Biden Officials Continue Sowing Energy Policy Confusion

One of the continuing themes in my writing about President Joe Biden and his administration has had to do with the consistent inconsistency between the public statements from the President and his senior officials and the actions they take related to energy. This lack of consistency not only causes confusion within companies in the energy space, it has also resulted in diminished confidence in the U.S. legal and regulatory system.

Not surprisingly, this inconsistency between words and actions from Biden officials produced even more confusion in the energy space last week.

Here are some of the highlights:

New Water Heater Standards – on Thursday, the Energy Department (DOE) proposed new efficiency standards for water heaters, as part of its ongoing campaign to tighten regulations and raise prices for all types of home appliances. The new standards for water heaters follow similar proposals related to air conditioning, gas stoves, portable gas generators and dishwashers.

Reuters reports that DOE claims the new standards would save consumers $11.4 billion in heating costs each year, but the requirement that makers of electric heaters incorporate heat pump technology into their units will undoubtedly result in significantly higher prices for the units themselves.

“Consumers will pay the real price,” Jill Nitoni, spokesperson for the Association of Home Appliance Manufacturers, told DailyMail.com. “The Department of Energy has proposed very stringent standards for home appliances that will require higher upfront costs to purchase a product. Manufacturers just want to be able to deliver high performing, fully featured products at costs that consumers of all incomes can afford. The DoE is making that very difficult with the standards they are proposing.”

New regulations on federal oil and gas leasing and development – The Department of Interior (DOI), led by longtime anti-oil and gas activist Deb Haaland, proposed new regulations on Friday that would a) raise royalty rates for onshore oil and gas leases, b) dramatically increase lease bonus and bonding requirements and c) increase restrictions on oil and gas development on federal lands.

Regardless of their respective merits, all the proposed changes would hamper future growth in production of oil and gas on federal lands. The impact would be significant from a national perspective given that the federal government owns vast swaths of lands in big oil and gas states of the West, like New Mexico, Colorado, Wyoming, Montana and Utah.

Granholm calls for U.S. companies to raise oil and gas production – Despite that proposal from DOI, Energy Secretary Jennifer Granholm urged U.S. companies to produce more oil and natural gas during an interview with CNBC the very next day.

“There is a lot of emotion in these markets and so we have deep concern about trajectories of where things are headed,” Granholm said when asked about the state of oil markets. When asked about high gasoline prices, Granholm added, “We want to see more supply … It gets dangerous when the prices are so high. I think the prudent course is to ensure that transportation is affordable for people, and that of course means making sure that supply is stable.”

So, here we see yet another example of Biden administration actions conflicting with the rhetoric coming from its senior officials. Obviously, ratcheting up costs and restrictions related to oil and gas leasing and production on federal lands is not the way to encourage the higher production Granholm says she would like to see. This move at DOI only amplifies Sec. Haaland’s ongoing refusal to hold regular lease sales as required by law not just onshore but in federal offshore leasing areas as well.

In response to the contradiction between Haaland’s new proposed regulations and Granholm’s statements, the U.S. Oil & Gas Association sent the following tweet:

No, you really can’t make this up, and why would anyone even want to try?

The Bottom Line

The frequent conflicts between the actions of this presidential administration and the rhetoric coming from its’ senior officials does not merely cause confusion. The constantly shifting landscape harms the ability of companies to plan their businesses and is resulting in a loss of confidence in the U.S. legal system.

This reality was reflected by an answer one company CEO gave when I asked if the actions of the Biden administration were leading to a loss of predictability in U.S. laws and regulatory structure: “I wish I could say it is just ‘leading to’ that: The fact is, it’s already gone.”

Last week’s events again show why that is the case.