Goldman Sachs: Lack of Investment in American Oil Creating ‘Revenge of the Old Economy’

American energy is suffering from a lack of longterm investment, which temporary fixes cannot alleviate, global head of commodities at Goldman Sachs Jeff Currie said on Thursday.

Downplaying the Ukrainian war’s impact on oil prices, Currie said soaring energy prices are due to a lack of U.S. investment in the fossil fuel sector.

“The global slowdown, let’s say it’s FED induced,” Currie said about the Federal Reserve increasing rates to combat inflation, “it may create a pullback in [oil] prices, but it’s not a longterm fix.”

“I want to emphasize demand destruction or demand slowdowns is not a fix to this problem,” Currie stated.

Currie said for a decade the U.S. has not invested into oil refineries and oil production capacity to properly mitigate price shocks.

“There is only one longterm fix to this problem and that is investment, harnessing large amounts of capital into this space to debottleneck it,” Currie said.

“What are the reasons for the lack of capital investment?” Currie asked. Naming ESG, Environmental, social, and corporate governance, Currie explained too much focus on leftwing investment strategies is one of the main reasons the U.S. is unprepared for energy price shocks produced by a variety of factors.

In 2020, then-candidate Joe Biden promised to wage a war on the American oil industry by terminating subsidies and drilling feasibility.

He has made good on his promise. Into Biden’s second year in office, his administration has driven up private and public financing costs of oil drilling, halted drilling on public lands, and canceled the Keystone pipeline.

Gas prices reflect his policies. On Thursday, the national average gas price remained above $5 per gallon. Diesel fuel also reached a record high, driving up transit costs, food costs, and construction costs.

According to the Energy Information Administration (EIA),  Americans will pay $450 more for gas in 2022 than they did last year on an inflation-adjusted basis.

Trump warned voters that if Biden won the 2020 election, the price of gas would reach at least $7.00 per gallon. “If Biden got in, you’d be paying $7, $8, $9. Then they’d say ‘get rid of your car!’”

JPMorgan commodities analysts predicted gas prices may increase to more than $6.00 per gallon before Labor Day.

Follow Wendell Husebø on Twitter and Gettr @WendellHusebø. He is the author of Politics of Slave Morality.