Biden: Release the Barrels! Oil Executives: Stop Making Us Richer!

Home » Biden: Release the Barrels! Oil Executives: Stop Making Us Richer!
Biden: Release the Barrels! Oil Executives: Stop Making Us Richer!

That’s not to say they don’t have material interests. Oil and gas investors are keeping a tight leash on executives after corporate spending binges through the 2010s on fracking—an extraordinarily capital-intensive process—burned through their cash. That left them vulnerable when prices crashed, and drove a number of companies either out of business or to the brink of insolvency. There are supply chain challenges to grapple with too. There’s reason to believe SPR releases and replenishment won’t change that, much less investors’ minds about constraining production. CEOs, though, would much rather blame Biden for handing them money than shareholders for being stingy with it.

It all underlines just how weird America’s prolific fossil fuel sector is. Just about every other major oil-producing country on earth exercises some sort of direct control over energy production, typically via state-owned production companies. Major oil producers also tend to keep prices low domestically. Because oil and gas production is wholly dominated by for-profit firms here, the most powerful man on the planet has to go begging to a rogue’s gallery of ideologues to drill more and sell their products more cheaply. Right now, there’s no reason why they would: Drillers are raking in record profits. There’s also relatively little danger that a Congress it has helped stock through campaign donations will try to recoup those profits through a windfall tax, let alone price controls.

Democratic leaders in Congress and the White House are also still shying away from any talk of directly reducing demand for fossil fuels, instead preferring to try boosting clean and fossil energy production simultaneously. Historian Gregory Brew, for instance, has suggested that a national oil refining company could alleviate short-term supply bottlenecks in a way that private companies are loath to do on their own. There’s also the all-American prospect of more sweeping nationalization, a tool used frequently throughout U.S. history in times of crisis, including to discipline the fossil fuel industry. Opting to guarantee drillers stable prices carries more than a few risks. They may not take the bait, and industry analysts are somewhat skeptical of the effect even sizable SPR releases can have in the short run. The release’s relationship to prices is even more abstract, meaning the political upsides for Biden could be limited.

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