Concerned With High Energy Prices? Here’s How Lawmakers Can Start Fresh

Lem Smith
Posted May 17, 2022

News Overnight: You may have heard a controversial energy “price gouging” bill was pulled from House Rules Committee consideration Monday. It was nixed for good reason. Read on to learn why.

The Latest: The House Rules Committee convened Monday evening to consider policies purportedly designed to address the unfortunate reality of rising energy prices at home. But the gap between political posturing and realistic energy solutions is becoming clear to Washington -- as it’s long been to families and businesses from coast to coast. That’s why the Rules Committee and so many House Democrats swiftly rejected this ill-advised policy proposal. In truth, it was misguided legislation that would likely exacerbate the current crisis. One Washington Post writer even said the bill’s supporters are dabbling in “inflation conspiracy theory.” 

Let’s Get Real About U.S. Energy Policy: As news broke that gasoline and diesel prices had hit record highs in the U.S., the Interior Department said last week that it was canceling oil and natural gas lease sales in Alaska and the Gulf of Mexico within the previously mandated 5-year federal offshore leasing program. The administration talks often about the need for more oil and gas, but it keeps asking for increased production from other countries while taking actions here at home to eliminate domestic supply. 

Congressional Misunderstanding? Following the administration’s cancelation of the lease sales, congressional leaders announced the U.S. House would consider H.R. 7688, the “Consumer Fuel Price Gouging Prevention Act,” this week. The legislation’s goal is to make “unconscionably excessive” fuel prices illegal, something former U.S. Treasury Secretary Lawrence Summers called “dangerous nonsense” and “diversionary confusion.” This was the bill that died in committee Monday night. 

Time-Tested Truths: Repeated in-depth investigations by the Federal Trade Commission have shown that changes in gasoline prices are based on market factors and not due to illegal behavior. Prices at the pump are determined by market forces of supply and demand, not individual companies. Increased energy demand and lagging supply have combined with workforce constraints, geopolitical volatility and policy uncertainty to help create the current dynamic.  

Everyday Voters Get It: Clear bipartisan majorities support increasing domestic energy production. They want more U.S. oil and natural gas production in America, where environmental regulations and industry standards are among the strongest in the world. They want operators to tap into America’s energy abundance to strengthen our security here and bolster our allies abroad by producing more natural gas for export to Europe. Simply put: Voters understand supply and demand. Yet too many DC decisionmakers seem more content putting the energy policy gears in reverse. They are discouraging U.S. production and ignoring geopolitical realities that continue to reinforce the critical connection between energy security and national security for any sovereign nation.  

Bottom Line: Restrictions on production and futile messaging bills are missing the mark on energy policy, especially on increasing the capacity needed to avoid summer power grid disruptions and replenishing global oil supplies that some warn are rapidly depleting. However, it is never too late for Washington to take substantive actions to increase U.S. oil and natural gas production that can help protect American families and businesses; bolster our allies’ dwindling energy supplies; and encourage the private investment necessary to support long-term planning.

Three Specific Actions Congress Can Take to Alleviate Looming Energy Crisis:

Develop and Implement a New Five-Year Offshore Leasing Plan on July 1: The administration is slow-walking the process of issuing a legally mandated new five-year program for selling offshore leases in the Gulf of Mexico, which currently supplies 15% of America’s total oil output. This delay could erode investor confidence and bring a world of economic hurt to the Gulf region and beyond. Renewing the plan has strong bipartisan support and would create new momentum for deploying America’s energy abundance. 

Conduct Onshore Lease Sales on Federal Land: While officials have indicated they will resume some leasing on federal land, signs point to a drastic reduction in the amount of land available for this purpose. The acreage to be offered is about 80% less than the original acreage suggested by industry and is 30% less acres than what the administration itself proposed in November. The administration should commit to holding regular quarterly onshore lease sales with sufficient acreage and reasonable terms to promote clarity and certainty for investors. At a similar point in his administration, President Obama had approved 44 onshore oil and gas lease sales. The current administration has yet to complete a single lease sale.  

Support New Energy Infrastructure, Including Pipelines: American natural gas and oil producers welcomed recent news that President Biden and European and Commission President von der Leyen had agreed to expanding U.S. liquefied natural gas exports to Europe during this time of turmoil. But to get LNG supplies to export terminals and over to Europe will require infrastructure to move it there. Oddly, the administration is erecting new hurdles for needed projects in its recently revised National Environmental Policy Act (NEPA) Phase 1 regulations. These will slow the permitting process for infrastructure while creating new and unnecessary impediments to much-needed U.S. oil and natural gas development. The NEPA proposals also will impact carbon capture, utilization, and storage as well as hydrogen infrastructure – both of which are key to building a lower-carbon future. 

These are just three of the many steps this administration can take to ensure policy actions are consistent with President Biden’s rhetoric calling for more energy production. Increasing domestic supply should be supported by federal policymakers in Congress as well as the Administration. Responsible production and environmental protection are not mutually exclusive endeavors; instead, they are inextricably linked. Bipartisan leadership starts with two fairly obvious acknowledgments:  

1. We need all forms of American energy.  

2. Energy from traditional sources such as oil and natural gas remain a critical strategic asset to America – something that should never be taken for granted.