National Review Online
Friday, June 17, 2022
Joe Biden isn’t mad. He’s just
disappointed.
You see, gas prices have risen during his
presidency, and that’s making him unpopular with one of the most important
voting blocs in America: people who purchase gasoline. Gasoline prices are
largely out of Biden’s control, with prices determined on global markets and
various industrial factors limiting supplies.
In past attempts to seem like he’s doing
something about the problem, Biden has ordered releases of oil from the
Strategic Petroleum Reserve, pushed electric vehicles, and invoked the Defense
Production Act to produce more renewable-energy components. As anyone could
have predicted, gas prices were unaffected by those actions.
So now he’s just firing off notes to energy CEOs on White House letterhead threatening them with
government action if they don’t do what he wants.
“Your companies need to work with my
Administration to bring forward concrete, near-term solutions that address the
crisis and respect the critical equities of energy workers and fence-line
communities,” Biden wrote.
First of all, no, they don’t. No company
in the United States needs to work with any presidential administration on
anything if it does not want to. This remains a free country, and loyalty to
politicians is not a prerequisite to doing business.
Second, it’s almost sad that Biden can’t
get through a threat without genuflecting to his woke, environmentalist base.
Whatever “critical equities” are, we’re pretty sure they aren’t part of the
refining process.
As for “fence-line communities,”
environmentalist activism is one of the reasons for declining refinery capacity
in the U.S. In 2019, the largest refinery on the East Coast shut down
permanently after a fire. Its closure was hailed
as a victory for “environmental justice” as it was located near an African-American
neighborhood in South Philadelphia.
There’s a case to be made that refineries,
which produce unavoidable and harmful pollution, should not be built too close
to densely populated areas regardless. But if companies try to build in less
populated areas, the wildlife activists, in concert with environmental bureaucrats
at all levels of government, are there to block them.
Since refineries can’t be built in places
where people live, and they can’t be built in places where people don’t live,
they simply don’t get built. And no large refinery has, since 1976. The last
time a large refinery was built in America, Rocky was the
top-grossing movie, the Eagles’ Hotel California was the
top-selling album, and Joe Biden was only in his first term as
a senator.
By and large, energy companies don’t even
try to build new refineries. An attempt in
2005 to build a refinery in a remote part
of Arizona failed. And Biden isn’t helping. As the Institute for Energy
Research finds in a recent
article, “New refineries are unlikely to be built
in the United States due to daunting environmental standards and policies that
the Biden administration has been implementing to reduce petroleum product
consumption in the future.” Building a new refinery costs billions of
dollars and takes years. For that investment to yield a decent return, domestic
demand for gas and for diesel will have to be strong for quite some time to
come, but unless there is something we have missed, that’s not the fossil
future that Biden has in mind.
The administration’s biofuel standards,
which require refiners to add biofuels to petroleum products in increasing
quantities, essentially guarantee that investment in petroleum refining will
not pay off. If refiners don’t meet the biofuel requirements, they have to pay
the government large sums of money to offset their failure. That encourages
exactly what Biden claims to abhor, industry consolidation, by putting smaller
refiners who can’t afford the penalties out of business.
And for the refiners who are left, Biden
decries their profits, writing in his letter, “At a time of war, refinery
profit margins well above normal being passed directly onto American families
are not acceptable.” First, if the Biden administration believes the United
States is at war right now, it needs to be more up front with the American
people about it. Ukraine and Russia are at war, and the United States is
supplying Ukraine, which the administration has insisted does not mean the
United States is at war. If the U.S. isn’t at war for the purposes of foreign
policy, it can’t be at war for the purposes of domestic policy, either.
As for profits, this is exactly the wrong
time to be decrying them. Extraordinary profits should be attracting investment
and encouraging expansion. With gasoline above five dollars per gallon and diesel
even higher, refiners would absolutely love to get in on that action. That they
haven’t been able to is demonstration of how high the regulatory hurdles the
government has set for them are.
To review, Biden’s position on oil
refining is that new refineries should not be constructed, the ones that exist
should be regulated with increasing stringency if not closed down, and even if
they do stay in business, they shouldn’t be allowed to make too much money —
but please do me a solid and refine more oil, or else.
That “or else” is especially concerning
and goes beyond the ordinary incoherence we’ve come to expect from the
president on energy. He writes, “I am prepared to use all tools at my disposal,
as appropriate, to address barriers to providing Americans affordable, secure
energy supply.”
ExxonMobil responded to his letter with some proposals: suspend the Jones Act to make
it easier to transport petroleum products, lay off the biofuel standards, and
“promote investment through clear and consistent policy.” The American Fuel and
Petrochemical Manufacturers and the American Petroleum Institute wrote a letter describing how regulations from a variety of different agencies
influenced industry decisions to close and convert refineries. There’s plenty
the government can do by getting out of the way and letting American refineries
do their jobs.
But that’s not what Biden means when he
says “all the tools at my disposal.” He means abusing his emergency powers as
president (as he already
has in the past) to single out the energy industry and
punish it for his falling approval ratings. Biden has every right to be upset
that his presidency isn’t going as well as he’d hoped, but he does not have the
right to lash out at industries his party hates in response.
No comments:
Post a Comment