Day One Policy Changes
Upon taking office in January 2021, the Biden administration made immediate energy policy shifts that rippled through markets. Within hours of inauguration:
Keystone XL Pipeline cancellation was signed via executive order, terminating a project approved under the previous administration that would have transported oil from Canada.
This action signaled a broader shift in energy policy focus. The administration subsequently:
- Halted new oil and gas leases on federal lands
- Paused long-term leasing programs
- Implemented stricter environmental review processes for energy projects
- Reduced permitting efficiency for oil and gas development
- Signaled opposition to coal, oil, and natural gas expansion
Market analysts noted immediate investor concerns about domestic energy supply constraints, contributing to inflationary pressures in the energy sector.
Price Surge and Peak 2022
Average gas prices during the Biden administration reached $3.52 per gallon—a dramatic increase from the $2.49 Trump-era average. The situation worsened significantly in 2022.
In June 2022, the national average approached $5.00 per gallon—an unprecedented spike for most American households. Contributing factors included:
- Reduced domestic production growth due to permitting delays
- Strategic Petroleum Reserve drawdowns (later reversed)
- Russian invasion of Ukraine disrupting global oil markets
- Limited domestic refinery capacity expansion
- Energy policy uncertainty deterring investment in production
The June 2022 peak represented the highest prices Americans had faced in decades, creating severe hardship for working families, small businesses, and transportation-dependent industries.
Drilling Restrictions and Production Challenges
Beyond pipeline cancellations, the Biden administration implemented significant restrictions on domestic oil and gas development.
Federal Lease Sales: Offered far fewer acreage available for leasing compared to previous administrations, with stricter environmental conditions.
Permitting Timeline: Environmental review processes lengthened dramatically, delaying project approvals by years in some cases.
Discouraged Investment: Policy signals discouraged energy companies from major capital investments in U.S. production facilities, as regulatory uncertainty increased operational risk.
Refinery Constraints: No new refinery capacity was added, limiting the nation's ability to process crude oil into fuel even when crude was available.
These constraints created a supply-demand mismatch, pushing prices higher and increasing American dependence on foreign oil suppliers.
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The elevated gas prices under Biden-era policies created ripple effects throughout the American economy:
Household Budgets: Average families spent thousands of additional dollars on fuel annually, reducing spending on essentials and other economic sectors.
Inflation Acceleration: Energy prices feed into transportation costs for all goods, accelerating broader inflation that affected groceries, utilities, and services.
Business Operations: Small businesses relying on fuel—logistics, agriculture, construction—faced margin compression and delayed growth investments.
Wage Impact: Despite wage increases in some sectors, purchasing power declined as energy costs consumed larger portions of household budgets.
By 2024-2025, prices moderated from 2022 peaks but remained elevated compared to historical norms prior to 2021.