Democrats call on Biden to lower gas prices, support tax hikes, other regulations on the industry

Eleven U.S. Senate Democrats have called on President Joe Biden to do something about rising gas prices while also expressing support for policies that energy industry says are contributing to seven-year high costs at the pump, including oil and gas tax increases embedded in the Build Back Better Act.

The 11 senators wrote this month that they support the president’s commitment to the development of “clean renewable energy” but “must ensure that Americans are able to afford to fill up their cars at the pump in the meantime.”

The average cost for a gallon of gasoline Friday was $3.41 a gallon, according to AAA. That's $1.20 more a gallon than this time last year.

Under the Trump administration, the U.S. led the world in oil production and was energy independent. Under the Biden administration, gas prices are the highest they’ve been since 2014 within eleven months of him taking office.

In their home states, the Democratic senators write, “high gasoline prices have placed an undue burden on families and small businesses trying to make ends meet, and have proven especially burdensome as our constituents continue to recover from the economic fallout of the COVID-19 pandemic.”

They blame rising gas prices “on the Organization of the Petroleum Exporting Countries (OPEC) and others to purposefully manipulate gas prices by constraining supply, as well as the choice of domestic leaseholders and producers to continue to export U.S. petroleum.”

They asked Biden to consider “all tools available” at his disposal to lower U.S. gasoline prices, including releasing oil from the Strategic Petroleum Reserve and banning crude oil exports.

Biden instead responded by calling on the Federal Trade Commission to look into possible illegal conduct in the oil and gas industry that could be causing gas prices to rise.

Those in the oil and gas industry say the reason for increasing prices is because of lower supply due to restrictions imposed on the industry by the Biden administration, including canceling the Keystone Pipeline, halting new leases for existing operations on federal lands, among other policies.

American Petroleum Institute SVP Frank Macchiarola told The Center Square that Biden’s call was a distraction from his own energy policies, including restricting access to America’s energy supply and canceling important infrastructure projects.

“Rather than launching investigations on markets that are regulated and closely monitored on a daily basis or pleading with OPEC to increase supply, we should be encouraging the safe and responsible development of American-made oil and natural gas,” Macchiarola said.

Todd Staples, president of the Texas Oil and Gas Association, agrees, arguing, “The solution,” he says, “is not to disrupt energy opportunities that have been a driver to more economic gains for our state and nation.” Instead, all Americans, “should ask their elected officials to support the abundance of affordable, reliable energy available here at home.”

U.S. energy policy “shouldn’t forfeit energy freedom for energy dependence,” Staples added. Instead, it must “encourage smart, science-based policies that advocate for homegrown production, domestic jobs and economic advancement that benefit all Texans and every American. Unfortunately, we are feeling the repercussions of misguided policies that have encouraged foreign energy instead of encouraging American pipeline projects, domestic production and trade opportunities.”

One policy includes the “Methane Emission Reduction Act of 2021,” embedded in the BBBA, which imposes new taxes on all oil and gas producers for “ambient methane emissions.” Costs would be passed onto the consumer, the industry says, making gas prices even higher for the foreseeable future.

Ed Cross, president of the Kansas Independent Oil and Gas Producers Association, said the plan requires the industry to measure “ambient methane emissions,” using technology that doesn’t currently exist, or be taxed.

“The tax is based on ambient methane emissions measurements,” Cross wrote in an op-ed published by the Kansas City Star. “The measurements would have to distinguish between oil and natural gas production, agricultural emissions – about a third of U.S. methane emissions – and landfill emissions – about a third of U.S. methane emissions.

“And the measurements would have to be continuous – 24 hours/day every day. No such system exists and cannot be created in the foreseeable future.”

Methane emissions are already highly regulated. Because of American technological innovation, natural gas production in the U.S. has lowered emissions, making the U.S. the world leader in emission reductions, industry leaders point out.

The Texas Independent Producers and Royalty Owners Association argues the proposed taxes and fees on the industry “could cripple small Texas oil and gas operators and severely burden American taxpayers.”

Additional taxes would “have a ripple effect through the entire U.S. economy, negatively impacting American jobs, domestic energy production, household energy bills and the cost of goods and services, including the price of gasoline,” TIPRO President Ed Longanecker said. “The U.S. oil and natural gas industry has demonstrated its commitment to reducing emissions through innovation, collaboration and investment of hundreds of billions of dollars in greenhouse gas mitigating technologies throughout the value chain, and with quantifiable success.

“Turning back the clock on carbon dioxide emissions and every other major air pollutant, natural gas leads the way,” he added. Increased natural gas production “through innovation and efficient practices brought back manufacturing jobs and saved American families $204 billion a year through lower electricity, oil and natural gas prices. That’s the equivalent of $2,500 a year for a family of four.”

During the statewide shutdown in 2020 when the oil and gas industry experienced a “bloodbath” of losses, Texas companies still produced 43% of the nation's crude oil and 26% of its marketed natural gas.

Nearly one fourth of the nation's operable refineries and one-third of the U.S. total refining capacity are in Texas, the Energy Information Administration (EIA) reports, with 31 petroleum refineries processing a combined total of almost 5.9 million barrels of crude oil per day.

Texas also produces more electricity than any other state, EIA notes, generating nearly twice as much as Florida, the second-highest electricity-producing state.

Roughly one-fourth of U.S. dry natural gas reserves and three-tenths of the 100 largest natural gas fields in the U.S. are located either partially or entirely in Texas. In 2020, Texas produced one-fourth of the nation's natural gas, with the majority produced in the last decade from the Eagle Ford shale and Permian Basin.