Energy price politics is not a new game in Washington. Typically, politicians blame the opposing side for higher gas prices. These days, higher prices are at the meter as electricity rates have more than doubled the inflation rate over the past year. Democrats have seized on President Donald Trump‘s promise to halve electricity prices, blaming him for rolling back green subsidies and layering bureaucracy on renewable energy projects. However, a little self-reflection is necessary.
As a reminder, let’s go back 17 years to what candidate Barack Obama said on the campaign trail. He told us that his cap-and-trade climate plan would cause electricity rates to “necessarily skyrocket.” The objective was to increase energy prices for families and businesses so they would consume less, and then, voila, America meets its emissions targets.
CHEVRON REFINERY FIRE COULD RAISE CALIFORNIA GAS PRICES BY A DOLLAR
The fracking revolution saved Americans from the economic hardship that cap-and-trade would have caused. In fact, natural gas has been the main fuel source responsible for lowering energy bills and greenhouse gas emissions, and it has helped achieve the emissions targets set by the Democrats’ cap-and-trade bill — without the bill ever becoming law.
However, when the Democrats controlled Congress and the White House, their policies meddled in energy markets, using both carrots and sticks. Most notably, the Inflation Reduction Act offered generous taxpayer-funded subsidies to politically favored technologies, which were fiscally irresponsible and provided little climate benefit.
The sticks included the cancellation of the Keystone XL Pipeline (again), curtailing oil and gas lease sales, and imposing a methane tax. The most damaging regulation, though, was the Obama and Biden administrations’ power plant regulations that prematurely shuttered existing plants. Former President Joe Biden’s unfittingly named Clean Power Plan 2.0 would have effectively banned baseload natural gas plants and required expensive carbon capture and sequestration technology on one of our cost-effective and most reliable electricity sources.
Yet, in logic that only makes sense in Washington, the regulators justified carbon capture requirements by claiming the rule would lower technology costs by prompting companies to invest in it and ultimately reduce electricity prices. This contradicts basic economics and ignores the broken window fallacy, as regulations force companies to spend money on compliance rather than investing it productively elsewhere.
Furthermore, Democrats are also increasing demand through policies that force electrification on consumers. Biden’s federal emissions standards would have served as a de facto electric vehicle mandate, and states and local governments have promoted bans on internal combustion engines and natural gas hookups in homes and buildings.
Even when these rules do not go into effect or are reconsidered, they have profound costs by creating uncertainty and imposing delays. With expected growth in load from data centers, Reuters recently reported that pre-construction natural gas generating capacity is now more than six times higher than it was a year ago. Regulatory ping-pong from one administration to the next is no way to do energy policy.
In addition to supporting anti-energy policies, many Democrats have stood in the way of substantive permitting reform, which entrenches a status quo focused on blocking rather than building. Lengthy processes and protracted litigation have thwarted the development of solar arrays, transmission, and pipelines — all of which could have been generating power and delivering electrons to households today. Williams CEO Alan Armstrong recently stated that the permitting cost for one of his company’s pipelines was twice the construction cost itself.
Fortunately, more Democrats have become open to the idea of permitting reform, but the time to do it was two decades ago. The longer Congress waits, the worse the energy supply bottleneck will get, including for the deployment of the clean energy technologies that the Democrats champion.
Democrats are rightly frustrated by recent actions of the Trump administration against renewable energy, such as revoking a permit for an offshore wind project or increasing reviews for renewable projects on federal land. While there is an element of reap what you sow, given the previous administration’s anti-fossil policies, two wrongs don’t make a right. It makes for a poor business environment that ultimately penalizes energy consumers.
NEWSOM WARMS TO OIL INDUSTRY AS HIGH COSTS THREATEN CALIFORNIA
In fact, it is even more reason for Democrats to engage in permitting reform discussions. The success of energy projects should depend on market forces, not solely on bureaucrats in Washington. Permitting reform that establishes a straightforward, transparent process should contain future administrations’ actions and prevent drastic policy changes every four years.
An energy dominance agenda needs permitting reform. A climate agenda needs permitting reform. Removing barriers to building will benefit people and the planet.
Nick Loris is the executive vice president of policy for C3 Solutions.
