Horowitz: Biden’s insane raiding of the Strategic Petroleum Reserve is masking his permanent cycle of inflation and misery

The Biden administration is bragging about curving the trajectory on hyper-inflation and even touting the success of “Bidenomics.” But the lion’s share of the slowed rate of increase comes from the price of petroleum, while most other critical goods remain extremely elevated. Unfortunately, the only reason the price of gasoline stabilized is because Biden depleted our Strategic Petroleum Reserve to a dangerous level. Even so, the price of gasoline and diesel remains about $1.20 higher than when Biden was inaugurated, meaning we have nothing to show for our empty reserve but an economic hangover. Now what?

Why has inflation decreased? Because it hasn’t. Core inflation is up 5.3% over the past 12 months. The only decrease is from gasoline, because in the earlier part of 2021, thanks to the dumb Ukrainian war and the embargo on Russia, it skyrocketed to biblical levels and now has gone down to a plateau that is still appallingly high. Shelter has increased over 8%, food is up 6.7% even from last year’s highs, and transportation has skyrocketed 10.2%.

So why was Biden able to mitigate the uncontrollable increase in the price of gasoline? He replaced the 3% share of our petroleum that we imported from Russia by raiding the SPR.

When Biden was inaugurated, we had 638 million barrels of oil in the SPR. Today, we are under 350 million in stock, thanks to Biden’s raid of roughly half our emergency reserves. That is the lowest level since the early 1980s, when our population was a third smaller than it is today.

But what happens when you are not producing more but still cutting off oil from Russia? In order to keep this racket going for the remainder of his presidency, is he going to sell the remaining half of the SPR – again, just to maintain $3.50 a gallon at the pump, while core inflation continues to come in hot? We have nothing to show for this plunder but a telegraphing of weakness to China – that in the event of an emergency we don’t have enough reserves to draw from. What happens if there are high-impact storms this hurricane season? The SPR was established to guarantee a 90-day supply for any such disruption, but today we are down to less than three weeks.

So now the Biden administration is in a catch-22 with perpetual inflation fueled by debt and the need to refill the reserves. In recognition of the problem, the Biden administration announced a plan to purchase about 12 million barrels of oil this year. However, that is just a little more than 4% of what he took over the past year and a half. And meanwhile, we just passed the 13th consecutive week of Biden raiding the SPR inventory.

Thus, this is the best it gets in terms of gasoline prices as we are forced to reverse the one dangerous policy responsible for any price stabilization. A permanent baseline of gasoline and diesel ranging between $3.50 and $4.00 is with us to stay.

That is just gas. When it comes to the most important aspects of our economy, we are poorer than ever. Nothing is more important than housing, yet the cost of mortgages has almost doubled just since Biden took office. Between interest rates unnaturally skyrocketing to deal with the inflation created by the debt, and the housing shortage due to the war on construction and manufacturing, first-time buyers are locked out of the market.

Additionally, existing homeowners are now having to pay insurance and taxes on homes that are twice as expensive as they were a few years ago. So, for a modest home in a relatively low-cost city, you’re potentially talking about $2,600 monthly PITI payments, up from $1,250 or so just three years ago. For expensive metro areas, those numbers are much worse, well into the $3,000s. The welfare state’s war on the labor force, along with eco and energy regulations, are crushing innovation in the construction market and creating a needless shortage in homes. According to Redfin, the number of homes for sale in May dropped to the lowest level on record, down almost 40% since before COVID.

This, in turn, has created unnatural pressure on the rent market, making it nearly impossible for people to afford rent without assistance if they are below a reasonable income level. Rent is now hovering around $2,000 and much higher in many high-cost metro areas on the coasts.

Then there is food, which is still 20% more expensive than when Biden took office and even higher in some critical categories, such as bread and chicken.

After shelter and food, there is the great symbol of the American dream – the automobile. According to Kelley Blue Book, in recent months, the average transaction price of a new vehicle has plateaued at a sickening $48,000, up from about $40,000 since Biden took office and created policies to phase out the supply of gas-powered vehicles in favor of EVs. To finance such a car for five years with 7% interest will cost you over $750 a month, more than double the average car payment pre-COVID. Can’t afford a new car? Sure, you can get a used one for almost $30,000, nearly 40% higher than when Biden took office.

Overall, when wage growth is juxtaposed to price inflation, the average family is $7,200 poorer than less than 2.5 years ago.

That, in a nutshell, is “Bidenomics” that the president and his allies in the media touted yesterday during a speech in Chicago.

So where do things go from here through the remainder of Biden’s term? Well, unless we have a recession, core inflation will continue to remain elevated, because the same driver of the original inflation caused by COVID money-printing is continuing … and getting worse. In less than a month since Congress suspended the debt limit, the Treasury Department has issued another $800 billion in debt.

It took from our founding until the late 1970s to accrue that much debt! We have accumulated $8.7 trillion in new debt since COVID and $4.5 trillion in Biden’s less than 2.5 years in office. At $32.2 trillion and rising fast, the debt is 121% of GDP, higher than at the peak of WWII. Except, unlike in recent years, this new debt issuance is going to be serviced at exponentially higher interest rates, thereby sucking out more money from the private economy, forcing the Fed to print more money, and inducing a vicious cycle of inflation.

Indeed, Bidenomics is all about plundering the Treasury, the SPR, and the future of our children to keep the growth of weaponized government afloat so you can get poorer. As such, Bidenomics can be summed up as a modern version of Louis XV: “After me, the deluge.”