Thursday, March 17, 2022

Fund COVID Spending by Developing American Energy

Passage of Congress’ 2,700-page omnibus appropriations bill took a turn last Wednesday, when House Speaker Nancy Pelosi, D-Calif., had to remove $15 billion in Covid spending. Republicans had insisted on paying for the $15 billion from prior Covid spending, and House Democrats objected to language that would have rescinded $7 billion in funding to states enacted as part of last March’s $1.9 trillion spending spree.

Budget hawks have rightly noted that state and local government coffers are flush with cash; they don’t need any of the $525 billion in bailout funds Democrats appropriated last March, let alone the $7 billion haircut to those funds that Republicans proposed. But since Democrats reneged on the agreement congressional leaders reached about paying for Covid spending, Republicans should offer them a new one. Specifically, Republicans should propose paying for Democrats’ spending by expanding American energy.

Such a legislative package would first involve undoing the Biden administration’s war on fossil fuels. It would override the administration’s freeze on new oil and gas leases and permits, allowing for the development of natural resources in several Western states, and the resumption of projects in Alaska. It should restore reforms enacted in the Trump administration expediting environmental reviews for permitting and repeal the proposed “social cost of carbon” regulatory scheme.

All these steps would increase American oil production—a much better alternative than the administration’s current plan, which consists largely of begging Venezuelan dictator Nicolas Maduro and Iranian mullahs to produce more petroleum.

An energy package should also encourage the development and export of liquified natural gas. For starters, the legislation should expedite reviews to increase capacity at LNG export terminals, rescind restrictions prohibiting the transport of LNG via rail, and repeal the disastrous methane rule the Biden administration proposed in November. These measures would give our European allies new supplies and incentives to wean themselves off of Russian gas—the prime leverage point Vladimir Putin has over the continent and the major source of funding for his Ukrainian invasion.

A legislative package constructed in this manner would generate new leasing revenues for federal coffers. In 2017, the Congressional Budget Office concluded that a drilling program in the Arctic National Wildlife Refuge would result in $1.1 billion in additional revenues over ten years. Legislation forcing the executive to resume a leasing process that has ground to a halt nationwide would likely raise the $7 billion needed to replace the state bailout funds that House Democrats refused to cut.

More importantly, an American energy bill that passed through Congress would have a near-immediate effect on gas prices. Because oil and gas operate as a futures market, clear legislative signals that Congress will override Biden administration slow-walking and create certainty for energy producers would cause prices to plummet.

For instance, signals by the United Arab Emirates indicating a potential rise in production led oil prices to drop by $20 a barrel last Thursday. Passing this legislation would have a similarly salutary effect on oil prices, lowering Americans’ pain at the gas pumps.

During his recent press conference, President Biden repeatedly asked, “What are Republicans for?” A package that paid for new spending Democrats want by expanding American energy would place Republicans firmly on the side of giving families a break from higher gas prices, and increasing energy employment to boot.

If Biden wishes to oppose these policies because he remains in thrall to the left’s climate cult, then he should say so outright. And Republicans should remind voters that Democrats are for higher gas prices every single day between now and November 8.

This post was originally published at The Federalist.