How the Resurgent Oil Industry is Driving the Politics and Reaping the Profits of Gas Prices
On March 31, President Biden announced a new energy policy designed to combat high gasoline prices.
The United States will release 1 million barrels from the Strategic Petroleum Reserve every day for six months to reduce prices. Biden will also use his authority under the Defense Production Act to accelerate the development of minerals needed to construct electric vehicles. While Biden suggested the world needs to cut its dependence on oil, in the short term he emphasized the need for more production. “If we want lower gas prices,” Biden said, “we need to have more oil supply right now.”
This rhetoric reflects the contradiction in the United States’ approach to energy and climate policy. Unlike past energy crises — most notably during the 1970s — individuals and businesses are under no pressure to reduce their oil and gas consumption. The Biden administration is wary of suggesting conservation measures in large part due to the politics surrounding the domestic oil and gas industry, which has flourished since 2010. Politicians in both parties support the drive for “energy independence.” But this policy will make it harder to decarbonize the economy and reduce dependence on fossil fuels to combat the dangers of climate change — a goal an overwhelming majority of Americans said they supported before recent events.
In the first half of the 20th century, the United States was both the largest consumer and producer of petroleum, accounting for more than 50 percent of the global total. Gasoline consumption per capita in the United States was higher than anywhere else on earth, reflecting a way of life defined by automotive transportation.
In periods of crisis such as World War II, however, the federal government imposed price controls and rationing of energy products.
After the war, consumption soared as global production fueled a boom in fossil fuel use. Domestically, the interstate highway system encouraged more driving and oil company subsidies kept gasoline relatively cheap.
The boom came to an abrupt end when demand outstripped supply in the early 1970s, leading to the supply shock of the 1973-1974 Arab oil embargo and OPEC price increase.
The 1970s also marked the peak of postwar American oil production and the rapid increase in domestic dependence on imported oil, much of it from the Organization of the Petroleum Exporting Countries. That pushed politicians to experiment as the federal government tried to tackle this burgeoning crisis. President Richard M. Nixon’s Project Independence foresaw cuts to oil imports through greater fuel efficiency, the nation’s first federal speed limits and a shift to alternative energy sources. President Gerald Ford followed with the Energy Conservation Act of 1975, which created the Strategic Petroleum Reserve and pushed voluntary conservation and fuel efficiency programs.
While Nixon and Ford aimed to boost domestic oil production to offset the nation’s dependence on imports, their policies also prodded Americans to reduce consumption.