Biden Scolds Oil and Gas Companies for Not Drilling Enough
One of the most bizarre moments of last night’s State of the Union address was President Joe Biden chastising oil and gas companies for returning capital to shareholders rather than investing in new production.
This was strange on many levels. First and foremost, Democrat officials have spent the better part of a decade attempting to reduce or eliminate investment in fossil fuel production. Take Sarah Bloom Raskin, who Biden tapped to be the Vice Chair for bank supervision at the Federal Reserve, a position considered the second most powerful at the central bank. She is perhaps the most prominent of Democrats who have claimed that investing in fossil fuels is especially risky — they call it “transition risk” — because climate change concerns might suddenly cut off demand for fossil fuels.
Biden also sought to install radical professor Saule Omarova as Comptroller of the Currency, which would have made her one of the most important bank regulators in the United States. She has advocated using government policies to bankrupt fossil fuel energy companies and using centralized government banking to direct capital toward green energy projects.
Biden appointees to the Securities and Exchange Commission have been pushing rules that would require companies to make extensive climate change disclosures. One of the principal effects of this would be to discourage investment in or exposure to fossil fuels.
When banking executives appear before Congress, Democrat lawmakers regularly subject them to harangues about the alleged need for them to stop providing financing to fossil fuel companies. As recently as September of last year, Rep. Rashida Tlaib (D-MI) claimed that preventing temperatures from rising more than 2.7 degrees in the coming decades would require a complete halt to new fossil fuel production.
Various Democrat-aligned leftwing pressure groups are constantly attempting to shame financial institutions into divesting from fossil fuels. One of the most prominent last year called for governments around the globe to “prohibit all financing for all fossil fuel expansion projects and for all companies expanding fossil fuel extraction and infrastructure along the whole value chain.” There was, so far as we can tell, not a word of protest or dissent from President Biden or his administration.
Fortunately, both the nominations of Bloom Raskin and Omarova were withdrawn in the face of opposition from Biden’s own party. The S.E.C. is reportedly considering paring back the anti-fossil fuel climate change disclosure rules. Financial companies are beginning to exit from coalitions with leftists that demonized fossil fuels.
Biden’s ability to muster outrage at the allegedly paucity of investment by oil and gas companies in new production demonstrates an impressive ability to deny the reality of his party’s and their allies’ culpability in our energy insecurity. He might want to spend some time cleaning out the stables of the Democratic Party and the global left before lecturing oil and gas companies to “do the right thing.”
A Death Sentence for Fossil Fuels
It got even worse. About halfway through the speech, Biden went off-script.
We’re still going to need oil and gas for a while,” Biden said. Later he added, “We’re going to need oil for another decade.”
This might have been a short-lived break-through of reality into the president’s bubble. Perhaps he felt like he needed to break the news to some of the Democrats in the chamber that we’re not quite ready to “transition” off fossil fuels yet.
Yet even here he was undermining his own message. By claiming that we are only going to need oil for another decade, he is discouraging investment in production and refining. Think of it this way: if you knew the government was going to outlaw smartphones in ten years, would you invest in Apple? Putting a decade-long-time line on oil and gas is putting them on death row. It will drive away investment and encourage investors to demand even bigger returns of capital.
The Record High Trade Deficit
We keep reading about how we have entered into a new age of economic nationalism and protectionism — with the end of globalism in sight, international trade declining, and reshoring becoming all the rage. Even Biden, who spent most of his career supporting so-called free trade measures, sounded Trumpian last night when he talked about the hollowing out of the middle-class and too many manufacturing jobs being shipped overseas.
The reality, however, is that the U.S. trade deficit surged to $948 billion last year, a 12 percent increase and the highest ever. Trade with China surged to a record $690.6 billion. We imported from a record 90 nations and exported to a record 73.
Globalization seems to be doing just fine. No wonder everyone at Davos sounded so smug.
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