This article originally appeared on Fox Business on April 6, 2022.
President Biden is attacking oil companies for failing to do exactly what his administration has been aggressively preventing them from doing since he took office – increase oil production.
At his press conference announcing the release of oil from the Strategic Petroleum Reserve, Biden claimed oil companies are sitting "on record profits" and "don’t want to increase supply because Putin’s price hike means higher profits."
You really have to ignore a lot of recent history and economic reality to come to that conclusion.
First, if oil companies controlled oil prices, prices would rarely decline. But they declined during the Trump era as the supply of oil surged and prices at the pump hit lows not seen in years. There are simple reasons why.
To try and help Biden and his economic team understand how this works, let’s use a business that has fewer political overtones than oil – like peanut farming. Let’s say you’re a peanut farmer and worldwide demand for peanuts suddenly surges beyond the available supply. Maybe climate activists concerned about cows and methane emissions convince people to switch from meat to peanut butter for protein.
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