The cognitive dissonance was striking as President Biden berated oil and gas companies for their daring to make profits and apparently not investing properly into the USA..In his own words “The oil industry has a choice. Either invest in America by lowering prices for consumers at the pump and increasing production and refining capacity. Or pay a higher tax on your excessive profits and face other restrictions.”.The gall is beyond the pale. Perhaps it’s not cognitive dissonance so much as cognitive disability leading Biden to chasten oil companies for not increasing production when he has spent his entire presidency trying to force oil companies to lower production..Joe Biden’s very first act in office was to shut down the Keystone XL pipeline project. Billions of dollars had been invested and years dedicated to the line and it was killed by the president with the stroke of a pen. Biden was making it clear then and there that he would fight if not outright block any expansion of oil and gas infrastructure in the United States, and here he is today threatening to punish oil and gas companies for doing just that..The idiocy of Biden’s approach runs deep and exposes a total lack of understanding of basic economics on Biden’s part..Oil and gas companies took a beating in the last decade. They lost billions of dollars while oil prices were low and government regulations made production financially unviable. Now that they can recoup some of those losses, Biden is threatening to steal those profits from them through taxation..If Biden hits oil companies with a punitive tax, guess what will happen? Those companies will reduce expansion of and production. Why should they risk more dollars if the president is going to steal the profits? Investors will of course flee..The world energy crisis is due to a lack of supply and Biden is taking an approach that would reduce supply..Pouring more money into “green” renewables won’t solve this problem. If that worked, Germany wouldn’t be moving back into coal as an energy source today after spending billions on wind and solar..Nationalizing the industry won’t work. Just ask Venezuelans how that worked out. They have some of the richest oil reserves on earth and are suffering under fuel shortages and rampant poverty. Only government management of an industry can pull off such a disaster..Governments need to get out of the way. They need to cut the onerous regulations dumped on energy companies and make investors confident that capital projects will be allowed. Investors need and deserve a return on their investment or they won't open their wallets. In other words, governments need to do the opposite of what Biden is doing..Now let’s pivot to our own domestic idiot with a deficit in economic understanding. Yes, I am talking about Prime Minister Justin Trudeau..Trudeau is an impressionable little man, and he likes to follow. Rest assured, he is watching Biden and thinking about how he could implement a similar policy..Justin’s father tried to take control of the Western Canadian energy sector with his disastrous National Energy Program (NEP). The NEP caused thousands of bankruptcies while bleeding Alberta of nearly $100 billion at the start of the 1980s. It was a catastrophe that left Alberta ravaged and irreparably damaged national unity. Justin would love to succeed where his father failed with battling Western Canadian energy companies..Unfortunately, Trudeau can only replicate what his father did. He can’t make an NEP work because the model is fatally flawed. Can we expect Trudeau to realize this though? I wouldn’t bet on it..Trudeau is still trying to borrow and spend Canada into prosperity. Inflation is running rampant and the government is getting backed into a corner as higher interest rates make servicing the federal debt untenable. He will be tempted to make a grab for western resources and he likely won’t be able to resist himself..All we can do now is hope somebody somehow talks some sense into Joe Biden and gets him to reverse course. Otherwise, he and Trudeau will form a tag-team sending North American energy capacity into the dark ages.
