Gasoline prices will soar after the Democrats’ midterm shellacking. Why? Power. For many politicians, as well as parties, the point of power is power.
Biden campaigned against American oil and gas, saying he would “end fossil fuels” with no more pipelines and “no more drilling on federal lands, no more drilling, including offshore, no ability for the industry to continue to drill.”
Within a week of taking office, Biden banned the Keystone XL pipeline and suspended oil and gas leasing on federal lands — the latter move was subsequently overturned in late August by a federal judge in response to a lawsuit by Texas Attorney General Ken Paxton. The regulatory assault has been unrelenting as well.
Meanwhile, Biden’s allies in woke finance are working to dry up the capital needed to find more oil and gas and then produce and refine it. As a result, America is producing about 1 million barrels a day less oil than it did under former President Donald Trump (before the onset of Covid-19).
Strategic Reserve Low
Coincidentally, that 1-million-barrel shortfall is about the same amount of oil Biden has been withdrawing from the Strategic Petroleum Reserve (SPR).
Congress created the SPR in 1975 after the oil shocks of the 1970s led to gas lines and stagflation. Situated underground in giant caverns associated with salt domes in Louisiana and Texas, the SPR was rapidly filled to about 600 million barrels by 1990. It reached its maximum capacity of 714 million barrels during the Great Recession when the price of oil plunged from $190 a barrel to $58.
But since Biden’s election — and especially since the White House announced an accelerated draw down of the SPR on Nov. 23, 2021 — the oil in the SPR has plummeted to levels not seen since 1984, shortly after the storage caverns became operational.
Presidential Approval Tied to Gas Prices
The figure below illustrates two important variables during President Joe Biden’s time in office. The first is the RealClearPolitics average of presidential job approval polling, with approval tracked in black and disapproval in red. The second is the average price for a gallon of regular gasoline. The figure shows how public approval of the job Biden is doing tends to lag the price of gasoline — a common and necessary product most voters buy on a regular basis, and one for which there is extreme and constant visibility, unlike, say, the cost of eggs or a pair of shoes.
Sources: Real Clear Politics, Energy Information Administration, American Automobile Association.
Not surprisingly, an administration whose chief declared war on American-made energy well before inauguration presided over a steady increase in the price of gasoline.
By November, with the average price of a gallon of regular gasoline having increased steadily over the past 11 months from $2.20 to $3.40, or 55 percent, the Biden team was panicking as the presidential job approval deficit hit a negative 12.1 percentage points. The irony, of course, is that the price of energy was merely reacting to Biden’s own policies.
The challenge for green politicians is that while polling frequently shows Americans approve of expanding green energy (wind, solar, and batteries) by 80 percent to 20 percent, when a modest cost is assigned to these policies — even $20 a month in higher prices for electricity or gasoline — support quickly collapses to 30 percent to 70 percent against green energy, especially among lower-income groups that have traditionally been a core Democratic constituency. It seems everyone’s for windmills, rainbows, and unicorns — until the bill comes due.
Thus, on Nov. 23, 2021, as Biden’s approval ratings had precipitously declined for six months, the White House announced a greatly accelerated drawdown of the SPR. Almost immediately, there was relief at the pump and the Biden job approval rating saw a jolt upward — for a month.
Unfortunately for Biden, his administration’s ongoing hostility to American-made oil, combined with the federal government’s competing against the oil and gas industry by selling oil out of storage, could not keep prices low forever.
Using the Strategic Petroleum Reserve Politically
So, where do we go from here? If Biden has been drawing down the SPR for crass partisan purposes, transmogrifying the Strategic Petroleum Reserve into the Strategic Political Reserve, what might he do after Nov. 8 when the Democrats may lose both the House and the Senate as well as some governorships and state legislative chambers?
To see how Biden might use the awesome, market-shaping power of the SPR, we must look at how it’s been abused so far: not as a store of energy to mitigate the effects of another Arab oil embargo, nor in the event of a major war, but to purchase political popularity. This view is further fortified by revelations out of Saudi Arabia that Biden begged the Saudis to delay the Organization of the Petroleum Exporting Countries’ production cut until after the November elections.
The Biden team — overweighted with elite, woke Ivy Leaguers — would view a loss to the MAGA masses in November as a rebuke deserving of a crushing response.
One option is refilling the SPR. My colleague John Hostettler, a member of the U.S. House of Representatives for a dozen years through 2007, believes that in the wake of a midterm loss, a simple cessation of the SPR draws wouldn’t be enough; it wouldn’t inflict enough pain.
Should the SPR draws stop, or, as Hostettler believes, shift back to refilling the reserves, what would happen? Oil prices would immediately spike, with gasoline prices following quickly. Democrats would start attacking “greedy Big Oil” and would introduce so-called windfall profits taxes, propose a ban on the export of American oil and gas, and call for hearings on oil industry collusion.
Republicans, of course, would defend the domestic oil industry. In response, Democrats and their allies in big media would pillory Republicans, calling them friends of Big Oil and enemies of working Americans.
Lastly, as gasoline prices pushed through $6, $7, or even $8 a gallon, Biden’s team would be at first quietly, then openly, touting the “transition” to green energy. “Don’t want to pay $8 a gallon for gas? Buy an electric car (with a made-in-China battery)!” they’d say.
In an arcade gaming context, Democrats’ actions to punish Americans for their November insolence might well turn into a Leeroy Jenkins moment, where their drive to inflict maximum pain at the pump results in the Democrats being wiped out in 2024.
But a new Republican majority in Congress wouldn’t be powerless. They can make aggressive use of the Congressional Review Act (CRA) to overturn many Biden administration rules, including the climate disclosure rule, that increase the costs of producing energy. Biden could veto CRA joint resolutions, but doing so would highlight his bad policies. Republicans could also redistribute funds from regulatory compliance to accelerating permitting to speed getting oil and gas out of the ground and to the consumer. Congress can also vote to remove judicial review to curb frivolous environmental or green energy lawsuits. While Biden could veto all of these initiatives, Congress, with the power of the purse, has a powerful negotiating tool.