Nothing is scarier on Halloween than a White House that doesn’t understand basic energy economics. Unfortunately, that’s the pattern we continue to see from President Biden who, right before passing out sugary sweets to children at the annual White House Halloween event, will use the podium to attack the U.S. oil and natural gas industry by pushing false claims and debunked theories of price gouging and advocating for a windfall profits tax.
All the while, the White House’s own energy envoy is in the Middle East calling for increased global investment in oil and natural gas development.
Here are three things to keep in mind when watching this spooky spectacle:
#1: Ghoulish Claims of Price Gouging are a Ghostly Fabrication
In teasing the Halloween presser, the White House said: “President Biden responds to reports over recent days of major oil companies making record-setting profits even as they refuse to help lower prices at the pump for the American people.”
Yet, while consumers face actual pain at the gas pump, the Biden administration is playing ‘tricks’ as no experts have given any credibility to the price gouging theory. EID has repeatedly discussed this topic at length, dispelling these claims time and again.
Here’s just a sampling of those experts:
Garrett Golding with Dallas Federal Reserve Bank:
“It’s not price gouging or a grand plot by the industry. This is how the business functions.”
“Democrats blame oil companies for high fuel prices. But the facts don’t back them up.”
And the Washington Post:
“Democratic leadership has also sought to blame oil companies for high gas prices, a growing concern for voters ahead of the midterm elections, despite no evidence of price gouging.”
What’s more, Phil Verleger from the Niskanen Institute cited more than 100 investigations and lawsuits brought on by everyone from consumers to the FTC and numerous attorneys general over the last 30 years that all “flopped,” saying:
“There’s no such thing as price gouging.”
The administration’s claims that oil and natural gas producers are engaging in price gouging to pad their own profits are “six feet under” reality and ignore the many efforts from producers to increase production, despite nearly two years of policy headwinds from the administration.
#2: Windfall Tax Would be Counterproductive for Energy Policies
President Biden will also reportedly float a windfall tax on energy companies during his Halloween presser, a move that has “Keep it in the Ground” activists cheering. In reality, a windfall profit tax would have truly ‘scary’ impacts by disincentivizing investment in production, therefore reducing supply and raising prices on American consumers.
A Congressional Research Service report detailed the harm a similar tax had on production when implemented in the 1980s:
“From 1980 to 1988, the WPT may have reduced domestic oil production anywhere from 1.2% to 8.0% (320 to 1,269 million barrels). Dependence on imported oil grew from between 3% and 13%. The tax was repealed in 1988 because (1) it was an administrative burden to the Internal Revenue Service (IRS), (2) it was a compliance burden to the oil industry, (3) due to low oil prices, the tax was generating little or no revenues in 1987 and 1988, and (4) it made the United States more dependent on foreign oil.” (emphasis added)
Oil companies have similarly warned of these effects. In a recent interview, Chevron CEO Mike Wirth emphasized the cyclical nature of the commodities business:
“There are hard times, as we saw just two years ago where we had enormous losses. Good times don’t last just like the difficult times don’t last. We have to invest through those cycles and it’s important we do to meet the growing demand for energy.”
ExxonMobil CEO Darren Woods also pushed back on short-sighted windfall profit tax proposals, cautioning that such tax plans would exacerbate the trend of refinery closures, such as they have in Europe in recent years:
“[Windfall tax proposals] have the potential to further jeopardize the ability of struggling European refineries to compete in a global market and reduce Europe’s prospects of improving energy security.”
The Independent Petroleum Association of America’s Jeff Eshelman summarized the dangers of a windfall profit tax, while pointing out an ironic Halloween plot twist worthy of the big screen:
“A last-minute White House press conference on Halloween night calling for a deeply flawed windfall profit tax is clearly a ‘trick’ to distract American families from the administration’s misguided energy policies because they’re not seeing any ‘treats’ of relief at the gasoline pump. Meanwhile, the president’s own energy envoy is in the Middle East today calling for increased global investment for oil and natural gas. It’s time for the President to stop playing the blame game as Election night approaches and instead help support American oil and gas workers to increase supply here in the United States.”
#3: Domestic Production Continues to Ramp Up, Especially in the Permian
The White House’s claim that oil and natural gas companies are not investing in increased production is yet another ‘scary’ smear that is easily disproved.
Oil companies are ramping up production to reach record highs, a fact highlighted by the Energy Information Administration’s Short-Term Energy Outlook:
“U.S. crude oil production in our forecast averages 11.7 million b/d in 2022 and 12.4 million b/d in 2023, which would surpass the record high set in 2019.”
This is further boosted by what we’ve seen from U.S.-headquartered oil majors in the third quarter following calls from the Biden administration to ramp up production and help bring down the cost of fuel for consumers.
Chevron’s production in the Permian hit a new quarterly record and increased by twelve percent from last year’s third quarter results, with Wirth saying:
“We’re increasing investments and growing energy supplies, with our Permian production reaching another quarterly record.”
“Exxon said its U.S. oil and gas production from the Permian Basin was near 560,000 barrels of oil and gas per day (boed), a record. Production for the year will increase about 20% over 2021.”
This comes even as the administration’s own EPA hangs a “regulatory axe” over the Permian Basin which could hinder drilling even more and a recent analysis from the Wall Street Journal found that the Biden administration “has leased fewer acres for oil-and-gas drilling offshore and on federal land than any other administration in its early stages dating back to the end of World War II.”
The Biden White House is attempting to portray energy companies as Dr. Jekyll and Mr. Hyde – simultaneously casting them as the ‘evil’ ones responsible for high prices, while also looking to them as the doctor to bail out their own misguided policies.
Bottom Line: While motorists are “treated” to gasoline prices $1.50 higher than when President Biden entered office, the White House is instead focused on “a bag of tricks” to distract Americans from their ghoulish energy policies. The “spookiest” thing this Halloween is the continued debunked blame game that will do nothing to actually increase domestic production and lower costs for consumers.
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