Some Democrats on Capitol Hill are escalating the pressure on President Biden to take alternative measures to boost domestic energy production, including invoking wartime executive powers to combat the global energy crisis that has sent U.S. gasoline prices soaring.
Invoking the Defense Production Act (DPA), while an extraordinary move, would not be unprecedented. But the openness to a move typically reserved for national emergencies, such as the COVID-19 pandemic or war, underscores the weight on the administration’s shoulders to rein in record-high prices at the pump just months before midterm elections.
Democrats say resorting to DPA powers also reflects their belief that oil companies are taking advantage of the war in Ukraine to pad profits after years of deflated revenue due to the pandemic.
Although global oil prices have dropped to about $100 per barrel in recent days, gasoline prices at the pump remain at record levels. The average price for a gallon of regular gas was $4.31 on Wednesday, an 80-cent increase from one month ago, before Russia invaded Ukraine.
“This actually falls squarely within the wheelhouse of what the DPA is about. We have a national security crisis. We have an emergency,” said Rep. Jason Crow, Colorado Democrat. “We have to look at … how [the law] would be implemented and the unintended consequences of doing so.”
One of the first things that should be changed, Democrats suggested, is the so-called “use it or lose it” provision that allows energy companies to hold on to unused drilling leases for a number of years before having to give them up. It echoes a popular Democratic talking point that oil companies are purposely refusing to tap into supplies on federal lands in a bid to boost prices.
“Using the DPA is something I’d be open to,” said Rep. Tom Malinowski, New Jersey Democrat. “We give companies way too much time to sit on these unused leases.”
Sen. Debbie Stabenow, a Michigan Democrat and member of Senate leadership, also threw support behind the idea of invoking the DPA.
The 1950 law provides the president the power to give priority to government orders and to “allocate materials, services and facilities” for purposes of national defense.
Mr. Biden and former President Donald Trump both used the DPA for medical supplies during the pandemic. Mr. Trump invoked the DPA 18 times for vaccine manufacturing. The Defense Department uses its DPA authority for an estimated 300,000 military-related orders each year. In the early 2000s, it was used to supply natural gas to California during an energy crisis.
The idea first broadly emerged among lawmakers last week when a quartet of House members — one Democrat and three Republicans — sent Mr. Biden a letter urging him to use the DPA in a three-pronged approach: to provide financial certainty by promising to make domestic purchases for years to come to increase supply in the U.S. Strategic Petroleum Reserve; to expedite and expand domestic oil and gas production with financial incentives like subsidies and loans; and to convene top oil producers to address other production barriers.
Sen. Joe Manchin III, a centrist West Virginia Democrat and a critical swing vote in the chamber, has pushed for the DPA to be used to support domestic fossil fuel infrastructure, such as natural gas pipelines.
In recent weeks, bipartisan pressure on Capitol Hill has forced the White House to do an about-face by banning Russian energy imports. But so far, the White House has resisted calls to invoke the defense act while repeating the Democratic messaging about unused drilling leases.
“I would note that the use of the Defense Production Act, broadly speaking, would mean you’re paying a company to do what they already have the capacity and ability to do,” White House press secretary Jen Psaki told reporters Tuesday. “We know there are 9,000 unused and approved oil leases right now that these oil companies could tap into and do more.”
The feeling among Republicans, who are unified on their message that the administration must do more on rising gas prices, is far more mixed about the DPA.
“That is one of the dumbest ideas I’ve heard in a long time,” Sen. John Cornyn, Texas Republican, said last week. “This is like socialism: You don’t let the private sector do it and the government will force to get it done. It’s just impractical.”
But Sen. Kevin Cramer, North Dakota Republican, was more open to the idea. He suggested the DPA could be used to provide financial incentives, such as helping oil companies retrofit refineries so they’re better able to handle domestic light crude oil as opposed to the heavier crude that the U.S. imports.
“Only a couple of years ago, the price of oil was negative,” Mr. Cramer said. Producers need “the certainty that allows them to attract the capital [and] to make the investments that provide a long-term profit, not just a patriotic, immediate production during the crisis.”