Why Expand Your Business If the Government Will Soon Close It Down?

Progressives seem to be confused about inflation. Inflation is an increase in the supply of money and credit at a rate faster than the rise in the production of goods and services. It is monetary on the one hand and a supply issue on the other.

Therefore, the solution lies in restricting money growth to a level approximate to that of economic growth and allowing natural market forces to increase supply. Wherever there are legal bottlenecks to production and distribution, such as taxes, laws that serve as barriers to entry for competitors, import restrictions, and above all senseless regulations; government can play an active role in getting out of the way of production.

It is said the answer to high prices, is high prices. That is true if the government gets out of the way. High prices cause consumers to restrict demand while higher profits in the affected sectors attract capital and create more supply.

At the centerpiece of the worst inflation in 40 years, is the cost of oil and natural gas.

Insofar as the supply issues are concerned, Progressives and their sock puppet President Biden seems to understand that the drop in global supply has something to do with the increase in prices. But when asked if we can do anything to increase supply, they stare off into space as if the power supply to their brain has been generated by a windmill, and the wind just quit blowing.  The only increase in supply they can conceive of is if the extra supply comes from Iran or Venezuela as opposed to West Texas.

Just this week, Secretary of Treasury Yellen turned her attention away from abortion and gun control long enough to state that the Administration has done all it can do about rising oil prices.

Really?

What if Progressives allowed all that gas in the Marcellus shale, which can be pumped in Pennsylvania but is forbidden in New York, was allowed to be developed?  What if the great oil production that once came from California was permitted to grow?  What if the reserves in Alaska could be tapped? What about all the opportunities offshore and on Federal land?

In short, America has plenty of both existing and new oil and gas geography to be developed, but environmental fanatics will not permit it to be developed. For years, their strategy has been to remove available land with energy resources off the market and elsewhere harass development with endless regulations and lawsuits.

And now, the government explicitly has set goals to phase out oil and gas usage by 2030.

Meanwhile, the ESG movement does everything it can to make energy companies a pariah and starve them of capital. If you don’t have money, you can’t expand.

Put yourselves in the shoes of an oil or gas company executive. Prices are rising, profits are good, but the government intends to put you out of business in about 8 years. Why would you make substantial investments in projects that have a usable life of 30 to 50 years, knowing full well your business will be shutting down in just a few more years? 

A more rational response is to recover what you can under the circumstances. Use your profits to buy back stock, benefiting management and your loyal shareholders that have stayed with you through this constant attack from the government and distributing dividends to your shareholders as well. But these strategies while rational, do not produce an ounce of new energy.

You wouldn’t and that is why in the present situation rising prices will not do their magic, that is, call forward new production to alleviate the shortages.

This crisis in the short term has been aggravated by Putin. But the guilty parties are homegrown, the environmental movement and their allies in the Democrat party.

This energy crisis is wholly artificial, designed to drive the economy away from inexpensive oil and gas and towards the new Green nirvana of solar and wind. They want fossil fuels to be expensive so that their forced alternatives look better. They don’t want a level playing field where one energy source competes against the other. They want to cram their ideas down our throats because of the hubris of their movement. They think among all the variables that cause the climate to change over time, they alone can change the climate of the earth over the next 100 years.

If you can’t afford to drive to work or feed your family, you are just collateral damage necessary to achieve their greater goal.

What is even more insane is that they seem pleased if the oil and gas are produced elsewhere, as if the earth’s atmosphere can tell the difference between Alaskan oil and Venezuelan.

This push from the top down to change our energy system is aggravating the inflationary problems touched off by wild deficit-financed spending and a Federal Reserve Board that has gone out of its way to remove any restraint on the legislative and executive branches of government. Combined with the environmental movement, that has locked us into devastating inflation that will be hard to escape.

Unfortunately, market forces will not be unleashed to help alleviate the problem. There simply is no incentive under the circumstances to make new long-term investments in the sector.

Why invest in more hydrocarbon production if they are simply going to put you out of business?

Only one other solution exists. We must vote out of office those who grovel to the environmental movement and encourage all forms of energy development. If we don’t, our standard of living, and national security, will be in grave jeopardy. Then we need a program of fiscal responsibility and monetary restraint coupled with massive deregulation of American business.