The Blame Game: How Washington is Failing in the Face of Inflation

There’s an old adage known as Hanlon’s Razor which says: “Never attribute to malice that which can be adequately explained by stupidity.”

That would explain a lot where our government goes. No matter what choices are open to it, you can almost always count on them to make the wrong ones. 

But stupidity only goes so far as an explanation for their actions. When you keep making bad choices over and over, it wouldn’t be unreasonable to start imagining some pattern of intent.

Take inflation…

“As I said yesterday, inflation is a challenge for families across the country and bringing it down is my top economic priority.”
– President Joe Biden

If you’re a regular reader, you know that I maintain our current bout of inflation was initially the result of supply shortages created by the pandemic lockdowns which shut down the global supply chain. 

If that wasn’t enough, the government whipped out its checkbook and threw over $5 trillion at the problem.

But wait, there’s more…

In an effort to advance the left’s green agenda, President Biden has been openly hostile toward the oil and gas industries here in the US, worsening things on the energy price front. I wrote in some depth on the topic of inflation, especially soaring energy prices back in November.

So if you think inflation is bad now, just wait until the Biden administration starts fixing it.

The Biden administration’s idea of dealing with inflation is basically to blame it on someone else. To be fair, every political administration plays the blame game. But this administration takes it to new levels.

Let’s take a look at a couple of their “solutions” that not only won’t solve anything, but will likely make the current inflationary environment a long term fixture in our economy…

Blame the Russians

Since Russia’s invasion of Ukraine back in February, the government has put on the full court “victim” press. “ See… All this inflation isn’t our fault. We were just minding our own business when Putin invaded Ukraine and sent gas prices through the roof. He’s the bad guy.”

This was lazy… I mean really.  For the better part of a year prices were soaring while we were being serenaded with strains of “it’s only transitory” from the Fed and pretty much anyone facing reelection. 

And in truth, during all the sanctioning, countries (especially in Europe) were leaving carve outs for Russian oil and gas because they had become so dependent on it. So while the war certainly had some impact on energy prices, it was most likely not as severe as the blamers would have you believe.

But while it did give the folks in Washington a direction to wag their fingers, the “Putin bad” defense did little to nothing to actually resolve the situation. Gas prices are still off the charts (and rising).

So it was time to demonize someone else closer to home.

Blame Big Oil

If at first you don’t succeed… blame someone else.

Another tactic had to be taken. So the administration teed up a new villain and blamed those damned greedy oil companies…

Mr. Biden then looked at the camera and issued a stern warning to the oil industry: “Russia’s aggression is costing us all,” the president said, “and it’s no time for profiteering or price gouging.”

(Wrote about this assault by the government back in March

And since it was all those greedy corporate bastards’ fault, we needed to take some action against them.

On March 11 the House of Representatives introduced bill HR 7061 which goes by the name the “Big Oil Windfall Profits Tax Act.” 

This bill imposes an excise tax on the windfall profits of crude oil on taxpayers who extracted and imported more than 300,000 barrels (a barrel equals 42 U.S. gallons) of taxable crude oil (i.e., crude oil, crude oil condensates, and natural gasoline) in 2019, or who extracted and imported that amount in the current calendar quarter.

The bill requires rebates of the tax collected to be paid to individual taxpayers. The bill establishes the Protect Consumers from Gas Hikes Fund to finance such rebates.

It was  brought to the floor by 21 Democrat co-sponsors and referred to the Ways and Means committee. It was eventually joined by HR 7099 aka the “Stop Gas Price Gouging Tax and Rebate Act” with its 44 Democrat sponsors and HR 7103, the “Stop Profiting Off Putin’s War Act”

They’re all still sitting there to this day… Your tax dollars at work.

With the windfall profits tax stuck somewhere in committee, Congress had to find some other (possibly stupider) action to take.  Just this month another 13 Democrats co-sponsored HR 7688 known by its alias the “Consumer Fuel Price Gouging Prevention Act.”

