INTRODUCTION
The idea of American energy independence had all but been forgotten. After all, we gave up being energy independent in 1957. But during the Trump administration a pledge was made to restore energy independence and in December of 2018, America once again became a net exporter of oil.
From 2018 to January 1, 2021, Americans enjoyed relatively low prices at the gas pump. During this time period, overall inflation was likewise in check and America was elated with the resulting economic success across the board. Yes friends, America was great again.
This all changed beginning in January 2021. Donald Trump was gone, replaced by Democrat Joe Biden as a result of the November 2020 elections. Biden had economic prosperity handed to him, albeit the Coronavirus pandemic was a major problem threatening its continuance. But America remained energy independent.
So what happened? And how can it be fixed? In this article, we will attempt to unravel the politics and find an answer for these questions as relates solely to the energy sector.
JANUARY 2021 AND THE BIDEN UNDOING OF ENERGY INDEPENDENCE
Much of the 2020 Biden campaign rhetoric surrounded so-called 'green energy' replacing fossil fuels. Guess no one told the President it could not be accomplished in one day. On day one of his Presidency nonetheless, Biden, by executive order, started dismantling the Trump energy independence mechanism that was working all too well for America.
Specifically the following is a list of the items President Biden did to undermine the legacy of Trump's energy independence:
- Rejoined the Paris climate accords - pushing member countries to reduce greenhouse emmissions.
- Revoked the permit for the Keystone XL pipeline.
- Cancellation of other Trump energy rules - directing federal agencies to begin revising and reversing Trump administration rules, including banning drilling in national parks and restoring various prohibitive environmental protections.
- Temporarily halted the granting of permits for oil and gas operations on federal lands.
- Institution of methane emission regulations to establish standards of performance and emission guidelines for existing operations by September 2021.
- Texas is required to submit a State Implementation Plan for Ozone National Ambient Air Quality Standards by January 2022.
- The Biden revocations of Trump's petroleum orders dealt specifically with 'Waters of the United States', 'Promoting Energy Independence and Economic Growth' and 'Promoting Energy Infrastructure.
- Ordered conservation of 30% of Federal lands and water by 2030 and find ways to double wind production by then.
All of these items result in the loss of high paying jobs, hurt inflicted on an already struggling economy, negatively impacting those reliant on reliable and affordable energy, and makes America once again reliant on foreign sources of oil.
FINDING RENEWED RELIEF AT THE GAS PUMP
Contrary to what the Biden administration would have us believe, the root cause of the high gas and oil prices can not be attributed to the supply chain issues currently plaguing America. Nor can this root cause be attributed to OPEC's refusal to increase production to ease American petroleum prices. These two items do worsen the current price situation but neither caused it.
In fact, it is the Administration's actions that self inflicted the pain felt at the pump. The dismantling of the Trump administration's energy independence policies not only significantly reduced the supply of domestic oil being produced, it put America once again at the mercy of cartels for its oil supply solely on their terms.
As such, the fix for the energy component of inflation is simple. Reinstate immediately all of the Trump orders and mandates rolled back by the present administration. After a short restart period, the increased supply afforded by domestic oil should significantly reduce the prices at the pumps (as well as the heating oil tanks) through application of the most basic economic principles of supply and demand.
THE BIGGER PICTURE CONCERNING ENERGY
Fixing the energy component as set forth herein will provide additional positive impacts for the economy on a whole.
- There will be the creation of many quality high paying jobs.
- Delivery costs for goods to retail stores will be reduced by the lower fuel costs which if passed on to the consumer will reduce prices on the goods on store shelves.
- Systemwide inflation will be reduced by virtue of the lower oil and gas prices.
- America will no longer be reliant on foreign cartels in unstable areas for its energy supply but will regain energy independent status. The U.S. can be the master of its own energy destiny.
A PARENTHETICAL OPINION ON THE OVERALL INFLATION IMPACT ON THE U.S. ECONOMY
Basic Economics 101 tells us that throwing more money into a hot inflationary economy is plainly and simply the wrong thing to do. Yes, some of the COVID relief spending was necessary, but it went to far and in fact exacerbated the current inflationary problems. With what has been spent so far, what's done is done, but the unspent portions of those prior relief bills should be halted at once.
Biden yesterday signed into law the recently approved infrastructure bill. This bill needs to be seriously audited and non infrastructure items contained therein be pared and defunded. As the majority of this legislation deals with human infrastructure rather than traditional infrastructure, significant sums of money can be halted from entering the existing hot inflationary economy.
The traditional infrastructure items of this bill should be funded as they are beneficial to the overall economy and country as a whole. But the human infrastructure items, while nice, are detrimental to the economy adding only to the current inflationary woes.
Then comes the Democratic push for yet another 2 Billion for Biden's Build Back Better Social legislation. Basic economics tell us the time is simply wrong to infuse significant sums of money into an already inflationary economy.
A big if, but if the Washington economic gurus are correct and inflation will abate late in 2022, maybe Senator Joe Manchin is correct. Hold off on Build Back Better until Q4 2022, and reassess inflation at that time.
And finally, the administration must stop all in effect and proposed reparations payments and tax relief benefits to immigrants here illegally. Why in the hell. to our own economic detriment, are we rewarding illegality with money in the first place?
CONCLUSION
America's current energy inflation woes are the result of the Administration's self inflicted bad policy decisions. All it would take is the reinstatement of the Trump policies that worked to ease American's pain at the gas pumps. But unfortunately it will be a cold day in hell before the current administration follows this path. This being the case, no relief is in sight until at least the 2024 election and Inauguration in January 2025.