Higher prices for basketballs, lipstick, pacemakers and automobiles — brought to you by the U. S. Federal Reserve Bank, the Biden Administration’s Green Energy policies and Putin’s foreign policy
The International Monetary Fund (IMF) deemed the United States’ economy as the world’s largest in 2021, producing an estimated $22.94 trillion or 24.4% of global Gross Domestic Product (GDP). The U.S. GDP is especially impressive considering the U.S. population is just over 333 million with a per capita GDP of roughly $68,700.
When comparing Russia’s economy to ours, the U.S. economy is almost 13 times larger, as Russia produced a 2021 GDP of just under $1.65 trillion. Russia’s per capita GDP was just under $11,694 for a national population of 141.1 million.
Many public policy concerns with one most paramount
Many public policy issues stand out in America, from COVID-19 and our crisis at the southern border, to educational gaps that impair our ability to compete in a global economy. However, our energy policy should be perhaps the top concern for the U.S. Congress and the Biden Administration.
Oil prices fluctuated, declining to the mid-$60s range at the end of 2021, only to rebound to more than $77 a barrel by mid-January. At that time, we, along with many energy experts, thought oil could trade at more than $100 a barrel sometime in 2022 if the Biden Administration continued its illogical energy policy. On Feb. 24, West Texas Intermediate Crude closed at just under $95 a barrel after briefly surpassing $100, a price last seen in July 2014.
The Russian invasion of Ukraine fueled the dramatic increase in oil prices, a deplorable event yet not unexpected.
No matter what the price, it is often left out of the discussion that U.S. oil and natural gas are among the cleanest carbon-based fuels by type in the world today. In fact, U.S. production of clean fossil fuels have dramatically reduced the U.S. carbon footprint, making America the global leader in carbon reduction in the industrialized world over the last 30 years.
As President Biden’s policies continue to remove cleaner U.S. oil and natural gas from U.S. and world markets, the negative consequences we have been discussing for more than a year, are unfortunately coming to fruition.
First, President Biden’s decisions have enhanced the political and public policy initiatives of countries unfriendly to freedom like Russia and Iran.
Second, European allies have become more dependent on unfriendly nations for their oil and natural gas needs, thereby weakening the security and economic growth of Europe and the United States.
Third, Russia and Iran will sell more of their inferior oil and natural gas on global commodity markets. This increase, coupled with a decline in U.S. oil and natural gas production (due to policies Biden instituted during his first week in office), will yield an increase in the production of dirtier petroleum products sold on global energy exchanges. Consequently, President Biden’s policies will increase the global carbon footprint, not reduce it, ironically making his policies anti-green.
Fourth, Biden’s decisions are helping employ thousands more Russians and Iranians in high-paying oil industry jobs, whereas a more prudent policy would have those good jobs increase here in America, with U.S. workers paying taxes to our local, state, and federal governments.
Fifth, the U.S. economy will lose billions, not only because of losses in revenue and profits for U.S. oil companies, but a decline in related corporate tax revenues on the local, state, and federal levels in the months and years ahead. Perhaps this will be most harmful to the millions of retirees who hold oil stocks in American companies.
Sixth, if U.S. oil markets had remained less regulated under the Biden Administration, domestic and global oil supplies would be higher today. The price of oil per barrel on the global exchanges would be lower and Vladimir Putin’s ability to fund the acts of a tyrannical despot would be greatly reduced, while simultaneously validating that freedom and free enterprise is the best way to allocate resources globally.
Higher oil prices harm a wider aspect of the economy than most Americans realize
On Feb. 24, 2021, the national average for a gallon of gasoline was $2.65, with a barrel of West Texas Intermediate Crude trading just above $63 a barrel. One year later, gasoline was up to $3.54 a gallon and oil finished at just under $95 a barrel. It is obvious higher gasoline and oil prices in 2022 have resulted from inflationary U.S. monetary policy, supply chain problems, President Biden’s energy policies, and the Russian invasion in Ukraine. What is not obvious to most Americans is the higher cost they’ve been paying for hundreds, perhaps thousands, of petroleum-based products. They do not realize so many of the goods they consume have a petroleum base. Consider the following:
Automobiles
An automobile has many parts that are petroleum-based: the oil that lubricates the engine is an obvious one, but hoses also usually have petroleum elements, as do the many plastic parts, including clips, dashboards, gaskets, tires, paint and more.
Medical supplies and pharmaceuticals
Medical supplies and pharmaceuticals would not exist at the levels of quality and price we enjoy without petroleum. This includes items like hearing aids, pacemakers, heart stents and artificial joints.
Cosmetics and personal care
Makeup and grooming products are another vital part of our daily lives in which petroleum plays a key role, including lipstick, facial creams, toothpaste, and most containers for health-related items.
Sports and leisure
Sporting goods and leisure items are also made possible and better because of petroleum. The bladder for basketballs, footballs, soccer and volleyballs could not be made without petroleum. Baseball bats, grips on golf clubs, strings on tennis rackets, football tees, helmets, etc., all rely, in part, on petroleum. The soles of the shoes we use to go on long walks rely on petroleum. The cell phones we use to call friends, text loved ones, and send emails to close a business deal: All possible because of petroleum.
America must act to bring inflation under control
The price of gasoline and the many products mentioned above are higher today due to inflationary monetary policy, misguided regulatory and energy policy, and the immoral actions of Vladimir Putin’s Russia. America must take immediate action to reverse its expansionary monetary policy of the last few years to bring inflation under control. Also, the Biden Administration must reverse its anti-petroleum policies by reopening the Keystone XL Pipeline, and expand drilling permits on federal land. It is important to note that we are now buying 595,000 barrels of oil per day from Russia. If the Keystone XL Pipeline were operational, it would deliver 830,000 barrels a day to the U.S. economy. A strong and independent U.S. oil industry will do more to curtail Vladimir Putin’s expansionary aggressions than any words across a negotiating table could.
Finally, the U.S. national debt currently stands at more than $30.15 trillion (over $90,621 per U.S. man, woman and child, and just under $240,570 per U.S. taxpayer). Much of our national debt is due to excessive government spending on programs that are not needed, while taking capital from private sector investments and U.S. national defense.
It is crucial that U.S. fiscal, monetary and foreign policy focus on strategies that will grow U.S. capital investment, private sector jobs and the economy, while reducing our debt, defending our interests and that of our key allies. This is the only way to ensure the United States will remain the world’s only economic and military superpower.
Dr. Timothy G. Nash is the director of the McNair Center at Northwood University. The Honorable Lisa C. McClain is a member of Congress representing Michigan’s 10th Congressional District. Dr. Kristin K. Stehouwer is the provost of Northwood University.