Biden Urges World to Go Green But Pushes for Cheap Gasoline at Home

Source: By David R Baker, David Wethe and Ari Natter, Bloomberg • Posted: Sunday, November 28, 2021

Releasing oil from the nation’s strategic reserves while sticking with environmental pledges creates a policy whiplash.

President Joe Biden wants Americans to dramatically scale back their use of gasoline. And he wants that fuel to be as cheap as he can get it.

If you sense a contradiction there, you’re hardly alone.

In the past several weeks, Biden has urged the world to move faster against climate change and phase out the fossil fuels causing it. But on Tuesday he confirmed the U.S. is opening the spigots on its Strategic Petroleum Reserve, releasing 50 million barrels to bring down gasoline prices, working in concert with China, India, Japan,  South Korea and the U.K. That comes less than a week after a long-delayed sale of oil-exploration leases in the Gulf of Mexico which enraged environmentalists. He even asked OPEC to ramp up oil production at a faster pace (the cartel rebuffedhim).

The policy whiplash reveals the tension between Biden’s long-term climate goals and short-term political realities. He’s determined to transition the U.S. to cleaner sources of energy and rein in carbon emissions. But his administration is also mindful of the energy crisis roiling Europe in recent months. The president can ill afford to let energy prices rise so high that voters turn against him. Former Treasury Secretary Larry Summers made the danger explicit last week when he said inflation threatened to usher in a return to power for former President Donald Trump, who called global warming a hoax.

“That’s a challenging tightrope to walk,” said Dan Pickering, founder and chief investment officer at Houston-based Pickering Energy Partners. With no major breakthrough at the United Nations climate conference in Glasgow, and no cohesive strategy for lowering gasoline prices, Pickering added, “you look not great at either, which seems like the worst place in the world for a politician to be.”

Inside The Strategic Petroleum Reserve As U.S. Seeks Oil-Reserve Overhaul To Ease Mandatory Drawdowns

A contractor works on crude oil pipelines at the Strategic Petroleum Reserve in Freeport, Texas. Photographer: Luke Sharrett/Bloomberg

If the future of Biden’s administration is on the line, so is the climate. Steps to promote oil production will likely mean additional emissions for years to come, making the goal of limiting warming to 1.5 degrees Celsius even harder to achieve.

“A lot of what’s taking place will have long-term harmful effects, especially when we’re talking about drilling permits, leases, pipelines — these things aren’t just going to go away,” said Mitch Jones, policy director at campaign group Food & Water Watch. “There’s no clear, coherent, overarching message here, unless you want to say they’re still promoting the use of fossil fuels, because that’s what they’re doing.”

An administration official pointed to moves such as Biden’s swift action to rejoin the Paris climate accord and other executive actions as examples of leadership the president has taken while tackling global warming. The president recognizes the need to build a new, clean energy economy while keeping costs low for American families in the short-term, the official said.

U.S. presidents from both parties have long viewed high energy prices — particularly for gasoline — as a threat, and with good reason. Besides the grocery store, the gas pump can be the most visible inflation indicator for consumers, and a sharp price spike can leave people searching for someone to blame beyond a faceless oil company. 

“It’s the most transparent price in America,” said Daniel Simmons, who was an Energy Department official under Trump. “People see it every day, it is a reflection of the economy as a whole and it really scares people to see prices this high.”

The Biden administration has said its push for more oil isn’t inconsistent with its efforts to cut greenhouse gas emissions in half by the decade’s end. “You can’t just shut down everybody’s economy across the planet and say, ‘Okay, we’re not going to use’” fossil fuels, John Kerry, U.S. special presidential envoy for climate, said earlier this month when asked about the administration’s request for OPEC to unleash more oil.

The president still wants the Senate to pass his Build Back Better package of social and climate spending programs, and a consumer revolt over inflation would only make that harder.

“I don’t see a conflict between having long-term policies on climate change and having a short-term policy that would protect the economic well-being of Americans in need,” said Amy Myers Jaffe, managing director of the Climate Policy Lab at Tufts University. That’s particularly true, she said, at a time when the lingering Covid-19 pandemic has made many people fearful of using public transit or planes, pushing them back into their cars.

The U.S. and other major oil-consuming nations have grown increasingly anxious during the past year about resurgent prices. That led to the White House’s outreach to OPEC, and discussions between the U.S. and other countries. Biden’s team has mulled various options in recent weeks for lowering gasoline prices. Aside from releasing inventories, other measures debated in the White House include the halting of oil exports and limiting the use of biofuels.

Energy prices are a problem for Biden in a way that they weren’t for his predecessor. Like Biden, Trump complained about the price of gasoline and called on OPEC to do something about it. But he also pulled the U.S. out of the Paris climate agreement, opened more public lands to oil and gas drilling and championed the concept of American “energy dominance” based on fossil fuels.

Biden, in stark contrast, campaigned on his commitment to address climate change. He wants to reduce the nation’s greenhouse gas emissions by at least 50% by the end of the decade and achieve net zero emissions by 2050, a goal that can’t be reached without slashing fossil fuel use. The infrastructure bill he signed into law this month devotes billions of dollars to ramping up renewable power and electric cars. Those investments should lessen U.S. demand for oil and gas, but not for many years.

In the meantime, Biden has failed to implement other key changes he sought. He signed an executive order during his first week in office pausing new oil and gas lease sales on federal lands, only to see a federal judge order a resumption. The first, for leases in the Gulf of Mexico, went forward last week, with environmentalists branding it a betrayal that came on the heels of the COP 26 climate summit.

To some, Biden’s moves on energy and climate seem haphazard. Charif Souki, chairman of Tellurian Inc., which is trying to develop a natural gas export project, said he doesn’t know what Biden’s energy policy is right now.

“It’s a prayer; it’s not a policy,” Souki said last week in an interview on Bloomberg Television.

— With assistance by Jennifer A Dlouhy