Observers blame President Joe Biden for a sharp decrease in oil drilling permits, but say that is not the only Biden policy that is causing domestic oil production to dwindle. (Joe Raedle / Getty Images; Win McNamee / Getty Images)
By Warner Todd Huston March 15, 2022 at 3:09pm
Joe Biden is desperately trying to blame Vladimir Putin for the skyrocketing price of gasoline, but at the same time he is trying to avoid talking about how domestic drilling permits are plummeting under his regime just as America needs cheaper oil.
According to government data, the number of new oil permits being doled out to drillers has plunged as Biden enters his second year in the White House. And American oil producers say that Biden’s policies are hampering the industry’s ability to fill America’s tanks in even more ways than a dearth of drilling permits.
Gas prices began rising months ago, long before the war in Ukraine. The price of gas is now nearly double per gallon what it was when Biden took office in 2020.
And now, with the war in Ukraine, even more pressure has come to bear on the international oil industry. But Biden is trying to make political hay out of Putin’s attack on Ukraine by calling the sharp increase “Putin’s price hike.” Oil producers, though, place the blame squarely on Biden, not Putin.
In an attempt to avoid blame, the Biden administration has pushed back on alarm over the plunging number of permits being filed for U.S. producers to begin drilling, laying the blame on the industry itself.
“The oil and gas industry has millions of acres leased,” Biden said from the White House on March 8, adding that the industry has “9,000 permits to drill now.”
“They could be drilling right now, yesterday, last week, last year,” he said. “They are not using them for production now. That’s their decision.”
This 9,000-unused-permit statistic is certainly true. And, granted, it is also true that Biden put more permits to drill into play than Trump did in his last year as president.
As the Washington Post reported in January, “Biden has outpaced Donald Trump in issuing drilling permits on public lands. After setting a record for the largest offshore lease sale last year in the Gulf of Mexico, the Interior Department plans to auction off oil and gas drilling rights on more than 200,000 acres across Western states by the end of March, followed by 1 million acres in the Cook Inlet, off the coast of Alaska.”
Do you believe Joe Biden’s claim that gas has soared because of Putin?
All that is true, such as it is. But even as Biden expanded the issuance of permits in 2021, this year the permitting has plummeted. According to Energy Wire, Biden’s Bureau of Land Management only issued 95 permits in January compared to the 643 it issued at its highest rate seen last April.
The permitting is not the only problem. American shale drillers point to Biden’s floundering economy, the widely seen supply chain issues, skittish capital investors and tightening banking rules, along with anti-oil policies in areas other than permitting. They say all these have caused the industry to approach new drilling with extreme caution.
A major problem is the exploding cost of capital. “Ten years ago, the ‘cost of capital’ for developing oil and gas as compared to renewable projects was pretty much the same, falling consistently between 8% and 10%. But not anymore,” Bloomberg reported, adding that the cost of capital is now up to 20 percent for these long-term investments.
One of the reasons for this wild rise in costs is the attack on private financing Biden initiated with new global bank financing rules that make it far more difficult for drillers to line up investors for new oil rigs. And the Wall Street Journal added that the “flight of capital from the fossil-fuel industry in recent years has left U.S. oil patches without enough fracking equipment to bring a ton of new wells online, and that a resurgence of go-go drilling would deplete companies’ most valuable drilling locations.”
These banking and capital investing limitations imposed by Biden have contributed to a drastic plunge in oil production. In 2022, the industry is producing eight percent fewer barrels of oil compared to 2019, Breitbart News reported.
Not only has Biden been clamping down on the oil industry, he continues to push rules to hamper other parts of the U.S. energy industry. As Energy Wire noted, the Department of the Interior is already developing more rules to limit oil and natural gas producers.
The oil industry is also finding it difficult to find enough workers for new rigs, not to mention the supplies, parts (thanks to supply chain issues), and equipment to fuel new drilling efforts. All these pressures are tamping down oil production.
Finally, even as Biden is trying to make it seem as if domestic oil companies simply don’t want to drill for new oil because of those “9,000 permits” that haven’t been deployed, the fact-checkers of Austin American-Statesman pointed out that having thousands of unused permits is not unusual. “Having thousands of unused drilling permits is not something that is unique to Biden’s tenure,” the paper wrote.
When all is said and done, Biden’s policy on gas prices seems more like gaslighting than gas drilling.