Oil

During the course of my daily media interviews, one of the most frequent questions I hear is, “when will things get better?” Being the bearer of bad news is frustrating, but unfortunately that’s all I see for the next few years. Following the basic laws of economics, energy prices can only come down based on two factors: increase the supply or decrease the demand. They may not like to admit it, but President Joe Biden and his team understand the need for a supply increase. It explains the president's trip to Saudi Arabia to ask their king to increase oil production. He has dispatched envoys to Venezuela and Iran for the same purpose. Unfathomably, his administration continues its relentless attacks on domestic oil production.

Joe Biden promised on the campaign trail in 2020 that he would "transition away from the oil industry,” convert to 100 percent "clean" energy by 2035, and "end fossil fuels.” Shortly after taking office, he started to make good on this pledge by suspending all new gas and oil leases on federal property and ending the Keystone XL pipeline. Now, faced with gas prices at a record high $5 per gallon and runaway inflation — aka the consequences of his own actions — Biden is looking for an off-ramp. Somehow, the Biden administration has decided it can still convince oil companies to ramp up domestic production in the short term while simultaneously promising to adhere to the president’s ambitious climate change goals in the long term.

With the travel-heavy Memorial Day weekend upon us, the fast-rising cost of gasoline is getting a lot of attention. Last week, gasoline rose above $4 a gallon in all fifty states. That’s the first time that has happened. Some are predicting gas could reach $6 a gallon this summer. If that comes to pass, the average American family could see a major impact on their budgets. (It might be noted as well, that the price of home heating oil has nearly doubled this year. If that continues, the economic impact next winter, especially in the northeast, where a high percentage of homes are heated by oil, will be considerable.) The threat of a recession is rising thanks to fuel shortages. Why has the price of gasoline risen so far so fast?

President Joe Biden has lashed out at fossil fuel companies, accusing them of using high gas prices to “pad their profits at the expense of hardworking Americans.” These are the same fossil fuel companies, by the way, that two years ago were charging a measly average of $1.84 a gallon. They’re also the same fossil fuel companies that in 2020 donated $1.6 million to Biden’s presidential campaign. But no matter. If nothing else, Biden’s inveighing against Big Oil takes me back to my more youthful days when progressives were less afraid to run hard against what they called “the polluters.” Back then, every oil derrick was a seething Deepwater Horizon just waiting to explode and blackface the local terns and herons.

It would be ridiculous to claim that Boris Johnson’s visit to Saudi Arabia is not morally problematic. He is going to a country which held a mass execution for 81 people this weekend – a record number – and to visit a man who US intelligence blames for the brutal murder of the journalist Jamal Khashoggi. Yet, if the West wishes to reduce Vladimir Putin’s leverage – and stabilise the oil market – then it needs Saudi Arabia to pump more; no country has more spare capacity than Saudi Arabia, which could produce another 1.5 to 2 million barrels a day if it wanted to.

Boris Johnson is considering doing something that should be a duty for every leader. In the wake of sanctions poised to disrupt the 8 percent of domestic oil and 18 percent of diesel the UK imports from Russia, Johnson is reportedly toying with the idea of putting his country first and on the road to self-sufficiency by lifting the UK’s moratorium on fracking. The British government banned hydraulic fracturing, or “fracking,” in 2019. Fracking is a method of extracting oil and natural gas by drilling deep underground and fracturing shale rock with a fluid mixture (99 percent water and sand) that allows fossil fuels to flow out, be captured, processed and used to myriad ends (including gasoline).