In his campaign rhetoric and stated goals, President Joe Biden asked Americans to decrease their consumption of fossil fuels, including gasoline. At the same time, due to increasing prices, he is asking world oil producers to increase their output. This contradiction has recently caused trouble for the Biden administration in public opinion polls.
One of Biden’s first moves upon entering the White House was to rejoin the Paris Agreement on climate change; since then, his executive orders and policy decisions show a desire to take a leadership role in combating climate change. The American president needs to create an economy based on clean, modern energy sources, but at the same time he needs to keep prices low for American families in the short term.
Over the last year, while the COVID-19 outbreak has continued to spread, the U.S. and other top oil-consuming countries have become increasingly worried about rising prices. Expensive gasoline and the rise in inflation to 6.8% (unprecedented in approximately the last 40 years in the U.S.) is directly linked to a drop in Biden’s favorability ratings in the polls. This led the White House to request that OPEC+ members increase their production. The U.S. also entered talks with partners such as China, India, Japan, South Korea and the U.K., which at first did not result in action. But after continued consultation with these nations, the decision was made to release 50 million barrels of the U.S.’ strategic oil reserves into the market.
The contradiction between Biden’s hope for increased oil production and supply and his focus on clean energy sources results from a series of challenges that the administration faces. These include serious friction between the U.S. and the heads of OPEC+, Saudi Arabia and Russia; the request for U.S. domestic producers to participate in the oil supply despite a focus on limiting fracking;* and continued sanctions on oil exports from Iran and Venezuela. This has put the Democratic president under severe political pressure before the congressional midterm elections in 2022. To make things worse, some U.S. officials have gone so far as to warn that inflation is a threat that could result in Donald Trump’s return to power!
The most important question currently preoccupying experts concerns what issues the clash between a year of environment-focused energy policy and the demands of the American people and the energy industry have created for the Biden administration.
Presidents from both U.S. parties have long considered high energy prices a threat, particularly gas prices, and with good reason. Next to food prices, the gas pump is the most visible measure of inflation for consumers; a steep increase in prices could force people to look for someone to blame beyond beyond a faceless oil company.
Daniel Simmons, a former Department of Energy official in the Trump administration, believes that gasoline prices are the most transparent cost in the U.S. People see them every day and they reflect the economy as a whole. As a result, high gas prices seriously worry people.
On the other hand, the Biden administration’s focus on renewable energy openly contrasts with what the American people worry about, creating a problem for Biden that becomes clearer every day with his falling approval ratings. According to many experts and industry insiders, Biden’s action on energy and the environment has seemed haphazard and has failed to develop the necessary infrastructure, policies and planning.
Overall, the important challenges that Biden faces in reaching his energy goals can be summarized as follows:
1. The Biden administration’s request that OPEC+ increase oil production and its sale of long-term oil drilling contracts in the Gulf of Mexico has angered environmentalists;
2. This policy has laid bare the tension between Biden’s long-term climate goals and his short-term political reality. He is determined to push the U.S. toward cleaner energy sources and limited carbon emissions, but at the same time, he can’t let the price of energy go so high that voters turn against him. Former U.S. Treasury Secretary Larry Summers recently made this danger clear, warning that high inflation risks bringing Trump back to power;
3. In the meantime, the president is still pushing the Senate to approve his social and environmental spending package, called Build Back Better. This bill has only fueled American consumer dissatisfaction with high inflation, making the Biden administration’s path to approving the bill even more difficult; and
4. The Trump administration’s unjust and unilateral sanctions against large oil-exporting countries like Iran and Venezuela were encouraged and supported by shale oil and industry giants in the U.S. Now, with Biden focusing on environmentally friendly, anti-fossil fuel policies, the lack of oil entering the market from these two countries and the lack of cooperation from OPEC+ has made it difficult to supply the American people with cheap energy, bringing sanctions on such oil and energy sources under scrutiny.
*Editor’s note: This reference is to hydraulic fracturing, a technique the U.S. employs to extract shale oil.