As Democrats continue to push debunked “price gouging” accusations at oil and gas companies, two recent hearings on Capitol Hill examined how the Biden-Harris Administration’s energy policies are the real cost drivers behind high energy and consumer costs.
Representing a wide variety of vital industries within the American economy, witnesses at a House Budget Committee and a House Energy and Commerce Committee hearing voiced concern over the impact that high energy prices have on the farming industry, the price of food, home affordability for working-class households, and the ability to supply reliable power to the electric grid.
Travis Fisher, Director of Energy and Environmental Policy Studies at the CATO Institute, argued in his testimony at the Energy and Commerce hearing that sound energy policy is foundational to economic prosperity, saying:
“Bad energy policy has put the United States in a very weak position. American families face rising utility costs and increased strain on household budgets. American businesses – especially the energy intensive industrial sector – face an uncertain future and unnecessary delays. The stakes are high. Energy policy is too important to get wrong.” (emphasis added)
Farming, Food, and Groceries: How Higher Energy Prices Effect Every Household
A primary focus of the Energy and Commerce hearing was how higher energy prices have hurt the farming industry and led to higher food prices across the country. Oil and gas products are essential to many aspects along the food supply chain, from vehicles that are used to harvest and transport food to the fertilizer used to make food grow.
Witness Linda Pryor, who owns an apple farm in North Carolina, detailed the impacts of high fuel prices on her farm’s operations:
“For my farm in 2021, we spent $57,000 for diesel and gasoline, compared to what we spent last year, which was $83,600 for the same amount of diesel and gasoline… Fuel prices have increased nationally by close to 30 percent since 2021, while the sales prices of corn and apples has decreased since 2021.”
Representative Bob Latta (R-OH) shared a letter he had received from a farmer in Ohio that echoed similar challenges:
“I got a letter from a farmer in my district. They said that in 2021 they had about $122,000 in fuel costs, but they are projecting this year it will be at $180,000; their fertilizer costs are up from $580,000 to $900,000.”
While fuel is one of the main cost drivers for farmers, the price that farmers pay for fertilizer is primarily dictated by the cost of natural gas. This translates to higher prices for consumers: as both oil and natural gas prices have risen over the last few years, average annual food-at-home prices increased by 11.4 percent from 2021-2022, and then again by five percent from 2022-2023.
How Low-to-Medium Income Households Are Particularly Impacted by Higher Energy Prices
In addition to higher food prices, experts at the House Energy and Commerce hearing also explained how high energy prices disproportionately impact low- to medium-income households by making electricity, heating, and cooling all more expensive.
In her opening statement, Patrice Onwuka, Director of the Center for Economic Opportunity at the Independent Women’s Forum, pointed out how each key measure of household energy costs have risen under the Biden-Harris administration:
“Overall, prices are up 19.4 percent over the past 3.5 years of the Biden-Harris administration. Oil is up 36 percent. Electricity is up 32 percent. Natural gas is up 25 percent. These prices started to rise in early 2021. American households are in a more tenuous financial position now than they were before inflation took off in early 2021.”
High energy prices hurt all Americans, but have the most impact on households who spend a higher percentage of income on heating, cooling and fuel. The Biden-Harris administration’s day-one actions to limit oil and natural gas development on public lands and restrict the build out of energy infrastructure put additional pressure on energy supply and limited companies’ ability to take a long term approach to stabilizing and meeting American families’ energy needs.
Biden-Harris Polices Restrict Energy Supply at a Time When the World Needs More Energy
Instead of taking an all-of-the-above stance that focuses on developing the most affordable energy for households, the administration has picked winners and losers through legislation that subsidizes less reliable sources of energy over natural gas, despite natural gas’s ability to provide consistent baseload power and reduce emissions.
At last week’s House Budget Committee hearing, Alex Epstein, Founder of the Center for Industrial Progress, also emphasized the connection between Biden-Harris energy policies and higher prices in his testimony to the House Budget Committee, saying:
“When you shackle the most cost-effective and scalable source of energy, and you subsidize unreliable solar and wind, energy necessarily becomes more expensive, less reliable, and less secure.”
When presented with the facts on natural gas, some Democrats at the hearing justified the administration’s policies based on predictions that natural gas demand will peak in the next decade. But speculative forecasts about natural gas demand ten years from now are not a good foundation for energy policy – especially when energy demand is rising today.
Societal and technological shifts are driving increased energy usage across the globe. In developing economies, households newly connected to the grid are purchasing appliances, like air conditioning units, that in turn require more energy. Similarly, in the United States, the boon in data centers and A.I. technology is placing enormous demands on utilities, as the Wall Street Journal explained:
“In the U.S., with the most data centers, their share of electricity consumption could rise from 4 percent in 2022 to 6 percent in 2026, the International Energy Agency says.”
“AI could add 8 percent to U.S. natural-gas demand by 2030, according to research firm Thunder Said Energy, with backup generators burning more diesel too.”
“‘I think we’re going to need every little bit of renewables and natural gas we possibly can,’ Murray Auchincloss, chief executive of oil major BP, said of the growth of AI on a recent earnings call.”
By enacting policies that favor renewable energy sources over a diverse energy mix that includes oil, natural gas, and all other forms of energy, the Biden-Harris administration risks artificially limiting the availability of energy for American households and for developing nations seeking to grow their economies and improve quality of life.
Bottom Line: Recent Congressional hearings showcase that members of Congress and experts from a variety of sectors agree that reliable and affordable energy is essential to the quality of life for all Americans, and the only way to ensure affordable energy for the foreseeable future is to promote a diverse set of abundant energy resources that includes reliable natural resources like oil and natural gas.
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