One of the most overlooked and underappreciated aspects of Donald Trump’s presidency was the monumental increase in domestic oil and natural gas production, which laid the groundwork for a thriving economy and ultra-low prices at the pump.
When Trump entered the Oval Office in January 2017, the United States was producing approximately 8.9 million barrels of crude oil per day. By March 2020, due to Trump’s pro-energy policies, the United States was producing nearly 13 million barrels of crude oil per day.
Today, about one year after President Biden took the oath of office, the United States is producing 11 million barrels of crude oil per day, with no plans to increase production.
After all, when Biden’s Energy Secretary Jennifer Granholm was recently asked if the administration is considering increasing domestic production, Granholm burst into laughter and responded, “that is hilarious.”
Making matters worse, the United States has also drastically reduced its crude oil imports over the past several years. In 2017, the United States imported about 8 million barrels of crude oil per day. That number has fallen to 5.8 million barrels per day as of early 2022.
Meanwhile, as domestic production has been artificially reduced and imports have declined, the thirst for oil in the U.S. economy recently hit an all-time high of 20.8 million barrels per day in December 2021.
So, just a few years after the United States became a net energy exporter for the first time in nearly 80 years, we are back to being a net oil importer. This matters for many reasons.
Because America has cut domestic oil production while simultaneously lessening imports, the price of gasoline is skyrocketing. In December 2020, the average price for a gallon of gasoline in the United States was $2.28. Today, the average price for a gallon of gasoline has nearly doubled to $4.07. What’s more, economists estimate the price of gasoline will continue to rise before settling around $4.50 per gallon come summer.
Although many pundits are blaming the rapid rise in the price of gasoline on the Russia-Ukraine situation, the evidence tells a different story.
Consider. Since Biden became president, and on day one began to undermine domestic oil production, the price of a gallon of gasoline has risen every single month. Not coincidentally, the rate of inflation, which now stands at a staggering 7.5 percent, has also increased dramatically since Biden declared war on domestic oil production.
For those unaware of Biden’s anti-energy policies, let me remind you that on day one of his presidency, he canceled the Keystone XL pipeline, which would have transported nearly 800,000 barrels of crude oil from Canada to Texas refineries every day. Biden has also prevented oil and gas companies from seeking new leases on federal lands, ramped up EPA regulations on the oil and gas industry, undermined fracking, and instructed several federal agencies to clamp down on fossil fuel producers.
The net result of Biden’s attack on the U.S. fossil fuel industry has been a severe drop in production in the short-term, which has led to rising prices. However, more concerning, is that due to Biden’s refusal to grant leases on federal lands along with his other heavy-handed policies towards oil and gas producers, over the long-term, production in the United States could fall precipitously in the years ahead.
Oil companies, like all other businesses, rely upon long-term forecasting when preparing their business models. If, for example, the oil industry foresees the federal government making it more difficult and more expensive to explore and extract oil and gas in the coming decades, they will likely cut research and development for these activities, which will lead to less supply and higher prices for Americans.
On the other hand, if the federal government were to reverse course and enact a more fossil-fuel friendly regulatory environment while opening exploration and leases on federal lands, oil companies would have an incentive to increase research and development regarding future extraction sites and technologies. This, in turn, would likely lead to an increase in domestic supply and a reduction in prices at the pump.
It would behoove Biden to take the latter approach, especially considering that gasoline in the United States is now hovering near an all-time high. Moreover, because energy impacts the price of nearly all goods and services, increasing domestic production would also help tamp down inflation, which would be a huge relief to the millions of Americans who are struggling to put gas in the tank and food on the table.