices. Then a few days ago, she noted that the real problem is Wall Street. The White House has also been blaming oil companies for some kind of anti-competitive behavior with the President himself asking the Federal Trade Commission to investigate. This is cynical, dishonest, and wrong. It is “passing the buck.” 

As the administration knows, allegations of anti-competitive behavior and market manipulation is nothing new in oil and gas markets. In fact, over the past 20 years, the FTC has issued nearly 50 reports on the subject. If there were problems, the FTC would have found it a long time ago.

But let’s consider the specific issue President Biden is concerned about. He writes: 

“However, prices at the pump have continued to rise, even as refined fuel costs go down and industry profits go up. Usually, prices at the pump correspond to movements in the price of unfinished gasoline, which is the main ingredient in the gas people buy at the gas station. But in the last month, the price of unfinished gasoline is down more than 5 percent while gas prices at the pump are up 3 percent in the same period.” 

This is exceedingly strange to be concerned over small price movements over the course of one month and claiming it is evidence of anti-consumer behavior by oil and gas companies. No one is complaining about an 8 percent price swing. People are complaining because the price of gasoline is up 43 percent since Inauguration Day ($3.41 a gallon today versus $2.39 a gallon on Inauguration Day). 

The President should note that while the price at the pump is up 43 percent, the price of crude oil—the stuff that get refined into unfinished gasoline—is up 48 percent since Inauguration Day (West Texas Intermediate was $53.98 on Inauguration Day and is now $79.87). If the price of crude oil and the price at the pump are not in lockstep at all times, the prices of crude, unfinished gasoline, and the price at the pump will not always be in lockstep.  

The reality is that prices of crude, unfinished gasoline, and the price at the pump are coupled, but not perfectly. For example, ethanol and other blending components are added to unfinished gasoline, along with transportation and additional labor costs to get to the price at the pump. These prices bounce around from week to week and month to month. There is no scandal that the price of oil has outpaced the price at the pump since January. Otherwise, President Biden would have to ask for an FTC investigation for why gasoline marketers aren’t charging people more at the pump. 

The Biden administration wants higher prices at the pump. They keep taking actions that will reduce domestic oil production or increase the cost of oil imports from Canada and then they complain about the price at the pump. It’s either dishonest or they are really ignorant of basic economic principles.

On the same day that President Biden sent his letter to the FTC, E&E News ran an article on the Department of Interior’s mission to make it harder to produce oil and gas on government lands. E&E News explains:  

“The Interior Department’s second in command this week pledged the Biden administration is orchestrating a paradigm shift for the federal oil program, explaining in unusually candid detail possible components of the strategy to restrain fossil fuel development on public lands.

‘We are here to fundamentally reform the Interior Department’s oil and gas program,’ Deputy Secretary Tommy Beaudreau said during an interview with the Energy Policy Institute at the University of Chicago.

…

‘Beaudreau noted several specific policy changes that are being considered and spoke favorably of raising royalty rates, as well as launching new rules around valuation of fossil fuels to limit how royalties are whittled down through exclusions and write-offs.’

…

‘…I believe that going through that process is the best way to, at the end of the day, make sure the changes last and get us on a path to decarbonizing public lands.’”

These remarks demonstrate that the Biden administration is taking actions that will make it more expensive to produce oil and gas on public lands. Furthermore, they obviously do not want to follow the law. 

There is no statute that tells the Department of Interior to work towards “decarbonizing public lands.” In fact, the Federal Land Policy and Management Act of 1976, the Bureau of Land Management’s organic act does not contain the word “carbon.” Instead, it defines the Bureau of Land Management’s mission as mission as one of “multiple use and sustained yield.” 

“Multiple use” explicitly contemplates oil and gas development. There are a number of place the law explicitly discusses oil and gas development. In other words, the Biden administration is trying to ignore oil and gas development, things they have explicitly been instructed by Congress to do, in favor of decarbonization, which they have no statutory authority to do.  If President Biden is really looking for “anti-consumer behavior” that is driving up the cost of gasoline as his letter to the FTC asserts, he does not need to look far. That anti-consumer behavior is coming from the White House and its federal agencies and their fight against domestic production of oil and gas. Many people understand that that’s why Biden “I Did That!” stickers are popular on gasoline pumps.