By Paul Homewood
The Biden White House tried every gimmick to lower gas prices other than what really matters: Stop the regulatory and political campaign against American oil and gas production.
As the diplomatic humiliation plays out, it’s hard to come to terms with Wednesday’s decision by Saudi Arabia and its OPEC+ allies to cut oil production by two million bpd despite US calls. and a global economic recession is looming.
Over the weekend, it was reported that OPEC and its allies, including Russia, were contemplating cutting their production target by one million bpd at their meeting this week. They want higher prices, and the prospect that this means rising gas prices ahead of the November election has left the White House in overdrive.
CNN reported that senior Biden officials have lobbied Saudi Arabia, Kuwait and the United Arab Emirates to oppose production cuts. According to CNN, draft White House discussion points for Treasury Secretary Janet Yellen suggest that she inform our Mideast allies that “There is a major political risk to your reputation and relationships.” with the United States and the West if you move forward.”
The discussion points also explained that the production cuts would be a “total disaster”. A White House official told CNN “it’s important for people to know how high the stakes are.” The stakes are certainly high for the Biden Administration, which has claimed credit for this summer’s drop in gasoline prices.
The Saudis heard all this – and then increased the production cuts by a million barrels a day. They don’t seem to think that risking relations with the US is a big deal. And they put friendly relations with Russia above their “reputation” in the US
The White House responded in a statement Wednesday — from national security adviser Jake Sullivan and economic adviser Brian Deese — by calling the output cuts “short-sighted.” The statement also said the decision was “a reminder of why it is so important for the United States to reduce its dependence on fossil fuels.”
Do these people know how absurd they sound? No US president has done more to make America more dependent on foreign energy than Mr Biden in less than two years. He took office promising to cut American oil and gas production, and his regulators and Democratic Congress are doing everything they can to make it difficult for non-economic drilling and investment.
Mr. Biden called Saudi Arabia an “enemy” during the 2020 campaign, delaying a planned arms shipment and continuing to pursue a nuclear deal with Iran that would bring Saudi Arabia’s main enemy Saudi Arabia hundreds of billions of dollars to promote terrorism and other troubles. The president had to take his hat off to the Crown Prince of Saudi Arabia in July to demand more oil production, and all he got was a lousy bump.
Oil prices have risen since Monday amid news of OPEC production cuts, and those cuts will pour into the pump price for US consumers. Brent crude is back above $93 a barrel and OPEC seems to want prices to rise above $100. That would finance Russia’s war in Ukraine and help the domestic finances of Arab governments.
The Biden White House tried every other gimmick to lower gas prices with one really important campaign: Stop the political and regulatory campaign against American oil and gas production. A statement from Mr Biden suggested that effect would boost more production immediately in the Permian basin and encourage new investment.
But the government will not do it because they are too scared or share the wrong climate beliefs that want to ban the use of fossil fuels. That’s the definition of “short-sighted,” and it leads to humiliation like a Wednesday and higher prices for American families..
Right! America doesn’t need to limit itself to OPEC; it just needs to bring domestic production back to development.
The US EIA’s own data highlights the problem. Last year, US crude oil production was 9% lower than in 2019:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus1&f=a
So far this year, crude oil production is at about 2% higher than last year, but there is no sign of this being a sustained level.
Instead, the real danger is that Biden’s fight against fossil fuels will lead to long-term stagnation or even decline in the years to come.
If you think oil prices are high right now, wait!
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