Calling the gasoline supply crunch “Putin’s price hike” hasn’t worked for President Joe Biden, so now he’s trying a different tactic: blaming oil companies. His June 15 letter to seven major refiners complains about profit margins and a lack of supply in the U.S. market. But this is a little like Will Smith complaining that his hand hurt after slapping Chris Rock. Truthfully, Biden shares much of the blame.
Biden, like many others on the left, has made no secret that he wants to end all fossil fuels, especially oil. Of course, crude oil is practically worthless until it’s refined and turned into gasoline, diesel, jet fuel and other useful products. Noting that pump prices are increasing even above the cost of crude oil, the president wants answers. The fact is, the U.S. refining industry has lost about 1 million barrels per day of refining capacity over the last few years, and with the return of demand post-pandemic, there is a supply crunch.
Yet even as Biden says he may use “all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term,” his administration has taken multiple steps that have the predictable effect of decreasing the supply of fuels by decreasing refining capacity. Yes, the pandemic took a toll, and yes, some of his bad policies were also pursued by others, but Biden and his allies are largely at fault for the tight supply environment.
He has repeatedly talked about ending the fossil fuel industry as the primary way to reduce emissions. When the president of the United States promises the extinction of entire industry classes, investors notice. Any prudent company would consider the government’s regulations in making investment decisions, particularly since refineries require huge upfront investment and long pay-back periods.
The companies that Biden is requiring to explain “any reduction in your refining capacity since 2020” are the very same ones he and his allies have been pressuring to reduce their emissions by reducing production. The Securities and Exchange Commission in June closed its comment period on rules that will require every public company to disclose its climate impact – up and down its supply chain. The only way to reduce emissions on the scale the administration wants (50% by 2030, 100% by 2050) is to eliminate the demand for products that come from fossil fuels, including oil and derivative products.