How to Wreck an Economy

Prior to the pandemic Americans were enjoying one of the best economic environments in our history. Then the plague hit and knocked everything cattywampus. Eventually, we started to climb out of the pandemic and the economy began to regain its footing. Then came the election of 2020 and economic progress came to a screeching halt.

Now it looks like we're headed for one of the worst economic periods in our history.

Our supply chain appears broken, store shelves are barren, employers can't find workers, and worst of all, inflation, all but negligible for the last decade, is skyrocketing, negating whatever wage gains workers have made over the last several years.

The Biden administration seems helpless to do anything to meliorate the situation and oddly determined to make the problem by worse by hamstringing the energy industry.

Tristan Justice at the Federalist comments:

From day one President Biden has done everything in his power to suppress home oil and gas production leading to the price shocks Americans are coping with today.

Biden took an axe to the Keystone XL Pipeline, put pressure on Wall Street to cease investment on new projects, banned drilling in the Arctic, and suspended new oil and gas leases on federal land.

At the same time, Biden gave the green light to a new Russian pipeline into Germany, repeatedly begged OPEC to raise output, and demanded American oil producers lower costs after the administration’s cascade of expensive regulation. It’s not that Biden has no plan to bring down power prices, it’s that Biden is implementing a plan to keep them going higher.

The administration admitted this week another pipeline supplying more than half of Michigan’s propane needs is on the chopping block, even as propane users face the steepest spike in heating prices this winter.

The United States was,just a year ago, a net exporter of energy. Now we're pleading with the Saudis to increase oil production.

National Review's Jim Geraghty asks how "a country that became a net-energy exporter in 2019 and 2020 and that had cut its dependence on foreign crude oil by more than 50 percent from 2016 to 2020, is reduced to pleading with OPEC to increase production."

A lot of Americans are also wondering "why an administration that so desperately wants other countries to produce more oil seems so implacably hostile to the U.S. producing more oil."

Geraghty elaborates:

More than a few observers have pointed out the irony that a president who campaigned on pledges that “We are going to get rid of fossil fuels,” and “We’re going to phase out fossil fuels” is now calling on Saudi Arabia, Iran, Iraq, Venezuela, and the rest of OPEC to increase oil production.

And unsurprisingly, OPEC likes high prices and is in no rush to bring them down, as the Wall Street Journal reported. In fact, they think prices might go significantly higher by next summer:

Foreign producers are also benefiting from rising prices and fearful of oversupplying the market, giving them little incentive to cooperate.

“We must keep the price. Iraq needs the money . . . for its stability,” Iraqi Foreign Minister Fuad Hussein said in an interview last week. He predicted oil might go as high as $120 a barrel by next summer, up from about $80 currently.

It’s not just OPEC; Wall Street analysts such as those at Bank of America think gas prices will be 45 percent higher than now by June 2022. That would calculate out to a nationwide average price of about $4.94 per gallon.

$5.00 a gallon gasoline would be catastrophic for many Americans, especially those living on limited incomes. Not only would it affect personal transportation, but since everything we buy, including food, is brought by truck, and since trucks use gas, the price of everything is going to continue to rise.

Moreover,

... people don’t just use crude oil for their cars; home heating oil is another significant use. The EIA projects that “The 4 percent of U.S. households that heat primarily with heating oil will spend 43 percent more — 59 percent more in a colder winter and 30 percent more in a warmer winter.”

But don’t think you’re off the hook if your home uses natural gas or propane:

“We expect that the nearly half of U.S. households that heat primarily with natural gas will spend 30 percent more than they spent last winter on average — 50 percent more if the winter is 10 percent colder-than-average and 22 percent more if the winter is 10 percent warmer-than-average.”

The only homes not getting walloped by price hikes will be those using electricity for heat, but the EIA projects that even those homes will see a 4 to 15 percent price increase.

This is all a consequence of the president's wish to prove his green energy bona fides and appease the progressive wing of his party. He may succeed in getting a pat on the back from Alexandria Ocasio-Cortez and Bernie Sanders, at least for a time, but he'll do so by devastating the financial well-being of millions of Americans.

Mr. Biden received the votes of more Americans than any candidate in American history, but I'm sure that very few of them thought they were voting to make the U.S. more like Venezuela.