Joe Biden’s energy balancing act really worked.
There should have been a climate backlash.
A week out, that’s what’s most astonishing about the midterm elections. During previous administrations, voters penalized congressional Democrats for even trying to pass a climate bill. That’s what happened in 1993 and 2009. This time, Democrats actually did it with the Inflation Reduction Act, and then it turned into the best midterm performance for a party in power in a generation.
As I wrote last week, that Democrats stopped a red wave is excellent news for climate policy itself. With control of the Senate, President Joe Biden will be able to appoint and confirm nominees and judges, allowing him to implement the IRA as planned. He will also have a stronger hand in budget negotiations. But I’m still wondering: Why was there no backlash?
Let’s set aside what might be the most likely explanation—that voters were focused on other issues this year, or that Republicans nominated such extreme candidates for the Senate that voters overlooked the IRA and voted for Democrats anyway. The GOP barely made an issue of the IRA, almost never mentioning it in attack ads, preferring instead to focus on inflation and crime. Still, that suggests something worked about the IRA that didn’t work about earlier climate proposals. What was it? I’ve come to think that three aspects of the law—and the campaign to pass it—helped differentiate it.
First, Democrats need to thank Joe Manchin. For most of Biden’s presidency, Manchin was the archvillain of the climate process: He killed the Build Back Better Act, which fused the president’s original climate goals to a messy set of new domestic programs, not once, but twice. In July, I wrote that Manchin’s fickleness at the negotiating table was setting America up for catastrophe. Yet when he finally settled on a deal, he defended it, and his long opposition to climate policy bestowed an aura of moderation on the IRA. The public never thought the IRA was radical in part because it was Manchin’s bill.
But second, Manchin should thank Democrats, too. If Manchin provided political cover for the party, then the party returned the favor and gave policy cover for Manchin. The idea underpinning the IRA—that climate policy should aim to lower the cost of clean energy and create new, pro-decarbonization coalitions within the United States—proved politically far less harmful than the older idea that climate policy should aim to make fossil fuels more expensive.
The third and perhaps most important reason the IRA did not face a backlash is that the other half of Biden’s energy policy has given the law cover. Biden has made enterprising use of the Strategic Petroleum Reserve, or SPR, the U.S. government’s strategic stockpile of oil that it can distribute in an emergency or if supplies are interrupted. Starting in April, after gas prices surged during the Ukraine war, the government released an average of about 1 million barrels a day from the reserve, the largest and fastest sale of supplies from the stockpile ever.
In June, gas prices hit an all-time high, and then they steadily declined throughout the summer. Although these releases are not solely responsible for the decline, they have helped accelerate the downward slide. Last month, the White House announced the second and more important aspect of this policy, which is that the government will refill the reserve at a price guaranteed to generate a small profit for U.S. oil companies. Until the government runs out of space in the SPR, this will help place a floor under global oil prices, giving drillers the confidence to expand production.
Although Republicans have tried to attack Biden over these releases, they haven’t hit the mark. That’s in part because … what would they criticize? If Americans are upset about gas prices being so high, shouldn’t Biden go out of his way to bring them down? Some moderate Republicans even called for Biden to adopt a similar strategy in March.
In the simplest sense, Biden’s use of the SPR allowed moderate Democrats to say that they support expanding oil and gas drilling or lowering costs while still backing Biden’s far more important climate policy. Using the SPR as an insurance policy is one of the policies that Representative Jared Golden of Maine, for instance, called for after Russia invaded Ukraine. Golden later voted for the IRA, but framed it as one more policy among many to lower energy costs—all kinds of energy costs. He was just reelected in a district that leans 10 points toward Republicans.
It turned out that addressing energy costs now allowed Democrats to take the most ambitious steps ever proposed to cut long-term fossil-fuel demand. It’s notable what an act of defiance Biden’s energy policy is. That the president could even try managing gas prices reflects a shift away from political wisdom. In 2012, the University of Chicago Booth School of Business surveyed 41 economists about whether federal policy affected gasoline prices more than market forces did. (This was seen as a proxy for: Can the president do anything about gas prices?) Not one said yes.
Yet here is Biden, doing it, and it may have helped save him. What’s more, voters vindicated those efforts at the polls. To the degree that politics is what you can get away with, Biden has managed to successfully nudge down gas prices while preserving power to pass more aggressive climate policy.
This is perhaps the most reassuring lesson of the midterms. Managing the energy transition is going to be really hard. Here’s one example: Global oil demand is set to plateau in the 2030s, according to the International Energy Agency. During that time, the world’s transportation sector will still depend on oil, but for the first time in the roughly 160-year-old history of the oil industry, nobody will want to risk producing too much of it. Oil companies have no experience running a business when global liquid-fuel demand is plateauing, much less falling—but they will have to learn.
And that is only one challenge. New factories will have to open; demand for certain minerals will explode. These are going to be unprecedented changes, and they will likely cause some volatility and backlash, both in politics and the economy. What Biden’s energy balancing act suggests is that these bumps in the road can be managed as long as politicians understand what the economy needs—to fight climate change in the long term and to manage costs in the near term—and deliver.
The country isn’t doomed to endless thermostatic backlashes: When policy is designed cannily and attentively, it can avoid political blowback. That’s maybe the most hopeful takeaway of them all.
Joe Biden’s energy balancing act really worked.