HARRISBURG — In the third of its series of hearings on inflation, the House Majority Policy Committee on Tuesday heard testimony reaffirming the significant role energy prices and the policies that stifle the industry’s growth are having on employers, working people and their families.
“The high costs of energy and food are just crushing people across the state, including the farmers who produce the food and the truckers who deliver it to our grocery store shelves,” said Rep. Martin Causer, R-Turtlepoint, chairman of the committee. “While energy prices are significantly impacted by global markets, there is absolutely no question the anti-energy policies of the Biden and Wolf administrations are a driving force behind higher electric bills, gas bills, transportation fuel costs and groceries.
“And rather than acknowledging the damage they are doing, they just keep digging in and refusing to recognize Pennsylvanians and all Americans cannot afford their misguided and out-of-touch policies,” he added.
Daren Bakst, senior research fellow for environmental policy and regulation with The Heritage Foundation, highlighted the 8.6% rate of inflation year-over-year, noting that food prices in May 2022 were more than 10% higher than last May. These extreme food price increases, unlike any seen in the last four decades are occurring across food categories, from fresh fruits (8.5%) to fish and seafood (12.2%).
“The (Biden) administration’s war on energy is one of the main culprits in driving up food prices,” he said. “Energy is an input that affects sectors across the economy, including the food sector. From turning on lights, operating machinery to transporting goods, energy is critical across the food supply chain.”
Kyle Kotzmoyer of the Pennsylvania Farm Bureau noted that while commodity prices are high, the cost of production has been rising much faster. Those costs include, among other things, a 30% increase in the cost of fertilizer; a 133% increase in the cost of nitrogen, which is influenced by natural gas prices; and the cost of fuel to run their machinery.
“As energy prices soar and have an impact on each of us, farmers have justifiable concerns of being able to fill their tanks during harvest this fall,” Kotzmoyer said. “Taking mindful advantage of the bountiful natural resources available to us in Pennsylvania would lighten the load on all of us, but particularly our farming community.”
The trucking industry both affects and is affected by inflation, according to Rebecca Oyler, president and CEO of the Pennsylvania Motor Truck Association (PMTA). She testified that, like most businesses, the trucking industry is struggling with a workforce shortage. It is also being hit by supply chain issues as parts that are necessary to repair trucks on the road and build new ones are increasingly difficult to find and have risen in price. But the biggest hit to the industry is diesel fuel costs, which have risen 75% in Pennsylvania since last year. As a result, a typical PMTA member with six trucks will need to figure out how to manage an expense increase of more than $325,000.
Among her recommendations to keep the state’s vital trucking industry moving, Oyler emphasized the importance of US energy production and particularly sufficient refining capacity. “US refineries have been closing at an alarming rate, with Philadelphia’s own Energy Solutions (PES) refinery closing after a fire in 2020. The pandemic’s decrease in demand for motor fuels and federal policies hostile to fossil fuels were the nail in the coffin for many refinery operators, and in 2021 US refining capacity reached its lowest annual level since 2015,” she said. “Encouraging American production of diesel fuel should be a high priority.”
The committee heard from a panel of energy industry advocates who highlighted the damaging impacts of energy policies at both the federal and state levels.
Patrick Henderson of the Marcellus Shale Coalition pointed to Biden administration policies that have effectively prohibited any future leasing of taxpayer-owned land for development of oil and natural gas resources, as well as development of pipeline infrastructure. The problem is further exacerbated in Pennsylvania by similar Wolf administration policies, including a time-consuming and unpredictable permitting process with the Department of Environmental Protection.
“Pennsylvanians – and our fellow citizens beyond our borders – are in desperate need of sound economic policies that will unleash America’s energy resources to stem the pain being felt by historic inflation and cascading supply shortages,” Henderson said. “Our industry and its employees stand ready to help alleviate this pain and restore our economic and geopolitical stability.”
Stephanie Catarino Wissman, executive director of the American Petroleum Institute of Pennsylvania, also highlighted the state’s potential for energy development that would help address cost and supply issues in the Commonwealth and beyond.
“Given the vast supply of shale gas in Pennsylvania, policymakers should support policies that encourage new investment and the build-out of energy infrastructure, including in southeast Pennsylvania, which has the potential to become a hub for LNG exports and help meet the growing demand for natural gas,” Wissman said. “But first we need predictable regulations and efficiently permitting here in the state, and policymakers in Washington who are committed to real energy leadership.”
In his testimony, Terrance Fitzpatrick, president and CEO of the Energy Industry Association of Pennsylvania, also warned against policies that discouraged investment in domestic energy production, leading to rising costs and less supply.
“When you stigmatize something that you rely upon for such a high portion of your energy, you’re really running a long-term danger in terms of drying up the investment there because there is just so much uncertainty about where things are going,” he said.
The committee will conclude its examination of inflation next Tuesday, June 21, when the focus will be on long-term solutions to rising costs. The hearing will begin at 9 am and be streamed live at www.PAGOPPolicy.com.