Federal lobbyists have made huge profits in the second quarter of 2022, according to financial disclosures reviewed by Politico, while many Americans continue to feel the effects of inflation and the ongoing energy crisis.
Of the top twenty lobbying firms by revenue, just two saw revenue decreases when compared with the first three months of the year, Politico reported. The lobbying boom was largely attributable to reconciliation negotiations between Democratic Sen. Joe Manchin of West Virginia and Senate Majority Leader Chuck Schumer of New York, as well hotly contested deliberations on whether to dole out subsidies to domestic semiconductor companies.
Try as they might to mitigate the severe energy crisis plaguing the U.S., the Biden administration’s attempt to shore up supply is a few wellheads short of an oil rig.
With gasoline prices averaging over $4.60 per gallon and several electric grid operators warning of rolling blackouts, increasing the supply of America’s most critical energy sources is vital. Fossil fuels account for 80% of America’s energy usage, yet the administration is intent on curbing oil and gas supply, cutting gasoline refining capacity, and making it more challenging to meet rising electric demands.
The day after President Biden announced that the United States would ban imports of Russian oil and gas, a group of eleven powerful European investment funds that includes Amundi, Europe’s largest asset manager, outlined plans to force Credit Suisse, Switzerland’s second largest bank, to cut its lending to oil and gas companies. The juxtaposition of these two events dramatizes the fundamental disunity of the West. At the same time as the Biden administration is sanctioning Russian oil and gas producers, Western investors are sanctioning Western ones. Under the banner of ESG (environmental, social and governance) investing, the West’s capital is being deployed to create an artificial shortage of oil and gas produced by its companies and reward non-Western oil and gas producers such as Russia and Iran with higher prices. In doing so, the West is undermining its own security interests.
Before Russia’s invasion of Ukraine, energy markets were already extremely tight. In the past, high oil and gas prices stimulated a supply-side response leading to increased output and to prices falling back. This relationship has broken down. According to analysts at JP Morgan, capital spending by S&P Global 1200 energy companies peaked in 2015 at just over $400 billion and shrank to around $120 billion last year – less than half its previous trough of $250 billion in the aftermath of the 2008 financial crisis, even though global demand is now around 15% higher than it was then.
Russia’s invasion of Ukraine and soaring energy prices are a bracing wake up call to the West to abandon our anemic energy policies, which have pretended to be green but in reality have only shifted the dirtiest parts of our energy supply chains to bad actors like Russia and China. Western energy dependence on hostile powers limits our ability to preserve peace, to reduce our supply vulnerability, and to find the most cost-effective climate change solutions.
President Biden has acknowledged some of these problems, conceding that gasoline prices are too high and promising to do “everything in my power to limit the pain the American people are feeling at the gas pump.” But gas prices continue to rise, up by 10% in the last week.
One option President Biden has not yet explored is working with Congress to fix our incoherent domestic fuel policy to improve fuel efficiency across the board and reduce the amount Americans pay for gasoline. Currently, the EPA regulates fuels and automobiles separately, instead of as a single system. Automakers have the technological know-how to make much more efficient car engines, but regulatory barriers prevent them from doing so because they do not permit the use of cleaner fuels that would reduce carbon emissions and enhance performance.
The warning signs are everywhere. We are stumbling toward an energy crisis that is likely to be far more severe and long-lasting than the upheavals of the 1970s. And no, this isn’t about Russia or Ukraine. This is about the perilous state of the U.S. electricity grid.
If action isn’t taken soon to address the unraveling reliability of the grid, the United States will face the specter of rolling blackouts, factory shutdowns, loss of jobs and soaring electricity bills. Our organization CASE recently released a policy brief highlighting just how dire the situation is.
In recent months, European gas prices have risen as much as 700 percent, leaving millions of citizens vulnerable to a dangerously unstable grid and burdened with high electricity costs heading into this winter. Disruptions from this energy crisis have been felt by households and many industries that rely on affordable power to provide goods and services.
Until the recent escalation of Russia’s confrontation with NATO over Ukraine, the Biden administration’s solution to Europe’s energy crisis had been to implore Russia to send more gas to Europe. EU member states are already dependent on Moscow for roughly 40 percent of their gas supply. Initially, the White House made a deal with Germany, letting the Nord Stream 2 gas pipeline move forward. As part of an effort to repair relations with Germany, this decision allows Russia to tighten Putin’s grip over European energy security at the expense of our strategic partner Ukraine. Fortunately, German regulators refused to approve the pipeline, effectively delaying the certification of the project before July 2022. As part of the growing confrontation with Europe and the U.S. over Ukraine, Russia has further cut gas exports to Europe.
Low wind power generation is largely to blame for Europe’s ongoing energy crisis and scramble to import more fossil fuels, according to a Reuters report.
Wind farms across Europe produced just 14% of their capacity from July-September compared to the previous average of 20-26%, market data from Refinitiv showed, according to Reuters. As a result, European energy providers have been forced to purchase more coal and natural gas which have skyrocketed in price as demand has increased.
Republicans on the House Energy and Commerce Committee urged the Biden administration to lay out its plans for tackling the looming energy crisis.
The representatives noted that the federal government was responsible for protecting U.S. energy security and ensuring Americans have access to affordable energy, in a letter Thursday addressed to Energy Secretary Jennifer Granholm. They added that energy prices are directly tied to particular sectors of the economy and could further push inflation higher.