Biden Didn't Shut U.S. Oil Production, Partially to Blame for High Gas Prices

Mohit Oberoi, CFA - Author
By

May 20 2022, Published 8:30 a.m. ET

U.S. President Joe Biden’s popularity has fallen sharply since the Afghanistan withdrawal. Since then, soaring inflation, especially record-high gas prices, has taken a toll on his approval ratings. Most polls show his approval ratings in the low 40s while his disapproval ratings have been consistently above 50 percent.

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Rumors are floating around on social media related to Biden. Many allege that the Biden administration is compromising the country’s food and energy security. People have even claimed that some of his cabinet colleagues were complicit in food processing plant fires, which they claim is a conspiracy. Now, amid soaring gas prices, many are speculating that Biden shut down U.S. oil production and that he's to blame for record-high gas prices in the country.

Biden didn't shut down U.S. oil production.

Biden didn't shut down U.S. oil production. However, oil production has fallen under his tenure. In 2021, U.S. daily crude oil production was 11.19 million barrels, which was slightly below the 11.28 million per day production in 2020.

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Some may argue that the production is “similar” to 2020, which was the last year of former President Donald Trump’s tenure. However, we should also remember that 2020 was the year of COVID-19 lockdowns, which took a toll on U.S. oil production. A better comparison, that most companies in corporate America also made, would be with 2019 before the pandemic started.

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In 2019, U.S. oil production hit a record high of 12.3 million barrels per day. So, U.S. oil production has fallen under Biden. The EIA expects U.S. oil production to rise to 11.91 million barrels per day in 2022 and hit a new record high of 12.85 million barrels per day in 2023.

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Biden issued an executive order.

Biden did issue an executive order that barred oil and gas leases on government land. That order was soon turned down by a federal judge. If anything, the Interior Department approvals to drill oil and gas wells on public lands in 2021 were higher than what the Trump administration issued in its first year. The permits have plummeted after the initial rise even as Biden has been cajoling oil majors to increase production.

The Biden administration canceled the oil lease auction.

Recently, the Biden administration canceled the oil lease auction in Alaska and New Mexico. Spokesperson Melissa Schwartz told The Hill that the Alaska auction was canceled due to a “lack of industry interest,” while the Gulf of Mexico auction was canceled due to “conflicting court rulings.”

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Scrapping the Keystone pipeline didn't lower U.S. oil production.

Many believe that Biden’s decision to scrap the Keystone pipeline lowered U.S. oil production. That isn't true since the pipeline wouldn't have “produced” but carried the oil from Canada to the U.S. Even if the pipeline got approved, it would have taken years to transport the oil from Canada and the decision hasn't played a part in the global oil shortage.

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What is causing gas prices to increase?

The demand-supply imbalance is causing the increase in crude oil and by its extension a rise in gas prices. Russia’s invasion of Ukraine and sanctions by multiple western countries, including a ban on Russian oil, have put an additional strain on the global crude oil supply.

Also, the oil and gas industry has been underinvesting in new projects amid the pivot towards green energy.

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Is Biden to blame for high gas prices?

Biden isn't fully to blame for high gas prices. However, he has much lower leverage over major oil-producing nations in the Middle East, unlike his predecessor Trump who enjoyed a good relationship with major OPEC countries. Trump also mediated what he called a “historic” oil production cut deal when global crude oil prices plunged in 2020.

Biden has announced the gradual release of 180 million barrels of oil from the U.S. strategic reserves. However, it doesn't seem to be having much impact at least in the short term.

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