Democratic Congresswomen Kim Schrier and Katie Porter have introduced the ‘Consumer Fuel Price Gouging Prevention Act’ that will give the President the power to issue an Energy Emergency Declaration that would make it unlawful to increase gasoline and home energy fuel prices in an excessive or exploitative manner.

They now want to legislate price controls

What seems to be lost on our representatives is that when you cap prices (and limit profit incentive) production actually goes down… go figure. Prices keep pushing against the artificial limits until the government has to remove the caps… then you get an explosion of demand chasing basically no supply.  

Do I need to tell you what happens to prices then?

Let’s hope the usual government inaction takes care of these two bills.

In the meantime, they’ve taken the blame game to an all new level of insanity…

Blame OPEC

Struggling to increase the global supply of oil, and apparently lost in the irony that he had just turned off the tap at home, President Biden tried persuading Saudi Arabia to increase their output.

They declined.

So he sent emissaries to Venezuela and Iran because when you refuse to produce oil and gas at home, you may as well do business with the local authoritarian regime.

When that didn’t work, he again tried to set up another call with the Saudis…

Saudi Crown Prince Mohammed bin Salman and the U.A.E.’s Sheikh Mohammed bin Zayed al Nahyan both declined U.S. requests to speak to Mr. Biden in recent weeks, the officials said, as Saudi and Emirati officials have become more vocal in recent weeks in their criticism of American policy in the Gulf.

And so with no options left where oil producing countries go, it was time to drop the big one. They have resurrected one of the most harebrained ideas ever to come out of Washington… 

NOPEC. (No Oil Producing and Exporting Cartels.)

Its intent is to allow for international lawsuits against OPEC members accused of market manipulation. (It seems like the only people the administration is interested in making rich is the lawyer-class.)

This legislation has actually been on and off various agendas since 2000, but this is the first time it’s gained any real traction. It was just passed by the Senate Judiciary Committee by a vote of 17-4.

One of the major proponents of the legislation is Chuck Grassley (R-Farm Country) who believes bi-partisan support is in order for this effort. He’s likely feeling some heat from his farming constituents who can’t afford diesel fuel or fertilizer thanks to skyrocketing energy costs. 

This legislation has received some serious pushback from business groups including the American Petroleum Institute who believe it could “backfire on America’s oil and gas industry and U.S. interests.” 

Do ya think??

The UAE expressed their disapproval as well…

“If you hinder that system, you need to watch what you’re asking for, because having a chaotic market you would see … a 200% or 300% increase in the prices that the world cannot handle,” (UAE Energy Minister Suhail) Al Mazrouei told CNBC’s Dan Murphy during a panel at the World Utilities Congress in Abu Dhabi.

Relations between Saudi Arabia and the US haven’t been all that rosy for a while now. Suing sovereign nations for not bending over backwards to solve the problems that WE created in the first place isn’t going to help anything…

Business as Usual

While the global supply chain itself may be beyond our ability to fix, there are proactive steps they can take to at least ease some of the current inflationary pain. Like making nice with the oil and gas industry here at home.

Instead, it’s business as usual. The Biden administration recently canceled three high-profile oil and gas lease sales: two in the Gulf of Mexico and one in Alaska’s Cook Inlet.

According to reporting by the Epoch Times: 

The Interior Department said that due to “lack of industry interest in leasing in the area,” it will “not move forward” with the proposed Cook Inlet oil and gas lease sale 258 in Alaska, in a statement to news outlets.

“The Department also will not move forward with lease sales 259 and 261 in the Gulf of Mexico region, as a result of delays due to factors including conflicting court rulings that impacted work on these proposed lease sales.”

Yet another ship burned

So back to Hanlon’s Razor — are all these actions the result of stupidity or something else?

Do those in government who are proposing to legislate our way out of this mess honestly believe that they’ll do anything to help the inflation situation? 

I guess it’s possible to chalk all this stupidity up to… well… stupidity. 

On the other hand, it now appears this administration won’t do anything that doesn’t test well.

Make the trend your friend,

Bob Byrne
Editor, Streetlight Confidential