Biden Opens Public Lands for Drilling to Tackle Gas Crisis amidst Russo-Ukraine War
A pump jack in Texas in 2019, when then president candidate Biden promised there won’t be drilling on federal lands. Photo: Brandon Thibodeaux/New York Times
On Friday April 15, the Biden administration officially announced to resume opening public lands for drilling under the pressure to lower gas prices. The new policy series will resume the previously halted sales of leasing for oil and gas drilling on public lands. However, companies who are going to pursue such a lease will have to pay more federal royalties. This announcement echoed Biden’s statement to do “everything within his power” to tackle surging gas prices during his time in Iowa this Tuesday, which is his first venture out of Washington and Delaware this month.
Inflation and energy crisis are the ticking timebombs for the Biden administration. Just two weeks ago, Biden decided to release a million barrels of oil per day from SPR (Strategic Petroleum Reserve) amidst the highest inflation rate in the past 40 years. The travel to Iowa to promote a new policy series and the subsequent announcement to open public land for drilling can be seen as an effort from the administration to deliver the message that the president is tackling the politically damaging problem.
The crisis stems from macroeconomic events and mistaken strategies. On the energy side, the Russia-Ukraine war creates geopolitical uncertainty around Russia, one of the world’s biggest gas suppliers. With the lower gas supply, the gas price skyrocketed even without the following economic sanctions from the EU and its allies. Moreover, the growing illusion of overcoming coronavirus pandemic fueled the trend of returning to normal in regards to the traveling and hospitality industry. The increasing demand for traveling then affects the numbers of flights and the gas’ quantity of demand. The two factors together result in record high gas prices.
On the inflation side, the Biden administration might still be suffering from the consequences of previous macroeconomic strategy. Larry Summers, the former Treasury Secretary under the Obama administration, believes that there are only limited options for the Biden administration to stop the rising prices and the price is the result of the Russo-Ukrainian war and Biden’s strategy to put money in the economy last year. The Biden administration so far has been dealing with the surging inflation problem with rhetoric such as “transitory.” To Summer, such rhetoric and the strategy to increase money supply is Biden’s “macroeconomic policy errors from 2021.”
On Tuesday’s venture, Biden traveled to Melon, Iowa, to announce a series of policies that includes the new EPA (Environmental Protection Agency) policy to allow the sales of a new gasoline blend. The new gasoline blend, E15, which contains 15 percent ethanol, has long been resisted by environmental protection organizations, but will effectively deliver short term relief. On top of which, Friday's announcement to re-leasing public lands for oil and gas drilling given higher federal royalties, will also increase gas supply, lower the gas price, all while increasing federal revenue.
Frankfurt skyline during the continuous spreading of coronavirus. Photo: Kai Pfaffenbach/Reuters
With the German chancellor’s press announcement to oppose sanctioning Russia energy, states across the international stage are collectively struggling to find a solution to solving record high energy prices amidst the Russo-Ukraine war. Energy issue is not only a matter of international security but also an economic issue. On Wednesday, the German government said the economy will face a sharp recession if Russian energy is being cut off.
Similarly, most Germans are against the idea of sanctioning Russian energy according to a survey published on the same Wednesday. As the German Economy Ministry said, "Uncertainty about future economic developments remains correspondingly high." Biden’s steps toward tackling this dilemma by increasing supply may help the international relations community by providing either a mirror or a strong ally to replace Russia.