The War on U.S. Energy Independence Continues

by | Jan 30, 2024 | Biden Administration, Blog Articles, China, Economy, Energy, Finance, Geopolitics, Inflation, Iran, Politics, USA

In a little noticed statement slipped out last Friday, the Biden administration pulled another plank out from under America’s energy security and future prosperity. Declaring the climate crisis “the existential threat of our time,” President Biden announced that his administration was imposing a “temporarily pause on pending decisions of Liquified Natural Gas (LNG) exports.” In other words, the administration—which was already slow-walking energy regulatory approvals—is simply not going to green light any new LNG project, including any new terminals, any new capacity expansion or upgrades, or any new export licenses, for the foreseeable and indeterminate future.

This decision, intended as a political concession to the radical progressive wing of the Democratic Party, further undermines U.S. energy independence. The action freezes the industry and effectively paralyzes any potential future investment towards the growth, development and productive enhancement of a critical energy resource. The knock-on effect of this will be higher future energy costs for American businesses and consumers, and a weakening of the U.S. energy industry. The “pause” deters foreign buyers in Asia and Latin America from considering the U.S. as a reliable supplier for their growing LNG demand, hurting our export economy. More consequentially, the move strengthens the hands of our global energy competitors and potential adversaries including China, Russia, and Iran. It is a total folly.

The Biden administration has been at war with American energy independence from day one. In pursuit of a quixotic dream of zero emissions and complete migration from fossil fuels to renewables, the Biden administration is willing to send the American people back to the dark ages. One of the administration’s first actions (literally on Biden’s first day in office) was to issue an executive order canceling the Keystone XL pipeline project, which, in addition to creating tens of thousands of American jobs, would have safely and cleanly delivered over 800,000 barrels of oil per day from Alberta to U.S. refineries at low cost.

Previously approved oil and gas exploration and development leases in the arctic were suspended on grounds of “deficiencies” in paperwork and process, and all work ceased. Regulatory agencies were given clear instructions to unleash the Kraken of bureaucratic red tape, ensuring that applicants would suffocate under the constriction of its tentacles. New approvals ground to a halt. Even before last week’s decision, LNG export applications processed by Biden’s Energy Department took nearly a year to receive approval, compared with an average of less than two months under the Trump administration.

Starting in November 2021, the Biden administration began to drain the U.S. Strategic Petroleum Reserve (SPR), which by January 2023 had lost 265 million barrels of oil, and which even to this day sits at less than half capacity. Just a few months ago, in September 2023, the Biden administration reversed Trump era approvals and permanently canceled seven oil and gas leases in Alaska.

All of this begs the question, why would any company, entrepreneur or debt financing provider be willing to risk investing capital in an environment in which billions of dollars of work can be flushed down the toilet with the administrative stroke of a pen? The answer is obviously that no one would, and that is precisely the intended result of the Biden administration’s short-sighted and foolish actions. These complex projects take years to complete, not to mention the cost involved. Even with a new, energy friendly administration, the risk of policy reversal—witnessed firsthand with the Trump-Biden transition—will hang like a dark and foreboding cloud over future investment decisions.

This latest blow against American energy independence comes at a time that U.S. inventories of WTI crude oil in Cushing, Texas have fallen to their lowest seasonal level in a decade. U.S. refinery capacity remains nearly one million barrels below pre-pandemic levels. U.S. oil rig counts are down 110 from a year ago, and production is at its lowest level since June. The SPR is at its lowest level since 1985. These are all warning signs that are being largely ignored. Energy was one of the biggest drivers of inflation in 2022. While energy prices have fallen in recent months, it is dangerous to grow complacent.

The world watched anxiously last winter as Europe nearly froze after Russian gas supply to the continent was cut off. It was U.S. LNG that came to the rescue. Europeans suddenly woke up to the dangers of reliance on foreign suppliers for their energy needs. The U.S. government seems to find nothing worthwhile to learn from Europe’s experience. But just who will come to America’s rescue if our oil and gas industry falls in to disrepair and neglect? China? Iran? Saudi Arabia? Qatar? While they are all investing in and expanding their energy industries and export capabilities, they are not doing it for the sake of America’s economy or its people.

We are devouring our children’s future.

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