If President Joe Biden were looking for a way to exacerbate the energy shortages facing the United States and our allies, he’s found it: imposing an export ban on U.S crude oil and/or refined products (e.g., gasoline or diesel).
Biden’s flirting with an oil export ban is not—we repeat, IS NOT—driven by good policy or economics. It’s driven solely by politics. He’s doing everything he can to minimize likely Democratic loses in the upcoming midterm elections. But such efforts are completely counterproductive.
First, the way to promote the increased production of a product or service, any product or service, is to ensure access to the broadest market possible. With respect to oil and natural gas, that means a global market, which means exports.
Access to the broadest market means there will be demand for a company’s products. Even if there is a decline in demand in the domestic market, other markets may be able to pick up the slack.
Second, companies need policy and regulatory stability. Oil and gas companies need to know that if they invest the millions of dollars it takes to ramp up production—i.e., drill more wells, build more pipelines, expand refining capacity, etc.—the administration won’t flip-flop in the next few months or years. And yet no oil or gas company has that assurance.
The fact is the Biden administration has embraced the most chaotic energy policies of any U.S. administration in modern history. Does anyone know what the Biden energy policy is?
We know he’s willing to throw billions of taxpayer dollars at renewable energy companies. But what’s the plan right now? Oil and gas companies have every reason to be skeptical of this administration and respond accordingly.
Third, Biden needs to abandon his counterproductive proposals. For example, he’s chided oil and gas companies for not producing more when prices were at record highs. But in the next breath he’s threatened to impose a windfall profits tax on oil and gas companies to take away those very profits he says should be driving them to produce more.
Finally, energy is a global market. Production changes, such as OPEC+’s recent announcement to cut oil production by 2 million barrels a day, have global ripple effects. A wise and prudent president would have recognized that fact and (1) avoided vilifying and alienating Saudi Arabia, which has been a long and generally reliable ally, and (2) ensured that U.S. oil and gas companies had the freedom and political support they need to increase production. He’s done just the opposite.
In 2019, former Obama Defense Secretary Robert Gates observed, “I think he’s [Biden] been wrong on nearly every major foreign policy and national security issue over the past four decades.”
Add energy policy to that list.