Oil cartel cuts two million barrels of production and defies US pressure.
As the Organization of the Petroleum Exporting Countries (OPEC) decided to issue a major cut to oil production, the Biden administration is once again left floundering for a cohesive response that sidesteps the embarrassment of going cap in hand to Saudi Arabia earlier this year. Rather than admit that the president’s pleas have been ignored, White House Press Secretary Karine Jean-Pierre deflected blame to the war in Ukraine, saying “It’s clear that OPEC+ is aligning with Russia with today’s announcement.” While his personal blunders have been on full display even before arriving at the White House, Joe Biden’s public policy boondoggles have had lasting consequences for the American people and their pocketbooks. And the soon-to-be-rocketing energy prices are no exception.
OPEC: 2020 Redux
During OPEC’s first in-person meeting at its Vienna headquarters in more than two years, the 23-member cartel agreed to slash crude output by roughly two million barrels per day (bpd). When reports first surfaced, sources had stated the group was considering a cut of approximately one million bpd, with market analysts purporting that 500,000 bpd was a more realistic figure. This was the biggest reduction since the early days of the coronavirus pandemic and highlighted officials entering panic mode.
The drastic measure was approved “in light of the uncertainty that surrounds the global economic and oil market outlooks.” In other words, OPEC is worried about a recession eviscerating global demand, so the institution needed to keep prices elevated. Does this mean energy could flirt with $100-a-barrel prices again? The Biden administration is trying to mitigate the pain by – once again – raiding and draining the nation’s oil-denominated rainy-day fund and potentially turning to dictators to bail out progressive errors.
Biden Policy Gaffe
The White House announced soon after OPEC’s decision that the federal government would release ten million more barrels of oil from America’s Strategic Petroleum Reserve (SPR) in November. “The President will continue to direct SPR releases as appropriate to protect American consumers and promote energy security, and he is directing the Secretary of Energy to explore any additional responsible actions to continue increasing domestic production in the immediate term,” said National Security Advisor Jake Sullivan and National Economic Council (NEC) Director Brian Deese in a statement.
As Liberty Nation recently reported, Biden’s plan to inject one million barrels of oil a day from the emergency stocks was scheduled to expire on Oct. 31. However, the Department of Energy announced more releases for November deliveries, and now the administration is breaking open the piggy bank again ahead of the midterms. But a blindfolded Stevie Wonder stuck in a basement could see this is a political ploy, particularly with gasoline prices edging toward a national average of $4 per gallon.
While this is a short-term fix to improve Democrats’ chances at the ballot box, the long-term consequence is the SPR. When Biden took office, the roughly half-century-old SPR contained about 637 million barrels. For the week ending Sept. 30, there are a little more than 416 million, representing a 34% decline and the lowest level in four decades. Remember, then-President Gerald Ford helped establish the SPR in 1975 to prevent supply disruptions, not for Democrats or Republicans to bolster election odds.
Meanwhile, the administration all but confirmed that it still cannot comprehend what is going on with the energy file. According to the Oct. 5 press statement, officials are working with Congress to determine additional tools to reduce OPEC’s control over energy prices. The release also suggested that passing the Inflation Reduction Act was crucial to national security and energy independence.
First, OPEC’s immense impact on international energy prices was significantly diminished before the current inflationary crisis. Prior to the COVID-19 public health fiasco, the United States transformed into an energy-independent market, no longer depending on the Middle East, as the US was producing more than 13 million bpd. Moreover, former President Donald Trump wanted to add to the reserves when prices were cratering, but Democrats opposed this plan. Now, because of the Biden administration’s actions, the nation is begging OPEC, relying on repressive governments, and eating into Uncle Sam’s savings account.
Second, the Inflation Reduction Act might be a worthwhile long-term endeavor, but it does not resolve the plethora of current challenges. It is terrific that there will be more electric-vehicle chargers by 2035. But what about today? The American Petroleum Institute (API) has repeatedly stated that Washington could facilitate expanded output by slashing red tape, approving more leases, defending the sector in court against militant environmentalists, and lifting restrictions. The progressive utopia of a future zero-carbon economy does not need to be abandoned, but consider this: Despite the trillions of dollars in subsidies given to renewables, solar and wind only account for around 10% of the nation’s power generation. By comparison, natural gas and coal, which are more efficient and effective for electricity creation, represent about half.
Oil-vember
Will the pain at the pump and higher utility bills matter to voters come Nov. 8? Liberty Nation’s Leesa K. Donner reported that polls show 38% of Americans listed the economy as their top priority. What’s more, 48% trust the Republicans more than the Democrats (37%) on the issue. This is a notable gap, but the only poll that matters, as the old trope goes, is the one on Election Day. President Biden is utilizing a broad array of options to help lower energy costs by using a pen, a phone, and the trifecta of power in Washington. It is clearly not enough. Households may realize this, and, surprisingly, the GOP might succeed in this area because the solution to $4 gasoline, $5 diesel, $100 oil, and $7 natural gas is simple: drill, baby, drill.
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