President Biden has done more to promote green energy than any other president in US history. It’s ironic that he remains remarkably bound to fossil fuels, in ways he probably hopes nobody notices.
Biden’s entire energy agenda during the last three years has paired the overt promotion of renewables with a covert effort to keep fossil fuels plentiful and cheap. The latest example is the Biden administration’s Jan. 26 decision to temporarily suspend the approval of new facilities for exporting natural gas. Current facilities will continue to operate, without any limit on exports.
The pause will let the Energy Department study the impact of surging US natural gas exports on the climate, domestic energy prices, national security concerns, and other factors. The review will take several months, followed by the usual comment period. You won’t go broke betting the farm that an outcome will come in 2025, well after the November elections.
In one regard, a review makes sense. The fracking revolution that kicked off around 2010 generated a massive boom in US fossil fuel production, which has made the United States the world’s biggest oil and gas producer. US law limited energy exports until President Barack Obama signed legislation and changed other rules broadly allowing oil and gas exports. Starting in 2015, gas exports soared. The Biden administration now says the rules for approving export facilities are outdated and need to account for the nearly fivefold rise in gas exports since 2014.
But there’s also a likely political angle when a president makes a controversial policy change in an election year. Environmental groups lobbied hard for the pause on new gas-export facilities, and they declared victory when the White House made the decision. So maybe Biden is reinvigorating his pitch to environmentally minded voters, who skew young and want to see more forceful action to banish the source of greenhouse gases causing global warming.
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There could also be another target: keeping American energy prices low. Drillers often say that robust exports create an incentive to produce more gas, which in turn keeps domestic supplies abundant and prices low. But that may be wishful thinking. A 2023 analysis by the US Energy Information Administration found that “higher [gas] exports results in upward pressure on US natural gas prices and lower [gas] exports results in downward pressure.” It’s also true that gas prices in other markets, such as Europe and Asia, are considerably higher than in the United States, which creates an obvious incentive for American producers to sell outside the country where they can make more money.
So Biden might be making sure there’s no uptick in US energy prices while he’s running for reelection. Natural gas prices get far less attention than gasoline prices, but they’re arguably more important because natural gas powers 40% of the nation’s electricity generation and 60% of home heating. “It seems likely,” Kurt Cobb wrote recently on OilPrice.com, “that someone whispered into the administration’s ear something about the possibility of much higher domestic prices in the coming years if the US LNG [liquified natural gas] export juggernaut is allowed to continue.”
US natural gas prices did spike in 2022, as Russia’s invasion of Ukraine led to a sharp reduction of Russian gas exports to Europe and a scramble by other gas exporters to fill the gap. US natural gas prices are now back to the relatively low levels typical from 2015 to 2021.
Electricity costs have jumped, however, and stayed there. Since Biden took office, electricity costs have risen 27%. That’s a stealthy source of inflation, which has been Biden’s biggest economic problem. Higher electricity prices boost consumers’ utility bills, while also making it more expensive for businesses to produce goods and keep the lights on (literally). Businesses normally try to pass cost increases on to consumers.
When inflation spiked in 2022 and gasoline prices hit $5 per gallon, Biden’s approval rating dropped sharply. Overall inflation is almost back to normal levels, but Biden clearly recognizes the risk that high energy prices pose to his political future. Since 2022, Biden has taken a variety of measures to lower energy prices: selling oil from the US reserve, asking Saudi Arabia to produce more oil, and even encouraging more energy production by ne’er-do-well nations Iran and Venezuela. Biden’s credibility with environmentalists comes from the massive green energy plan he signed into law in 2022, but Biden’s overall popularity relies far more on the cost of fossil fuels we’re still dependent on.
There’s good reason for Biden to retain the pro-export policy that began under Obama, continued under President Trump, and remained in place for Biden’s first three years in office. In a Jan. 26 analysis, the Eurasia Group argued that ongoing high levels of American gas exports are an important lifeline to Europe and a key lever of US power in other parts of the world, including Asia. Russia would clearly love more influence in those parts of the world, and the availability of American energy as an alternative to Russia’s exports is a barrier to Russia’s malign ambitions.
So maybe the Biden review will sound the all-clear, with a few permit denials to appease the climate lobby, if Biden wins reelection. But if evidence mounts that energy exports are raising costs for Americans, Biden won’t be the last president to have a problem with that.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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