USA 2020 Elections: Thread

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Bretton Woods III? China Begins Buying Russian Coal And Oil In Yuan

Democrats' Approach To Rising Gas Prices Reveals Their Economic Illiteracy

https://www.realclearenergy.org/articles/2022/04/07/democrats_approach_to_rising_gas_prices_reveals_their_economic_illiteracy_825805.html
https://www.warren.senate.gov/newsroom/press-releases/warren-calls-for-doj-investigation-into-top-poultry-companies-anticompetitive-practices-as-americans-face-record-high-turkey-prices-ahead-of-thanksgiving
https://thehill.com/policy/energy-environment/600396-democrats-take-aim-at-big-oil-in-lead-up-to-midterms/
https://subscriber.politicopro.com/article/eenews/2022/03/30/6-oil-execs-to-testify-as-dems-probe-high-gasoline-prices-00021567
https://www.weforum.org/agenda/2020/04/oil-barrel-prices-economic-supply-demand-coronavirus-covid19-united-states/
https://www.dallasfed.org/research/surveys/des/2022/2201
https://www.wsj.com/articles/joe-bidens-energy-contradiction-lng-europe-gas-companies-russia-ukraine-gina-mccarthy-11648244471
https://www.congress.gov/117/bills/hr7061/BILLS-117hr7061ih.pdf
https://www.sanders.senate.gov/wp-content/uploads/Ending-Corporate-Greed-Act.pdf
https://subscriber.politicopro.com/article/eenews/2022/03/31/dems-press-case-for-windfall-profit-tax-on-energy-companies-00021900



Inflation is hitting voters where it hurts the most, forcing
policymakers to pay attention—and revealing the economic illiteracy of
the Left.
(AP Photo/Manuel Balce Ceneta)

Rather than acknowledging that reckless fiscal and monetary policy are
to blame, Democrats have turned to their favorite boogeyman to explain
the sharp increase in prices: corporate greed. From “big poultry” to
“big oil,” Democrats are eager to scapegoat their harmful economic
policies.

This week their political theater is on full display with Democrats
dragging oil executives before the Energy and Commerce Subcommittee on
Oversight and Investigations to determine what’s driving up the price
at the pump and why these companies haven’t expanded production.

Subcommittee Chair Diana DeGette (D-Colo.) explained the purpose for
the hearings in a statement: "We want to know what’s causing these
record-high prices and what needs to be done to bring them down
immediately."

Is she kidding? By now, the reason should be obvious.

Inflation is ultimately the result of expansionary monetary policy. In
response to the Covid pandemic, the Fed dramatically increased its
quantitative easing program and kept interest rates near zero, both of
which flooded the economy with money, expanding the money supply by 40
percent over the course of the past two years.

At the same time, the government’s fiscal policy was also stimulative,
with a gush of transfer payments that further goosed demand. These two
approaches combined over stimulated demand in the market at a time
when supply had been seriously hampered because of the pandemic and
the government’s draconian response to it. The result? A classic
inflationary tale of too many dollars chasing too few goods.

Government-mandated lockdowns decimated demand during the pandemic
bringing the price of Brent crude down to $0 a barrel. Once government
restrictions began to lift and the economy began to rebound, demand
for oil surged. Suppliers have been trying to play catch up ever
since.

Likewise, the Biden administration from day one has clearly
communicated its goal to phase out fossil fuels — from canceling the
Keystone XL pipeline and pausing federal oil and gas leasing, to
setting net-zero goals and making controversial anti-fossil fuel
nominations. The industry would be stupid not to internalize this
message. Why would they invest in new oil and gas exploration or
pipeline construction with the amount of uncertainty their industry
faces? Naturally, Democrats obscure the connection.

Expanding production requires capital investment which requires some
level of confidence that policymakers won’t throw sand in the gears of
your operation. Perhaps the Democrats' climate messaging has been
nothing more than political red meat for its voter base, but in the
real world, words have meaning, and telling an industry that your
policy goal is to make it obsolete doesn’t encourage new investment or
growth.

To further illustrate this point, a recent survey by the Federal
Reserve Bank of Dallas found that 59 percent of oil and gas executives
said pressure from investors is the primary reason major companies are
restraining production growth. In a similar vein, White House National
Climate Advisor Gina McCarthy recently stated, “[U.S. climate policy]
is not a fight about coal anymore. It is a challenge about natural gas
and infrastructure investments because we don’t want to invest in
things that are time limited. Because we are time limited.”

Gee, I wonder what’s spooking investors?

Others are taking a different, though equally backward approach. The
"Big Oil Windfall Profits Tax Act," introduced by Sen. Sheldon
Whitehouse (D-R.I.) and Rep. Ro Khanna (D-Calif.), would put a
50-percent-per-barrel tax on the difference between crude oil prices
and the average between 2015 and 2019, with revenues returned to
consumers as a rebate.

Not to be outdone, Socialist Bernie Sanders has proposed the "Ending
Corporate Greed Act," which would slap a 95 percent tax on excess
profits of corporations with more than $500 million in yearly revenue.
Sanders noted that had this act been in place last year, Chevron Corp.
would have paid an additional $12.9 billion in taxes.

Now, one could rightly argue that this is a craven political move
meant to appease key constituents ahead of the midterm elections,
motivated solely by cratering poll numbers. But something more harmful
is afoot here. Increasing the tax burden on these companies will
increase costs, which they’ll pass on to consumers in the form of
higher prices.  Meanwhile, flooding the economy with more
government-issued checks will further stoke demand, which will, in
turn, exert upward pressure on prices.

Others on the progressive left have called for price controls or more
stimulus checks or antitrust action. All of these ideas would just
exacerbate the problem. A better solution would be to tighten the
Fed’s loose monetary policy, reduce the tax burden, and untangle our
ever-growing web of regulation, but don’t hold your breath for such
logic to prevail. It’s unsettling to see serious calls for such
harmful and economically illiterate policy proposals. But what do we
really expect? After all, it’s what the government does best: propose
backward solutions to problems it created in the first place.

Kat Dwyer is a Young Voices contributor and co-host of the Whiskey
Bench podcast. Her writing has appeared in the National Review,
Washington Examiner, and others. Follow her on Twitter @KatJDwyer.