The Assault on U.S. Energy Markets has Americans Living on Borrowed Capital

It is hard to believe that just over a year ago America had perhaps the world’s most affordable and reliable supply of energy.

Today, the assault on fossil fuels – which began on President Joe Biden’s first day in office when he canceled the Keystone XL pipeline – has Americans heading toward European-style energy poverty, with gasoline and oil prices almost doubling since Biden took office. The higher prices and supply disruptions should not surprise us because current U.S. energy policy is threatening the infrastructure needed to discover, produce, and distribute energy from fossil fuels.

These policies continue today. This past week, Democrats in Congress held a hearing on rising energy prices where they attacked oil and gas companies for high prices instead of discussing how to lower them.

Despite these short-sighted attacks, the world spends more than $1 trillion each year to maintain and improve the fossil fuel infrastructure. This investment is being threatened in two ways. First, the Biden administration, with state and local governments, is going directly after production, distribution, and use of fossil fuels. In addition to shutting down pipelines, early in his presidency Biden issued an Executive Order on Tackling the Climate Crisis at Home and Abroad that banned new oil and natural gas leasing on public lands and offshore waters. Though the ban was later overturned by a federal court, the U.S. Department of Interior has taken another route to halt new oil and gas leasing.

And even for lands that have already been leased, it can take as much as 140 days for the federal government to approve a drilling permit compared to about two days for the state of Texas. This resulted in the Bureau of Land Management approving just 95 permits for oil and natural gas in January, down from 643 issued last April.

New York City has joined in by phasing in a prohibition on the combustion of fossil fuels in new buildings. And New York Gov. Kathy Hochul announced her support for what could be the nation’s first statewide gas ban for new buildings.

Second, the federal government is attempting to cut off financing for investment in fossil fuels. Biden’s executive order requires the immediate development of a government climate finance plan “promoting the flow of capital toward climate-aligned investments and away from high-carbon investments.”

Along these lines, the Securities and Exchange Commission is increasing the pressure on companies to turn away from fossil fuels by requiring “all publicly traded companies to disclose their greenhouse gas emissions and the climate risks their businesses face.”

The efforts seem to be working. Texas Comptroller Glen Hegar recently sent a letter to 19 financial firms who might be in violation of a Texas law that prohibits companies from boycotting fossil fuel companies. BlackRock Chairman and CEO, Larry Fink, for instance, has said the company will be “exiting investments that present a high sustainability-related risk” in order to chart a “path to net zero” CO2 emissions.

Despite these efforts and the relentless attacks from Washington politicians, U.S. producers are doing their best to keep the energy flowing. Claims from the Biden administration, including White House Press Secretary Jen Psaki and Democratic members of Congress, that the oil and gas industry is not properly utilizing oil and gas leases are not true. The industry is at a two-decade high for the percentage of producing leases on federal lands, with nearly 100,000 producing wells.

However, while markets are doing the best they can to facilitate this, we are living on borrowed capital. America’s current energy infrastructure can keep all the lights on, cars running, and homes heated for a while. But if efforts to shut down new investment succeed, it will only be a matter of time before Americans see long-term shortages accompanied by skyrocketing prices.

Instead of hosting a hearing focused on enabling the oil and gas industry to drill more and build the necessary infrastructure to reduce prices, Senate Democrats blamed fossil fuel companies for high energy costs. Suddenly, Democrats who supported this administration’s efforts to limit production are now singing a different tune. The simple truth is this administration’s misguided policies have created a hostile and unpredictable environment for the industry to work in, which has led to an unstable energy market.

All the wind turbines and solar panels in the world won’t be able to replace the reliability and affordability of the energy lost if we eliminate fossil fuels in the near future. Americans need to make up their minds whether they want a future of energy abundance or energy poverty.