Gas prices in the United States are rising. Like clockwork, the GOP is blaming this on Joe Biden. “Since President Biden took office, average gas prices are up more than 50 cents a gallon,” Florida Senator Rick Scott proclaimed in a written statement last week. The Koch-backed Institute for Energy Research has echoed the charge. It’s in some ways a version of what happened in last month’s devastating blackouts in Texas: A thing people don’t like happened, and Republicans are eager to blame it on Democrats.
But fuel prices going up is both a sign of economic recovery and very good news to fossil fuel companies. The industry is eager for higher fuel prices, having experienced a rash of bankruptcies after prices plummeted last spring. Persistent low prices generally mean that the sort of high-cost unconventional drilling that predominates in the U.S. is unworkable. So despite the GOP’s finger-pointing, major producers including ConocoPhillips are gleefully taking credit for higher prices, after years of drillers’ unprofitability and unsustainable overproduction courtesy of cheap debt.
It’s true that U.S. shale producers are on track for relatively modest production increases over the coming year, with many aiming to cut costs and reduce debt. They aren’t primarily the ones responsible for these higher pricers, though: Production cuts abroad, namely from OPEC+, kept some five billion barrels of oil per day in the ground in February. Even if more disciplined producers like ConocoPhillips do genuinely want to constrain production, the U.S. oil and gas sector is infamously anarchic. So even if drillers’ current prudence holds out for a while, there’s no guarantee it’ll hold across firms into the future. Neither, relatedly, is there any assurance that investors’ money won’t go flowing back into excess production if prices are steadily high in the ways that a strenuous recovery promises, particularly given the sheer amount of cash once again sloshing around the economy. Similar conditions, it’s worth noting, made the fracking boom happen. JP Morgan Chase analysts suggest another one may be on the horizon in 2022.
This all promises to create a confounding if frustratingly familiar situation. The Biden administration has to date had very little tangible impact on the fossil fuel industry—which absolutely needs to be regulated to meet his promised climate goals. The GOP is meanwhile eager to blame higher gas prices on his promise for a green recovery. All the while, the only legislation that has passed since Biden was inaugurated—the stimulus bill—has nothing to say about climate. Temporary limits on new permits and leasing on public lands, enacted by executive order, haven’t threatened production, since companies stock up on permits well in advance. Biden may have canceled the federal permits for the Keystone XL pipeline, but investors and refiners have long written it off as a lost cause. The American Rescue Plan is also a fairly conventional stimulus, without even the modest boosts to clean energy furnished by the American Recovery and Reinvestment Act signed by Obama in February 2009. If anything, such a conventional package—absent constraints and further legislation with more targeted investments—will be a boon to fossil fuels by fueling energy demand overall, both in the U.S. and around the world.
People in the U.S. will notice higher gas prices for the same reasons that they’ll be high in the first place: They’re driving to work again in newly filled air conditioned offices, traveling on summer vacations, and doing any number of other things that Covid-19 made virtually impossible. Republicans will blame Biden’s climate agenda in order to paint themselves as populists, all while their corporate donors reap the profits of $3 or $4 per gallon of oil. If OPEC+ opts to boost production—thus relieving prices pressure on consumers at the pump—the ensuing hit to domestic drillers and job losses will be blamed on the supposed tyranny of foreign oil producers. The GOP will argue for ramping up domestic fossil fuel production in the name of energy independence. And without an ensuing cut by OPEC+, that will only cause prices to dip even lower as the market is flooded with supply.
For much of the last half-century, the U.S. has held contradictory positions when it comes to energy. Car-centric planning makes consumers depend on cheap fuel. But the fracking industry depends on fuel not being cheap, since such unconventional drilling methods are expensive. American politicians claim that fracking has made us energy independent, though the price of fuel still depends in large part on decisions made halfway across the world by countries with more say over how much they produce. Politicians in the U.S. aren’t willing to do the only thing that could help sort out this situation, which is to coordinate and curtail production domestically.
This situation would be untenable even without climate change. But the fact that the planet is rapidly warming makes it catastrophic, with each company trying to out-produce the other, and no clear winner besides maybe a handful of fossil fuel CEOs. The bad faith, incoherent political messaging around higher gas prices in the last week is a reminder of how urgently we need a national, climate-focused strategy around fossil fuels. It’s also a reminder of the staunch opposition any such plan will face.
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