President Joe Biden’s energy policies are reducing U.S. oil and gas output by roughly $100 billion annually, according to a new Committee to Unleash Prosperity study by Casey Mulligan—a professor of economics at the University of Chicago—and Heritage Foundation economist Stephen Moore.
Among the Biden initiatives hampering U.S. energy output are “higher tax rates; additional regulatory burdens; the suspending of needed energy infrastructure, such as pipelines; prohibitions on drilling on public lands and off-shore; and . . . the political risk of investing billions of dollars only to have operations shut down by this administration,” Mulligan and Moore note.
The economists conclude that “the U.S. would be producing as much as $300 million more oil output per day” under the supply conditions cultivated by former President Donald Trump. That works out to $109.5 billion annually, by the Thinker’s calculations.
Lost oil and gas output tangibly harms the American consumer, Mulligan and Moore observe: Biden’s policies have “contributed to, among other things, inflation-adjusted U.S. natural gas prices in August that were more than triple from 3 years earlier.”
Bad Narratives Die Hard
Mulligan and Moore’s study unpacks the Biden administration’s claims of a “Putin price hike.” While conceding that it is “undoubtedly true” that Russia’s invasion of Ukraine spiked energy prices, Mulligan and Moore question why higher prices are not motivating U.S. energy companies to produce more—and thereby match unsatisfied demand with more supply.
“[W]hen Trump left office, the U.S. suddenly changed from the leading country in terms of raising production in the face of high oil prices to one of the few that holds its production fixed,” Mulligan and Moore note.
Biden’s “war on American fossil fuels” explains oil and gas companies’ recent inaction, per Mulligan and Moore. The economists observe the slow recovery of U.S. field production of crude oil, which is running one to 1.5 million barrels a day short of peak Trump levels, and the U.S. fuel production’s Biden-era inelasticity to price changes.
“Policies more friendly to oil and gas production would mean more jobs, more GDP, lower trade deficits, and lower gas prices at the pump,” Mulligan and Moore conclude.
SPR Releases Are Self-Inflicted Damage
A recent op-ed in The Wall Street Journalobserves that Biden has sold more than 30% of the U.S.’s Strategic Petroleum Reserve (SPR), which is intended for emergency use. “The SPR is at its lowest level since 1984, when U.S. oil consumption was considerably less and the reserve was initially being stocked,” the piece by Alexander Zemek notes.
According to Mulligan and Moore’s study, the U.S. “would not have had to sell a single barrel of oil” from the SPR had the Biden administration maintained Trump’s drilling policies.
Biden’s SPR releases have done little to address the sheer magnitude of the domestic oil production that he has suppressed by executive fiat, according to Mulligan and Moore. They estimate that Biden’s policies have forsaken 600 million barrels of oil, compared to the 150 million emergency barrels that he has released from the SPR (as of July 2022).
Pain at the Pump
Mulligan and Moore’s study complements the Bureau of Labor Statistics’ most recent inflation data, which observe 58.1 and 33.1 percent increases in the fuel oil and piped gas indices, respectively.
The American Automobile Association (AAA) placed the national average price for a gallon of regular gas at $3.76—roughly $1.50 higher than in early January 2021, when Trump left office.
A regular gallon of gas will set an Illinoisan back $4.17, the AAA notes.
Perry Zhao is a senior editor for the Chicago Thinker. He is currently a fourth year in the College majoring in Economics and Philosophy and minoring in History. He hopes to attend law school after graduation. An amateur guitarist and avid runner, Perry ran the 2022 Chicago Half-Marathon time in 1:30. His best 5K time is 19.09.