Andrew Stuttaford of National Review Online describes a difficult task for President Biden’s spin machine.
Much as I can understand the political reasons why the administration might like to attribute our current inflation woes to Putin’s Price Hike™, the White House is going to have to work much harder if it expects that narrative to stick. Persuading Americans to forget that prices were already rising strongly before the run-up to the invasion of Ukraine … won’t be easy.
And while it is true that the disruptions following the invasion will push up inflation still further — and not only in the energy space — this administration is going to find it hard to convince people that it is doing what it can to keep energy prices down, especially when there is news like this.
The Wall Street Journal: …
… “The Biden administration announced lease sales for oil and gas drilling on federal land Friday, but said it would sharply reduce the acreage available for leases and charge higher royalties on the oil and gas produced.” …
… Call me a pessimist, but that does not look like the best way to encourage oil and gas companies to invest in increased production. Obviously, the companies’ prospective rate of return on investment on this acreage will, everything else being equal, be hit, and it should be remembered that that rate of return also has to “pay” for those leases that turn out to be worthless.
Reducing the amount of land available for lease by 80 percent does not look much like the ideal way to boost production, either.
Not only that, but this greedy and grudging approach by the administration reinforces the message that it has previously sent to the oil and gas sector: Its efforts are tolerated, not appreciated, and the extent of that toleration will, the odd politically driven pause aside, be forever shrinking.
