For decades, U.S. presidents have reacted harshly to high oil prices, using whatever limited power they had to try to push them lower and then publicizing said efforts in hopes that they would win political points. Ronald Reagan took credit for oil prices falling during his tenure, crediting his deregulatory agenda. Bill Clinton released oil from the federal government’s Strategic Petroleum Reserve (SPR) to try to stem prices, though retrospective analysis shows it had little effect. Trump tweeted at OPEC, the cartel of countries that controls 40% of the world’s oil production, as oil prices rose in early 2019 to demand more production that would drive lower prices. (They didn’t oblige him).
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Over the course of this year, as oil prices have risen steadily, the Biden Administration has sought at every turn to counteract the trend. Biden has called on OPEC to raise production, asked the Federal Trade Commission to investigate big oil companies for “potentially illegal conduct” related to high gas prices and, last week, announced a release of oil from the SPR. “I will do what needs to be done to reduce the price you pay at the pump,” Biden said at a White House event on the economy on Nov. 23. “You’re the reason I was sent here: to look out for you.”
But while Biden’s actions may seem similar to those of his predecessors, the context is wildly different. Historically, decisions to try to bring down oil prices were simply about the economy—and its political implications. Low oil prices stimulate consumption, which is good for the pocketbooks of everyday people as well as big companies, which in turn makes everyone happy with the incumbent party.
Today, however, that is all complicated by the increasingly urgent reality of climate change, which creates a tension between pushing for lower oil prices and championing the energy transition.
A version of this story first appeared in the Climate is Everything newsletter. To sign up, click here.
Addressing climate change has never been a simple economics problem. It’s been clear for some time that the long-term benefits far outweigh the costs, but U.S. heads of state have either refused to act, like George W. Bush or Donald Trump, or had their efforts stymied by a lack of political consensus, like Barack Obama.
There is a complex set of reasons why climate policies have failed in the past. One of the most powerful is the entrenched interests—primarily the fossil-fuel industry—that have financed campaigns to distort public understanding of climate change. But the core concern for many skeptical of taking big action on climate is that it will necessarily hurt both everyday people and the economy at large.
In some cases—like low-income homeowners concerned about the cost of heating their homes—that’s a reasonable concern. In others—like oil and gas executives who claim fossil fuels are the only cost-effective form of energy—it’s not so much. Regardless, the current administration, hammered constantly by right wing media, is aware of the PR challenge. Showing concern about high energy prices is one small step to show that policies that foster the energy transition do not mean abandoning everyday people in the short term. “You have to do two things simultaneously,” David Turk, U.S. Deputy Secretary of Energy told me in Glasgow in November. “We’ve got to accelerate our energy transition… [And] we’ve got to be diligent in this time of transition.”
John Kerry, Biden’s climate envoy, put it more bluntly during COP26. “If life is so miserable … and the prices go up and other things happen, you’re going to lose,” he said, referring to the implementation of climate policy. “It becomes more challenging to get the job done.”
The current oil-price spike is just a small taste of the future. As the energy transition advances, the world is likely to experience more of these challenging dynamics—particularly without a concerted policy effort to stop them. It’s one thing to make largely symbolic gestures like releasing oil from the SPR. It’s another to actually implement policies with the real teeth needed to soften what is bound to be a bumpy transition (think of things like a payment program for low-income households vulnerable to high prices).
“In a world where you expect oil demand to go down as a result of electric cars, sustainable aviation fuels, more efficiency … the price of oil will also go down,” Fatih Birol, the head of the International Energy Agency, told me over the summer. “This is the basic rule, but, of course, between now and then, there will be a lot of volatility.” Amid that volatility, it will be crucial for leaders to show they’re still looking out for the little guy.