Energy consumers across the US are complaining about their energy bills becoming increasingly more expensive. It needs to be said that the US is not isolated in this challenge and countries around the world, especially in Europe, are also dealing with increases in energy prices. Still, many wonder how the energy crisis in the US got so severe and are looking for someone to blame.
Some analysts say that the situation has been getting worse ever since Biden altered the national energy policy.
‘In December 2020, the price of US gasoline averaged $2.30 per gallon and global crude oil prices were below $50 per barrel during most of 2020. According to AAA’s gas price index, the current national average fuel price is $4.08 per gallon (regular),’ Underberg and Kessler reported. These increases can be linked to limiting the availability of domestic energy sources.
There are, however, voices arguing that the energy crisis goes beyond Biden’s policies. In particular, increases have been caused by price fluctuations during the COVID-19 pandemic and have been affected by the ongoing war in Ukraine. So, even though Biden might be partially responsible for the high prices, the current energy crisis is a complex issue.
Green New Deal
The Green New Deal was introduced in 2006 as a plan to achieve 100% clean, renewable energy by 2030. The deal foresaw using tools such as a carbon tax, free college, or a jobs guarantee to achieve this goal. Overall, the Green New Deal aims to reduce greenhouse gas emissions and mitigate the consequences of climate change.
When Biden took over power, he prepared a different plan designed to help the US become greener. Many say that ‘Joe Biden did not fully embrace the Green New Deal’ and although he did suggest other measures to protect the environment, some say that his policies have been negatively affecting the US energy market and ‘have contributed to surging oil prices,’ according to the New York Post.
‘Biden is facing renewed criticism over his restrictive energy policies – with experts noting the administration’s frosty relationship with US producers has added to the problem,’ the New York Post also reported.
As for the Green New Deal, it has not passed so it has had no impact on the current energy situation.
War in Ukraine
While Biden’s administration might have done certain things that triggered price spikes, they are not fully responsible for the energy crisis. One of the main causes of the escalating energy prices in the US, but also in other parts of the world, has been the war in Ukraine. The conflict caused disruptions to trade and productions, which led to energy prices going up. Unfortunately, the World Bank says that the prices are expected to keep increasing in the next few months.
‘It expects the price of Brent crude oil to average $100 a barrel in 2022, its highest level since 2013 and an increase of more than 40% compared with 2021. Prices are expected to fall back to $92 in 2023 but will remain well above the five-year average of $60 a barrel,’ the Guardian reported.
These changes represent the largest commodity shock the world has experienced since the 1970s. Many hoped that the Russian invasion would only cause short term spikes in prices but now, experts say the situation is likely to remain difficult long term.
The war in Ukraine has shaken global energy markets, driving oil and gas prices to record highs and forcing many countries to look for new sources of energy. As Europe is widely dependent on Russia for gas, it has been turning to the US for help.
‘U.S. liquefied natural gas exports to Europe increased this year, according to the Energy Information Administration. The U.S. exported 74% of its liquefied natural gas to Europe through April this year compared to the annual average of 34% in 2021,’ wrote Austin American Statesman. In turn, there has been more pressure on natural gas prices in the US.
Russia is said to be the largest oil exporter to global markets in the world so events such as conflicts that involve Russia immediately affect prices.
‘This isn’t the first time that Russian military aggression has prompted world leaders to fret about energy security. Similar concerns arose when Russia invaded Georgia in 2008, and in 2014 when it invaded and then annexed the Ukrainian territory of Crimea,’ wrote Nature.
Now, as there is no end in sight to the war in Ukraine, everyone in the US needs to brace themselves for more expensive energy bills and possible gas shortages.
$369bn climate bill
In other, more positive news, to accelerate the transition to cleaner, more sustainable economy, last week a historic bill of $369bn for climate and clean energy programmes was backed. This bill will be the biggest single investment in clean energy and climate programmes that the US has ever seen.
The bill covers pipeline permitting reforms and generating more power from solar, wind and hydrogen.
‘You have to have energy security, you have to be energy independent if you want to be a superpower in the world,’ said Democratic senator Joe Manchin. As well as making the US greener, the investment will help make the country energy self-reliant, which would reduce its vulnerability to fluctuating global energy prices. Consequently, future price increases triggered by sudden geopolitical events or global gas shortages could be avoided.
Under the bill, utilities will be able to access a total of $30bn in grants and loans to help them transition to clean energy. What that means for regular energy consumers is that there will be more green tariffs and it will be easier for them to source their energy from renewables. Thanks to that, entire communities will be able to go green.
Other aspects of the bill include:
- $6bn in grants and tax credits will be available to the largest polluters in industrial manufacturing to help them reduce their emissions
- $27bn to promote technologies making reducing emissions easier
- $20bn for rural communities so they can invest in sustainable agriculture practices or land conservation
- $9bn ofr low-income families so they can purchase heat pumps, solar panels, and electric heaters.
The bill aims to tackle a wide range of environmental issues and it has the power to get the US closer to fulfilling its climate-related ambitions. Moreover, it represents a proof of the Biden administration’s commitment to reduce emissions and move away from harmful fossil fuels. If implemented successfully, the bill can also protect the US from being affected by future energy crises. If the US generates most of the energy it uses, the energy prices will not have to change even if other markets such as Europe are dealing with price increases. The next few years will show whether the bill brings the changes that everyone is hoping for, however.