DV Journal

Americans are facing a consumer confidence crisis as costs continue to climb and inflation crushes peoples’ pocketbooks. The 2024 inflation rate is still high at 3.4 percent, above pre-pandemic averages. And with federal officials making clear they plan to keep rates high and President Biden insisting he has already “turned around” the economy, it’s no wonder people are left scratching their heads.

Americans with fixed incomes are particularly susceptible to economic dips, with inflation and costs at the top of their minds. However, the security of our economic future and consumer welfare clearly isn’t the prerogative of policymakers whose job is to help alleviate financial burdens for Americans. Instead, they are full steam ahead on election-year politicking.

Take the latest move by Democrats in their crusade against American energy. Energy and Commerce Committee ranking member Frank Pallone Jr. recently launched a renewed focus on investigating oil and gas executives for alleged collusion and price fixing with officials from the Organization of the Petroleum Exporting Countries.

Unfortunately, to the detriment of the people, Biden and his progressive cabal are determined to use any agency, committee or platform to politicize the energy sector at a time when we need them the most. All in the name of politics.

Furthermore, their claims don’t hold much water given some important market indicators in the global energy marketplace. The data show that OPEC as an organization is foundering while U.S. energy has been booming in recent years, ramping up production that will offset OPEC supply cuts and contributing immensely to the American economy.

In fact, members of OPEC have been leaving for years, as Angola’s January 2024 exit follows others, such as Ecuador (2020), Qatar (2019) and Indonesia (2016). Market share among the remaining OPEC members declined to 27 percent, the same as during the pandemic. Unlike OPEC, global demand for fuel has since recovered and grown massively, along with U.S. supply steadily increasing since 2021 to reach 12.9 million barrels a day in 2023, according to the Energy Information Agency.

It makes no sense for systemic collusion to keep prices high and production levels down. The allegations against one energy executive directly contradict what the FTC itself has acknowledged: U.S. producers have led the world in production gains over the past few years, the only tool that will diversify market share and drive down prices.

The FTC’s formal complaint against Pioneer — the impetus for the letter from Pallone — acknowledges that U.S. output increases come from domestic production and that “U.S. production growth has injected new competition into the market and ultimately saved American consumers and businesses at the pump.”

This means the industry is actively working on expanding operations and keeping prices low, which Americans are seeing. If anything, the Biden administration has been more aggressive in its attempt to influence the members of OPEC. In October 2022, the president publicly begged the group to postpone oil cuts until after the U.S. midterm elections, all while simultaneously blaming U.S. producers for not doing enough to balance the market. If anything, Biden attempted to collude with OPEC over energy production and prices.

The question becomes: Well, why should we care? This issue is pertinent because the health of America’s energy economy directly reflects the health of the economy as a whole. According to Forbes, the United States became a net petroleum exporter in 2020, leading to a 2022 export total for oil of $119.37 billion and an export value of $75.02 billion for the first eight months of 2023.

Not only is this positive economic growth for businesses, but Americans also benefit at the pump. Oil prices nationwide have been declining overall since June 2022 after the Russian invasion of Ukraine, coinciding with record U.S. production to offset this. What we see here is U.S. production replacing OPEC supply cuts and Russian oil following global political upheaval, not collusion.

House Democrats have clearly piled onto this complaint to needlessly go after oil and gas companies for political gain rather than acknowledging that America’s booming energy economy has had material benefits instead of keeping prices high and competition low. This is a frivolous investigation request, and government officials must refocus on delivering financial relief for Americans.

This means attending to real economic issues like stagnation, inflation and everyday costs, not faulty collusion claims.

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When the Organization of the Petroleum Exporting Countries (OPEC) announced last week its members would be cutting oil production by a net of more than a million barrels a day, oil prices immediately jumped five percent. A week later, here in Pennsylvania, gas prices are up more than a dime a gallon, and the summer driving season is likely to send prices at the pump even higher.

Saudi Arabia, the United Arab Emirates, and Iraq are among countries dialing back production, while Russia said it would continue its present 500,000-barrel-per-day cut through at least the end of the year.

“The oil market has had a few days to digest the OPEC news and speculate about the reason. This has led to the price of oil stabilizing for now,” said AAA spokesperson Andrew Gross. “But the cost of oil accounts for more than 50 percent of what we pay at the pump, so drivers may not catch a break at the pump any time soon.”

And so why, some critics ask, isn’t the U.S. producing more domestic energy to protect consumers from higher prices and Western nations from political leverage by bad actors like Russia?

State Sen. Scott Martin (R-Berks/Lancaster) told DVJournal the price jumps are “not just about the price consumers pay at the gas pump.” Rather, the spikes “raise the cost of a whole host of goods and services we rely on every day.”

Martin, a Senate Environmental Resources and Energy Committee member has advocated for policies to help keep costs down, like blocking the state’s participation in the Regional Greenhouse Gas Initiative and voting to eliminate the state’s gas tax.

“At both, the state and national level, [OPEC’s cuts] underscores the need for lawmakers to pursue policies that emphasize energy independence and the responsible development of our natural resources—not limit them,” Martin said.

Long regarded as the place where the modern oil economy began, Pennsylvania is no longer a major producer of crude oil. Texas is the nation’s largest producer by far, at more than 1.7 billion barrels a year. Pennsylvania produces about 6.4 million barrels, less than states like Illinois and Mississippi.

National experts also cited the OPEC cuts as proof of the need for a robust U.S. domestic oil industry. Jeff Eshelman, the president and CEO of the Independent Petroleum Association of America, said OPEC’s decision “emphasizes the importance of supporting U.S. oil production, with our federal government’s policies and with investment from the financial community.”

Eshelman noted that “producing oil is not like turning on a water faucet.”

“It takes months to get production back up,” he said. “If U.S. producers want to produce more oil, it takes six to nine months minimum to ramp up. The timeline for increasing production on federal lands is even longer because of a lengthy bureaucratic permitting process.”

Eshlemna pointed to legislative efforts such as the Lower Energy Costs Act, passed by the U.S. House of Representatives in March, which would if signed into law “expedite the development, importation, and exportation of energy resources” in the United States through a variety of deregulatory and administrative mechanisms.

Other energy-focused groups have praised the March energy bill. The nonpartisan group Grow America’s Infrastructure Now said upon the bill’s passage that it would help with “streamlining the permitting process for building new energy infrastructure, supporting domestic energy production, and encouraging energy exports.”

Republicans, GAIN spokesman Craig Stevens said, “clearly demonstrated that U.S. energy is a priority and that lowering costs and increasing reliability for Americans is critically important.” The bill was passed with bipartisan support from Democrats as well.

High energy prices are still fresh on the minds of many Americans after the dizzying energy price spikes of 2022. Russia’s invasion of Ukraine and a global commodity market teetering on the precipice of a potential global conflict sent U.S. gas prices into unheard-of territory last year, reaching an average of $5 per gallon nationwide for the first time in history.

Mark Le Dain, a former investment banker specializing in energy and infrastructure deals, writes at Forbes that Western nations like the U.S. and Canada are ceding power to OPEC by refusing to ramp up production during this volatile period. He says to see if America has learned the lesson, watch the newly-approved Willow Project in Alaska.

“This is the largest proposed oil project on federal lands and is highlighted by environmentalists as the type of project that needs to be blocked. A few weeks ago, though, it received approval,” Le Dain writes. “It will be interesting to see if this is a trend or if the U.S. is comfortable ceding future oil price control to a collection of state actors.”

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