At the CNN town hall in July, Biden said the chances of long-term inflation are slim. “The vast majority of the experts, including Wall Street, are suggesting that it’s highly unlikely that it’s going to be long-term inflation that’s going to get out of hand,” Biden said.
Now, the White House is changing its tone after a recent federal report showed that consumer prices are rising more than six percent a year.
Natural gas prices have jumped over 180 percent since September 2020. Home heating oil prices jumped 115 percent over the past year and fuel oil is up almost 60 percent from a year ago. The federal government forecast that home heating costs could rise another 54 percent this winter, but some private forecasts said it could actually triple.
The shortages of truck drivers and other occupations also made sure that the current problems would multiply, with the federal Energy Information Administration warning that diesel stockpiles are at a 20-year low. Diesel is usually used for home heating oil and other products.
Yet Biden’s officials are still insisting that the inflation is “transitory.”
Secretary of Treasury Janet Yellen recently said: “I expect that next year, many of the supply bottlenecks that we’re experiencing now in opening up our economy will recede.”
Infrastructure bills may worsen inflation
The Biden infrastructure bill enacted by Congress is expected to worsen inflation for key supplies. Shortly before he was elected, the United States finally achieved energy independence. However, as Biden pushed against Russia’s Vladimir Putin, U.S. imports of Russian oil have soared.
The Institute for Energy Research reported that Biden is asking for help from domestic producers without giving back the tools that he took away from them, such as the controversial Keystone XL pipeline.
The ban on new oil and gas leases on federal land and waters, as well as the pressure on banks not to lend to the oil and gas industry, sent a strong signal that American energy is not welcome. (Related: Elevated crude prices and uptick in demand cause gasoline prices to reach 7-year high.)
This mindset is epitomized by Biden’s nominee for comptroller of the currency, Saule Omarova, who graduated in the Soviet Union. Earlier this year, the Marxist policy adviser declared that she wants oil and gas companies to “go bankrupt” to be able to tackle climate change.
The Biden administration is focusing on developing heavily subsidized offshore wind farms, despite their inefficiency, instead of permitting the private sector to fuel American homes.
Biden said on Wednesday, Nov. 17, that he ordered the Federal Trade Commission to strike back at any market manipulation or price gouging in the energy sector. However, there is no federal fix for the problems that the administration is already being blamed for.
Global demand for oil outstripping supplies
When global crude demand took a dive last year, countries were taking measures to cut the spread of the Wuhan coronavirus (COVID-19). However, the demand for oil has recovered as economies cast aside restrictions.
Crude prices have surged roughly 60 percent this year. Brent crude futures now cost $83.32 a barrel, while U.S. West Texas Intermediate crude futures cost $82.20.
As COVID-19 restrictions rolled back and more people get vaccinated, the U.S. drivers who were hunkered down at home have begun hitting the road, traveling long distances and driving more often as they get back to their daily activities.
Jim Krane, an energy analyst at Rice University’s Baker Institute said: “People are driving more, probably because the pandemic is fading or people are getting used to living with the risk of infection.”
Despite Biden asking for assistance from the Organization of the Petroleum Exporting Countries (OPEC), he was met with rejection to open their taps more generously. Instead, they decided to stick with their current plan to cast off production curbs that they put in place last year when oil demand was low.
Analysts say that this move by OPEC is largely because the cartel and other major producers are okay with waiting and seeing how demand improves. “Biden’s problem is that he is trying to coax oil producers to accept lower profits. It’s a tough sell,” Krane noted.
Read more news about natural gas and oil price hikes at NewEnergyReport.com.