In yesterday’s debate, Ron DeSantis said he would “unleash all of America’s energy potential on Day One.” Tim Scott said, “We have an opportunity as Americans to actually export the surplus energy that we create in our nation and disconnect from China and from murderous dictators and tyrants around the world.” Vivek Ramaswamy said, “Increase the supply of energy, that brings down the cost of energy, grows the economy.” Chris Christie said, “When you go ahead and you tell people we are going to unleash every bit of American energy, every bit of its potential, what happens in the futures markets, the prices go down, because those people who are believing that the Biden program will continue are the ones who are bidding this up.” Nikki Haley said, “We also need to be, not energy independent, energy dominant.”
The problem with this relentless emphasis on the need to increase production is that U.S. production of crude oil has been increasing rapidly for the past two years and hit a record high in August.
The U.S. produced 405 million barrels of crude oil in August, beating the previous record of 402 million barrels from December 2019. The pandemic caused a collapse in the energy industry just like it did everywhere else, but production levels have been increasing steadily since mid 2021 and are now back to setting records like they were before the pandemic.
Perhaps the candidates would argue that production would be even higher if only it weren’t for Joe Biden’s energy policies. Maybe it would be, but the market for oil is currently experiencing demand destruction, with other producers planning cuts. The price of WTI crude oil, the U.S. benchmark price, has fallen from around $95 per barrel at the end of September to around $75 today. (That decline comes in spite of the turmoil in the Middle East, which is a good reminder that OPEC isn’t nearly as powerful as it used to be, and energy markets are much more diversified now than in the 1970s — to America’s benefit.)
Oil is traded on a global market. While the U.S. is a major producer, it does not have price-making power on its own. And oil companies’ decisions have a whole lot more to do with the price signals on that global market than they do with who lives in the White House.
None of this is a defense of Biden’s energy policy. As I wrote for the April 4, 2022, issue of National Review, Biden’s energy policy stinks, but not because it reduces oil production. (It hasn’t reduced oil production.)
It stinks because it tries to centrally plan the “energy transition” away from fossil fuels. In doing so, it wastes billions of taxpayer dollars on green-energy boondoggles and creates distortions in private energy investment as well. It foists unready technologies such as wind power and electric vehicles on the American people through government mandates and subsidies. These intrusive regulations extend to everyday household items. Biden’s energy policy also views the fossil-fuel sector as a dying industry and therefore unworthy of future investment in pipelines, refineries, and other infrastructure. And the “whole of government” regulatory approach enlists financial regulators and the central bank in the climate agenda as well. All of this is wrong-headed, and it sets the U.S. up for a Germany-like future when the “energy transition” turns out not to have worked.
That’s just a sampler of different ways to criticize Biden’s energy policy; it’s hardly comprehensive. But blaming Biden for low oil production in a time of record-high oil production isn’t going to advance conservative energy-policy goals.