OPEC Ignores Biden Bluster, Votes to Cut Oil Production, Increase Prices

Three months after President Biden flew to Jeddah and pleaded with Saudi Arabian leaders to boost oil production in an effort to bring down American gas prices, a Saudi-led coalition of oil producers known as OPEC+ on Wednesday announced that they would do the opposite next month — cut production in an effort to drive prices up.The 23-nation coalition, which includes Russia, said following a meeting in Vienna that they would cut production by 2 million barrels a day beginning next month. The cut is far more than what analysts had been expecting and immediately caused a spike in the price of benchmark Brent crude oil on international markets.Before the vote, the Biden administration had been feverishly lobbying allies in the Middle East to try and avert a production cut. According to CNN, talking points shared among officials at the White House and Treasury Department described the cuts as a “total disaster” and a “hostile act” by Saudi Arabia and its allies.Any increase in oil prices would be a boon to Russia, which has continued selling on international markets in order to finance its ongoing war in Ukraine. Rising crude prices could also put further inflationary pressures on the American economy.In a statement released after the decision, the White House said Mr. Biden was disappointed by the cartel’s “shortsighted” decision.“At a time when maintaining a global supply of energy is of paramount importance, this decision will have the most negative impact on lower- and middle-income countries that are already reeling from elevated energy prices,” the statement said.The number two Republican in the House, Representative Steve Scalise of Louisiana, said Wednesday that Mr. Biden has only himself to blame. Mr. Scalise said on Twitter that the administration “destroyed” America’s oil and gas industry, making us dependent on the cartel again. “Total failure,” Mr. Scalise said. “OPEC is laughing at him.”The timing of the cuts, only a month before midterm elections, could not be worse for the administration. After peaking at alarming levels over the summer — the national average topped $5 a gallon in June — prices declined for a couple months before beginning to climb again in recent weeks.Gas prices in California have risen by 62 cents a gallon in the past week. In Arizona, Nevada, Washington, and Oregon it has climbed by 40 cents during the same period.In its attempts to stem the increases, the Biden administration has taken to attacking oil companies and the record-breaking profits they are raking in at the moment. When ExxonMobil sent a letter last week to the administration rebuffing some of the criticism, Energy Secretary Jennifer Granholm responded with a statement excoriating the company for its profit margins.“This week’s letter from a company that made nearly $200M in profit every single day last quarter, misreads the moment we are in,” Ms. Granholm replied. “The fact is this: Energy companies are making record profits, with refiners and retailers also posting margins that are well above average — while passing the costs on to consumers.”Ms. Granholm and others in the administration failed to note that two years ago, in 2020 at the height of the pandemic, Exxon reported its first annual loss — more than $20 billion — in its history as a public company. The administration also has made no secret of its distaste for fossil fuels and preference for “clean” energy as a means of tackling climate change, intervening to make exploration and development of domestic energy supplies harder and more expensive.In response to the OPEC+ cuts, the White House said Mr. Biden would continue selling oil from the nation’s strategic petroleum reserve, which is now at its lowest level in four decades. Officials also said they would be consulting with Congress about ways to reduce OPEC’s control over energy prices, and has hinted that it may consider bans on fuel exports and other, similar, protectionist measures that oil companies have said would cause more harm than good.“Banning or limiting the export of refined products would likely decrease inventory levels, reduce domestic refining capacity, put upward pressure on consumer fuel prices, and alienate U.S. allies during a time of war,” an oil industry trade group, the American Petroleum Institute, told the administration last week. “For these reasons, we urge the Biden administration to take this option off the table.”The United States exports about 3.5 million barrels a day of fuel, primarily to markets in Latin America.

OPEC Ignores Biden Bluster, Votes to Cut Oil Production, Increase Prices

OPEC Ignores Biden Bluster, Votes to Cut Oil Production, Increase Prices

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