Biden’s unforeseen energy errors are leading to global oil crisis

Much of the past week was spent debating whether we were in recession, after Thursday’s GDP report showed economic growth had fallen for the second quarter in a row. The White House argued it was a “transition” not a recession, while critics of Wright accused President Biden of gaslighting.

But this whole debate is a distraction from the conversation we should be having. Instead of debating the definition of a recession, we should talk about something more pressing: the ongoing energy crisis.

It’s actually worse than a distraction; The Biden administration is making the energy crisis worse by trying to fix inflation. Consider the Biden administration’s decision to release massive amounts of oil from the Strategic Petroleum Reserve (SPR) to drive down gas prices. Not only has it failed to affect the price of gas in any significant way, but it is also making us less safe. What we must do is allow oil wells and fast-tracking pipelines to ensure a steady supply in the future.

Or consider the Federal Reserve’s decision to aggressively raise interest rates in an attempt to cool an overheated economy and stave off inflation. It does the exact opposite of what it’s supposed to do: encourage investment in energy, which is needed to keep lights and air conditioning running.

We do not have to look far to see the consequences of these failed policies. Europe was lauded for their “progress” in the energy transition and is now turning to natural gas in winter. European electricity prices have hit an all-time high, and as a result, countries may have to ration energy supplies.

The situation is so dire that Deutsche Bank recently issued a warning, that the Germans will have to burn wood to stay warm this winter! Despite the utility of oil products for transportation, European natural gas costs several times the price of a barrel of oil in the US and ten times the cost of natural gas.


Meanwhile, Austria and France are directing their industries and utilities to upgrade their facilities so that they are able to burn crude oil for electricity, posing a risk of price cuts and further natural gas supply disruption. Other European and Asian countries are not far behind, burning up to two million barrels per day of oil and oil products for heat and electricity last winter, and potentially burning up to five million this winter.

We are also at risk of an energy crisis and a conflict with Russia turning into an oil crisis. The SPR release is expected to end in October, shortly before Europe and Asia begin burning oil for electricity and heat, and shortly thereafter OPEC+ production quotas stop rising by hundreds of thousands of barrels per day each month.

At the same time, ESG-driven disinvestment from our domestic oil and gas industry, coupled with a heavy regulatory burden and limited pipeline and drilling permits, has opened up a record gap between the price of oil and the number of drilling rigs operating here. We

Lack of oil supply growth despite very high oil prices is an unexpected policy error. And the European and Asian energy crisis is about to deepen oil shortages, potentially sending oil prices too high and limiting supplies in a new oil crisis.


Our leaders think OPEC+ can “turn the valves” and produce more oil for the US and the world. Unfortunately, it should come as no surprise that the Saudis did not agree to supply more oil when Biden visited.

OPEC+ is nearing excess capacity, potentially leaving an oil market deficit of 2.6 million barrels per day when it is needed most, potentially exacerbating the oil crisis and energy crisis.

There is no safety valve for this looming oil crisis, and OPEC+ certainly isn’t.


And yet, as the energy crisis develops into an oil crisis, the Federal Reserve and central banks around the world are raising interest rates and locking up capital that can be used to invest in oil production and infrastructure development. And desperately can be done to rebuild spare supplies. ,

And the Biden-administration rules aren’t helping, with pipelines and leases canceled on his first day in office, and repeated rhetoric claiming the oil industry is “going away” – further investment in the oil industry. Not a call at all!

President Biden
WASHINGTON, DC – JULY 28: US President Joe Biden makes remarks during a meeting on the US economy with the CEO and members of his cabinet at the South Court Auditorium of the White House on July 28, 2022 in Washington, DC.
Anna Moneymaker/Getty Images

Despite the potential negative impacts on the economy and our standard of living, the impending oil crisis presents an opportunity to reinvigorate the US economy. Our country’s energy sector is depressed, and there is an opportunity to physically increase the number of drilling rigs, accelerate production, and bring back hundreds of thousands of jobs lost in this sector. Doing so is expected to bring down oil and gasoline prices at the pump and help offset the massive inflation that is hurting American consumers.

It goes without saying that the above cannot happen without encouraging new investments from the private and public sectors. To attract new capital, policy makers should reduce the regulatory burden on companies operating in the oil and gas sector and can stimulate our economy by encouraging new investments.

If our leaders can shift from being hostile to supportive, depressed valuations and private capital allocation in the oil and gas sector can normalize, attracting capital to generate more energy and suppress inflation.

Volcker was not the magic of the 1980s economic boom and inflationary collapse; It was cutting Reagan taxes and regulations.

Josh Young is the founder and CEO of Bison Interests, an investment fund focused on publicly traded oil and gas stocks.

The views expressed in this article are those of the author.

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