Biden's Energy Choke Hold

Timothy Birdnow

Joe Biden broke his promise. He  promised to end oil and gas drilling on government owned property.

But he has broken that in a strange way. While opening land for drilling, he has opened only sparse amounts of it. And he has done it in a way guaranteed to raise prices and slow the production of fuel.

Jazz Shaw has the skinny:

The Interior Department announced that on Monday it will release a sale notice for leases to drill on 144,000 acres of government land — 80 percent less than what was initially being evaluated for potential leasing.

President Joe Biden, who on the campaign trail called for an end to drilling on federal lands, has been looking for ways to temporarily increase U.S. energy production to help drive down the price of gas.

In fairness to Joe Biden, I will have to give him at least a partial thumbs up for approvinganynew leases. But with that said, we should also be realistic about what’s really going on here. Biden’s base is going to be upset at the idea of new leases being offered, but not upset enough to go running into the arms of anyone in the "drill baby drill” crowd. And Biden’s handlers are clearly aware of that and weighed the risks before approving this idea.

The messaging here seems clear and it was included in the announcement. Biden wants to make a public show of attempting to do something to "drive down the price of gas.” Gas prices are further cratering his approval rating numbers and the Democrats’ chances of avoiding a wipeout in the midterms, so this is a purely political move.

But the underlying reality is that this relatively small number of new leases will have zero direct impact on gas prices for quite a long time. The oil and gas companies will have already sent people to do preliminary surveys on these parcels of land before putting in bids, but in-depth surveys will be required after they are awarded the lease. That takes time. Then the land has to be put on the drilling schedule. You don’t just wake up and move a bunch of huge oil rigs overnight. Then, once the drilling starts, assuming it’s a productive stretch of turf, the oil needs to be brought up out of the ground and scheduled for transfer to a refinery. In reality, the soonest that any of these leases will produce the first barrel of oil is almost certainly more than two years in the future, if not considerably more.

Also, you will note that the Biden administration couldn’t bring themselves to offer new drilling leases without including some sort of "punishment” for the evil oil barons. They significantly increased the royalties that the oil and gas companies have to pay for the privilege of drilling. Do you know what those companies do when you increase the cost of obtaining the oil they need? If you guessed ‘they pass the cost on to the consumer‘ give yourself a cookie. So when these leases finally do go into full production, the government will have managed to actually increase the price of the resultant gasoline, not decrease it.

I would add the Biden Administration knows full well that the "9,000 leases" he allegedly approved cannot produce as planned.

According to this industry analysis:

The U.S. oil industry has both developed and undeveloped leases and it pays the government fees for renting them, regardless of whether oil and gas is eventually found and produced. It generally takes 7 to 10 years for oil companies to determine whether a lease will become productive and for them to invest in the infrastructure that is needed to produce the oil. With the Biden administration trying to push banks away from funding oil and gas projects and instead spend money on renewable energy, it is no wonder that the industry is hesitating to make the investment needed. Besides the need to obtain necessary capital to make the investment, the oil industry is faced with the uncertainty caused by Biden and his administration about imposing new taxes and regulations on the industry that were contained in the Build Back Better Bill. Further, the Department of Interior agreed with upping the royalty rates on the industry when they performed the review Biden requested when he placed the ban on new oil and drilling on public lands.

I would add the Biden Administration has pressured banks and lenders to cut off funding for oil exploration and drilling. Given the time and money involved in getting these leases up to speed, it is vital they have loans at reasonable interest rates. Biden has taken steps to stop exactly that.

And he ended funding for overseas drilling earlier this year.

Also earlier this year the Administration paused a rule that said banks had to make loans to oil and gas companies.

The Office of the Comptroller of the Currency (OCC) is pausing the publication of a rule that would make large American banks unable to deny lending money to oil and gas companies until the Biden Administration’s pick for head of the watchdog reviews the final rule and the public comments received.

OCC saidon Thursday it had paused publication of its rule that aims to ensure large banks provide all customers fair access to their services.

So this Junta has clearly taken great pains to reduce the availability of oil and gas even while claiming to be pushing it - and blaming oil and gas companies for not producing more so as to shift blame.

Biden also cancelling a number of pipelines. And he shut down drilling in ANWAR (courts overruled him.)

The fact is Biden has footdragged when forced to do anything to make the price of oil and gas drop.

Oh, and Biden has angered the Saudis, first over Kashoggi then over his scheme to reimpose the Iran nuclear deal. They are willing to let Biden stew - and allow America to pay dearly for fuel. Biden still pursues the Iran nuclear deal despite the fact it is being negotiated by Russia and China on our behalf while our own diplomats are kept out of the proceedings.

This is not a result of the Ukraine war. It is a systemic policy by the current illegal Administration.

Posted by: Timothy Birdnow at 11:33 AM | Comments (5) | Add Comment
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