Background and Joe’s view of our energy problems:
Although Joe’s business is not an energy company, he lives and works in the heart of energy in Texas. He has also done business with those in the energy industry throughout his career. This has given him a unique look into the inner workings of the industry and what drives prices.
Despite President Biden’s claims that refining capability is one big reason for rising gas prices, the fact remains that our refining capability is higher than ever. Biden claims that no new refineries have been built in the last several years and this is partially true. It is true that no new refineries have been built in new locations; however, he ignores the fact that U.S. refineries were built with the future in mind. Refining companies bought far more land than needed at the time they initially built their refineries, leaving them plenty of room to expand as demand increased in the future. Guess what, they have expanded both their footprint and capacity as demand has risen through the years.
Another Biden falsehood is that oil companies are marking up prices to pad their profits. Joe ran the numbers and the bottom line is that the cost of the raw product, crude oil, is what is driving prices. According to Joe’s calculations, the cost of a gallon of gas would average over $7 right now if oil companies were truly marking up their prices as the President claims.
The oil and gas industry is constantly under attack by this administration and companies stay silent because they are in a no-win situation. If they speak out, it has no impact on their bottom line; but they could risk the government coming after them because they spoke out. The real loser in all of this is American consumers because they do not get to be educated on what is really taking place and why gas prices and other oil products are so high.
Biden’s policies of shutting down traditional U.S. energy production while pushing renewable energy at all costs is killing American consumers who both expect and need reasonably-priced energy. In 3 years, our country has gone from being largely energy independent to once again being dependent on other countries.
Tapping the Strategic Petroleum Reserve in an effort to temporarily lower gas prices, as Biden has done, is a dangerous move in an effort for political cover. Bad policies drove us into the current predicament, and only through changing those policies can we achieve permanent stability in energy prices.
Although the U.S. should be exploring alternative energy sources, the technology is not yet available for these to compete with traditional energy in a free market. For example, we should all be happy that electric cars are available as a choice for those who want to drive them; however, we don’t yet have a full understanding how these will perform over the long haul. We should not be implementing government policies that ultimately push people toward these until we are sure they are both dependable and competitive over a long period of time.
The current administration’s policies of forcing alternative energy on our country ahead of the technology, while at the same time discouraging domestic oil and gas production, will continue to cause energy prices to remain unnecessarily high.
Joe’s Energy Solutions:
Energy policies should be about helping our country thrive—now and into the future. Our goal as a country must be energy independence. Energy independence means that we not only have the necessary domestic production to support our needs, but it also means that it is dependable and affordably priced so we are able to remain competitive on the world stage.
While we should continue to explore alternative energy sources, including renewables, any transition that takes place to these sources over time should be natural, until the technology has evolved to the point where it is competitive. We should avoid arbitrary government policies that push technologies on us prematurely and place us at a disadvantage to the rest of the world.
While we continue to explore alternative energy, we should implement policies that promote domestic production and transportation of traditional energy sources. This means that we should lift restrictions and open up leases for exploration and production on land and offshore.
We should identify and support innovative ways to safely and efficiently transport energy. Projects that were halted, such as the Keystone Pipeline, should be resumed. More domestic energy, along with safe and efficient means of transportation, will result in a more affordable product for the American consumer. Additionally, affordable domestic energy will result in an expanding economy that creates more jobs and makes us less dependent on energy from other countries, many of whom do not have our best interest in their hearts.
Government policies should support continued efforts to upgrade and expand the refining capacity in our country. Refining entails taking the raw product and converting it into a consumable product. To be truly energy independent, we must have the infrastructure and workforce necessary to produce the consumable product here at home.
The government should enact policies that promote the financing of energy exploration, including traditional energy. Currently, the Securities and Exchange Commission is considering rules related to climate data that are overly burdensome. There are real fears that such rules could severely restrict energy financing. Much of the exploration in this country is done by small to mid-sized businesses, not major corporations. This means that they don’t have unlimited sources of capital and are reliant on the ability to obtain financing to do their work. The government should put in place policies that seek to promote, rather than inhibit, their ability to access capital.
The permit process should be streamlined and simplified. Most Americans are reasonable people who want to live in safety in a clean environment. We rightly expect our government to protect us and that is why there are permitting processes to review the potential impacts of energy exploration. The problem is that such processes often become bogged down in politics and red tape and are dragged out for far too long. This should not be. Instead, we should clearly outline the steps in the permitting process, the information needed during the process, the parties responsible for providing this information, time frames within which the information must be provided, and a timeline by which a decision must be rendered. There should be consequences for any parties, including government agencies, who do not live up to their responsibilities as outlined in the process.
We should seek the implementation of consistent policies that can help to stabilize the price of energy over a long period of time to avoid dramatic price increases and decreases. Anyone over 30 has lived long enough to experience some significant swings in gas prices. As evidenced by what has happened over the last couple of years, prices can change quickly. Prices have risen significantly because a new administration in Washington reversed a number of policies that had been keeping prices stable. There are some areas, such as the Federal Reserve, where the governance mechanism is set to allow for some stability from administration to administration. In the case of the Fed, the goal is to provide stability with regard to monetary policy. Similarly, we should seek to set up a system that would allow for this same kind of stability with regard to energy prices. As we look at oil prices today, they are consistently over $100 per barrel resulting in steep prices at the pump. Joe believes that $50 to $60 per barrel of oil seems to be the sweet spot. At this price, companies can make money, consumers have affordable gas prices, and our economy benefits from reasonable energy prices that allow for economic growth.
