Pennsylvania Rep. Dan Meuser and Fox News contributor Liz Peek weigh in on Democrats’ resistance to U.S. energy independence.
As the whole world watches in horror as events unfold in Ukraine, the primary economic implication for Americans has been its impact on energy prices. Cutting off trade with Russia has not really moved the needle on American economic activity. Russia is not among the U.S.’s top 15 trading partners, substantially lagging even much smaller countries like Belgium and Holland.
However, Russia’s role as a supplier of oil and gas around the world gives them huge power over prices – and that impacts all of us. Concerns about Europe’s energy needs if Russia cut them off from supply or Europe stopped buying from Russia have finally provoked a needed American conversation: Why are we not acting as the master of our own fate when it comes to our own energy needs?
House Energy Committee member discusses solutions to high gas prices on ‘The Evening Edit.’
Oil and gas prices impact all Americans, even outside of automobile usage, as they are relevant to everything from air travel to the delivery of goods to even the cost of household products like cosmetics and handbags. And the $120 per barrel cost of oil we have seen lately (about double what it was at the beginning of 2021) has not gone unnoticed by American consumers – who are also voters.
BIDEN BLAMING HIGH GAS PRICES ON RUSSIA IS CYNICAL AND DISGRACEFUL
Here are three facts all Americans should know when they think about the economic impact of the American energy story:
Author and investigative reporter Gregory Zuckerman says the U.S. can produce more oil and natural gas by offering tax incentives and ‘cutting red tape’ in exchange for more ‘environmentally sound production,’ which he argues would be a win-win.
U.S. is missing a huge growth opportunity to produce and export oil and gas.
Europe needs natural gas to power their electricity, to heat their homes and to cook their food. This is no secret to anyone. But as long as Russia is invading sovereign, independent countries on the European continent, it makes a lot of sense that Europe would not want to buy it from Russia.
The miracle of the U.S. fracking revolution was not merely that we could access a greater supply of oil and gas than we ever thought possible, but also that we could even export it to global partners, particularly allies in Europe and Asia. This opportunity has been ignored or diminished time and time again by radical environmentalists. They not only misunderstand that trading partners will instead get their energy needs met from dirtier carbon solutions, but completely ignore the incredible job growth (high-paying jobs) this opportunity represents.
An obsessive focus on being a leading exporter of liquefied natural gas would create would one of the great growth booms in American history.
An obsessive focus on being a leading exporter of liquefied natural gas would create would one of the great growth booms in American history.
Oil and gas prices are always a byproduct of supply and demand, and it is government policy that most limits supply.
It is true that domestic producers, burned by over-leveraged balance sheets and what has felt like a never-ending boom/bust cycle in energy demand, did turn production way down during the COVID moment. But as demand skyrocketed, and it was obvious supply levels would be inadequate, pushing prices higher, U.S. producers had all the incentive in the world to increase production.
FOX Business’ Kelly O’Grady reports on the move’s potential impact on gas prices in California.
Producers make money on margins, sure, but mostly on volumes. The idea that producers would sacrifice profitable volume for the sake of margin is silly. Economics is about incentives! Producers operating in their self-interest have ample incentive to produce more, driving volumes for their bottom line, while pushing prices lower for consumers.
So what is the problem? An irrational government ecosystem of policies that frowns on fossil fuel production. Permits for drilling are routinely denied or delayed. Currently, there are more than 4,600 permits that have been waiting on government. New construction of pipelines needed to transport oil and gas has all but disappeared.
Regulatory headwinds are suffocating out of the market over a million barrels of oil per day, barrels that would increase supply to meet demand, and therefore lower prices.
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German Ambassador to the U.S. Emily Haber discusses Germany’s sanctions imposed on Russia.
Aside from the economics, geopolitical and environmental considerations beg for more U.S. oil and gas.
I have been intrigued by what green-friendly European nations have admitted in the aftermath of Russia’s invasion of Ukraine – they will now need more coal (a lot more coal) to offset the anticipated lost oil and gas from Russia (which could get much, much worse).
There is no environmental debate about the fact that natural gas emits less carbon than coal, and is a cleaner-burning fuel. Those arguing for greater American energy independence and greater energy sector growth are not arguing for a worse environmental result, but a better one. And the geopolitical leverage that energy independence creates goes beyond the economic benefits. It keeps bad actors in Russia or the Middle East from being able to weaponize energy against America and its allies.
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Advocates of a more rational American oil and gas strategy are advocating for lower prices to consumers, but they are also advocating:
- A huge growth opportunity and job creation,
- More geopolitical leverage for America and her allies, and
- A superior environmental result
None of these arguments should be taken out of our arsenal as we plead the case for a freer and more prosperous society. This is not just good economics; it is good citizenship.
David Bahnsen, author of “There’s No Free Lunch: 250 Economic Truths,” is Chief Investment Officer of The Bahnsen Group, a national wealth management firm managing over $3.5 billion in assets.
