Here’s the Populist Climate Message Harris Should Embrace

First, let’s review why politicians’ promises to lower oil and gas prices are even more nonsensical than they might seem. Needless to say, the U.S. government does not control oil production. Decisions about fossil fuel production, distribution and pricing in the U.S. are virtually all made by the companies that drill, refine, and sell it. So when the Democratic party says it will work to “boost supply,” what it’s really talking about are additional policies to incentivize that industry into producing more oil; Biden’s favorite tool toward that end has been the Strategic Petroleum Reserve (SPR), i.e. selling oil from our national stockpile to modestly offset higher market prices, then buying fuel from the industry when it gets cheap enough. For a sense of scale, the U.S. consumes roughly 20 million barrels of petroleum per day, and currently makes about 13 million barrels per day. The total authorized storage capacity of the SPR is 714 million barrels. It’s big, but not that big.

Because much of U.S. oil production now happens via more expensive, unconventional extraction methods, including fracking, companies here prefer oil prices to be relatively high so that they “break even” or (ideally) profit. By positioning the U.S. government as a guaranteed buyer of cheaper oil, pledges to refill the SPR amount to setting a price floor—in essence, promising companies they won’t have to sell their products too cheaply. Inducements to “boost supply” of gasoline, that is, often function as guarantees to raise prices. These promises contradict the administration’s other goals, as well. While elsewhere in their platform Democrats state their commitment to “eliminating tens of billions of dollars in subsidies for oil and gas companies,” their efforts to keep gas prices low could entail the opposite of that. There are also very few guardrails in place to prevent companies from over-investing in fossil fuel infrastructure that could stay online for decades, or to safely shut it down once it’s no longer needed.

The relationship between boosting domestic production and bringing down prices at the pump likewise isn’t an especially direct one. Much of the crude oil produced in the U.S. is refined abroad. Oil is also a globally traded commodity. If members of the Organizations of Petroleum Exporting Countries (OPEC) decided to pump like gangbusters—flooding the world with excess supply—then there’s not much the U.S. could do to prevent oil prices from crashing. Sparsely regulated, little-known trading firms have enormous leeway to shape prices as they ferry it between buyers in different countries, as well.