Editorial:

For energy prices to drop, stop threatening companies for producing energy

Posted 7/5/22

If you traveled over the Fourth of July weekend, you felt the sting of filling up before your trip. Gas prices were down slightly from what they were earlier in June, but they remain painfully …

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Editorial:

For energy prices to drop, stop threatening companies for producing energy

Posted

If you traveled over the Fourth of July weekend, you felt the sting of filling up before your trip. Gas prices were down slightly from what they were earlier in June, but they remain painfully high. 

While most people feel the impact of high energy prices most directly when they pay at the pump, the greater pain of this problem will be gradually increased in the coming year. 

Energy is the industry that powers all other industries. If energy costs go up, the cost of all business goes up. Adding to inflationary pressures that grew out of the federal government printing large amounts of money to hand out to virtually every citizen in the country, those increased costs of doing business will be passed onto consumers — for just about every product we buy.

You might be spending more at the grocery store now, but in the coming year, it’s going to get worse. Farmers are paying more for diesel and fertilizer, which is made from natural gas. This year’s harvest will be much more expensive. After the crop is harvested, it has to be shipped to factories, which is more energy costs, and then to stores — again more energy costs. 

This is one key factor in why some economists predict we’re heading toward a recession. 

President Joe Biden and his supporters, such as Sen. Elizabeth Warren (D-Mass.), have been cranking out rhetoric to try to convince you that, when it comes to our growing energy crisis, they are entirely blameless. 

In September 2019, when he was campaigning for president, Biden told a crowd of supporters, “Look into my eyes. I guarantee you… we’re going to end fossil fuels.” He showed his commitment to that promise after becoming president by, among other things, banning oil leases and drilling on federal lands, as well as canceling pipeline contracts. 

This, of course, wasn’t the first time the president of the United States, in addition to a phalanx of powerful people, promised to deprive the entire globe of the energy source that supplies 80% of the world’s energy needs. While world leaders vow to completely eradicate the entire fossil fuel industry, climate activists do all they can to stop the permitting of critical infrastructure, such as pipelines. 

It shouldn’t surprise anyone that between 2011 and 2021, oil and gas exploration investments declined by 50%. When powerful people and angry mobs are threatening to do everything in their power to destroy an industry, investors are going to pull back. Less investment means less production. So, the supply is not increasing at a time the demand is increasing as people come out of the pandemic and try to get the world moving again. 

There is absolutely nothing technological limiting the oil and gas industry from producing enough energy to meet demand. Thanks to fracking technology, America is quite capable of not only meeting our energy needs, but exporting this valuable product to other countries. 

To be fair, anti-fossil fuel activists were convinced, as many of us were, that we had alternatives that were not only entirely adequate to the task, but cheaper. We’ve been told unequivocally that wind and solar are steamrolling over the entire fossil fuel industry. 

A look at the numbers says otherwise. According to the U.S. Energy Information Administration, since the 1970s, an aggressive campaign to replace fossil fuels has increased the share of wind and solar electrical generation from 0% to 9.7% in the United States. Electrical generation is a small piece of the energy pie. Transportation and industrial heating are a much larger portion, so the total energy produced by wind and solar in the U.S. is under 4%, because outside electrical generation, wind and solar are largely useless. 

Warren points to oil companies’ record-high profits as proof the entire problem is a result of industry greed. Strangely, in 2020, when oil prices fell to negative numbers, she wasn’t praising those companies for their charity. If oil companies could just raise prices to increase profits, prices would never collapse. Yet, they do frequently. 

Government policy, driven by climate activism, has artificially restricted fossil fuel production. No matter how much you shame people for using fossil fuels, that will have little impact on demand. At the end of the day, people need energy, and fossil fuels remain one of the most cost-effective means to meet that demand. So the demand has grown, while everything was done to punish the people who were producing the supply. 

That puts oil companies in a position to make a lot of money off that artificially low supply, but you can’t blame oil companies for this ironic and unintended consequence of a short-sighted and highly misguided energy policy. 

The bad news is that even if Biden and all those who fight so hard to keep fossil fuel companies from producing energy suddenly stopped what they’re doing, it would still be 12 to 18 months before the supply would start to grow. The even worse news is that most of them view high energy costs as a great way to sell you on the false promise of wind and solar. Hold onto your wallets. It’s going to be a long road back to energy sanity. 

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