This week, the entire Eastern United States experienced something Americans have not seen since the disastrous days of Jimmy Carter: a widespread shortage of gasoline. As motorists formed long lines and filling stations put out “no gas” signs, the Biden Administration advised Americans that the growing calamity–the result of a hacked pipeline–was the private sector’s problem, not theirs and that it was not much of a concern in any event.
The new Secretary of Energy refused to characterize the situation as a shortage but stated it was a “supply crunch”–a line echoed by prominent media outlets even as Americans waited up to four hours in line to purchase gas.
Meanwhile, the administration continues to pursue policies that will drive up energy costs even now that the pipeline is back open–from canceling the Keystone XL project earlier this year to the disastrous components of the “Green New Deal” hidden within the infrastructure bill.
This sets the stage for more Biden-induced economic damage in the months and years ahead. No commodity has a greater economic multiplier effect than energy. Small increases in the price of energy can add up to major problems for consumers and businesses alike.
Consider a simple example. Imagine that you take your granddaughter to the park and, while there, buy her an ice cream cone. Your local stations may have gas, but the price per gallon has gone up approximately 60 cents a gallon since January. So, you’ve paid a bit more to travel to the park. But that is only the beginning.
The vendor in the ice cream truck has also paid more for gas to get to the park. A small business person cannot afford to lose money, so he had to pass at least a portion of that gasoline cost to you when you purchased the ice cream. Add to that the dairy truck driver that delivered the milk to the creamery, the frozen food truck that delivered the finished ice cream to the wholesaler, and the gas it took for the ice cream truck driver to pick up his supply of mint chocolate chip from the wholesaler. Each time any of these people had to pay significantly more for gasoline, at least a portion of that cost was passed on to you.
While this example is only about the price of gasoline, you can see how such costs across many transactions would quickly add up. Yet gasoline prices are only the beginning. Electricity prices have an even broader impact on the economy. Many manufacturing processes require a tremendous amount of electricity, with some industrial facilities consuming as much electricity as a small city. Therefore, any policy that causes electricity prices to rise, such as the “Green New Deal” policies supported by the Biden administration, multiplies throughout the production process and heavily impacts consumers. In the most significant cases, electricity costs can even drive factories and entire industries to other countries, taking countless jobs with them.
The Trump Administration understood this, which is why Trump’s emphasis on American energy independence was exactly the correct policy and a huge reason why manufacturing jobs were returning to America under his leadership.
But the cost of an anti-American energy administration is not just economic. Every aspect of life, including better educational opportunities, greater sanitary conditions, improved health, and longer life expectancy, can be correlated to energy availability.
Unfortunately, the Biden administration doesn’t seem to place a high priority on affordable energy production. They are charging headlong into a policy of eliminating fossil fuels.
This despite the fact that The Energy Information Administration (EIA) tells us that energy consumption in 2018 grew at its fastest pace in over a decade, with 70% of all gains coming from fossil fuels. In 2018 79% of all domestic energy production was from fossil fuels, while only 1.1% came from renewables.
As this administration ponders future energy policy, it should learn from the short-lived energy crisis caused by the pipeline shutdown. They can make all the naïve wish lists about green power they want. But if this crisis has not shown them that the nation runs on fossil fuels and that American oil and gas are not easily replaceable, then blackouts and truly catastrophic gasoline shortages may be in our future.