Biden Has ‘Only Bad Options’ for Bringing Down Oil Prices

HOUSTON — When President Biden meets Crown Prince Mohammed bin Salman in Saudi Arabia, he follows in the footsteps of a president like Jimmy Carter who flew to Tehran in 1977 to exchange a toast with Iran’s Shah on New Year’s Eve.

Like the prince, the Shah was an unelected monarch whose human rights records were compromised. However, Mr. Carter was obliged to celebrate with him for cheaper petrol and a safer oil supply, which is a major concern for the people of his hometown.

As Carter and other presidents have learned, Biden is working to reduce the cost of pumps, especially when Russia, one of the world’s largest energy producers, launches a provocative war with a small neighbor. I have few valuable tools. The oil supply needed by Western nations during Carter’s day was threatened by the Middle East revolution.

During the 2020 campaign, Biden promised to turn Saudi Arabia into a “palia” for the assassination of prominent dissident Jamal Khashoggi. But officials said last week he plans to visit the kingdom this summer. It was just the latest sign that oil regained geopolitical center.

Only a few years ago, many Washington lawmakers and Texas oil and gas executives turned their backs on the energy boom that turned the United States into a net exporter of oil and petroleum products, making them energy-independent. The results now look illusionary as prices are rising.

The United States is the world’s largest producer of oil and natural gas, but accounts for only about 12 percent of the world’s oil supply. The price of oil, the main cost of gasoline, can still rise or fall, depending on events around the world. And no matter how powerful or capable, the president cannot do much to control it.

These facts are a cold comfort for Americans who have discovered that stopping at a gas station can cost much more than just a year ago and can easily cost $ 100. As fuel prices rise, consumers may demand action and oppose the president, who does not want or appears unable to lower the president.

The president is always looking forward to the next election, when his work and party power are at stake, begging domestic and foreign oil producers to drill and pump more oil faster. You can feel that it is impossible not to do or beg.

“The president has to give it a try,” said Bill Richardson, Secretary of Energy for the Clinton administration. “Unfortunately, there are only bad options, and alternative options are probably worse than asking Saudi Arabia to increase production.”

Two other oil-producing countries that have the potential to increase production, Iran and Venezuela, are US adversaries whose western sanctions have been significantly cut off from the global market. For Mr Biden, it is politically dangerous to make a deal with his leader without making major concessions on issues such as pyknosis and democratic reform.

Energy experts said that even Saudi Arabia is widely believed to have the most reserve production capacity ready to use, but it cannot immediately reduce prices on its own. This is because Russia’s production is declining and could fall further as European countries reduce their purchases from the country.

“The president may be the most powerful person in the US government, but they can’t pump oil prices,” said Chase Untermeyer, US ambassador to Qatar under the George W. Bush administration. “Even if prices go down for reasons he can’t control, President Biden probably won’t get much credit for it.”

Some Republican lawmakers and oil executives said that Biden would increase domestic oil and gas production by opening more federal land and water to oil drilling in places like Alaska and the Gulf of Mexico. He insisted that he could do a lot. He was also able to relax restrictions on pipeline construction, allowing Canadian producers to send more oil to the south.

But even these initiatives, which environmentalists and many Democrats oppose to delay the fight against climate change, can take months to start production of new wells and years to build pipelines. Being sexual, it has little direct impact.

Jason Bordoff, director of the Global Energy Center at Columbia University, said: He was an adviser to policy and President Barack Obama. “And it will have significant political, social and environmental downsides.”

Mr Biden and his aides have worked hard to pump more oil to US oil executives, but with little success. Most oil companies are reluctant to increase production because they fear that more drilling will lead to excessive price drops. They remember when oil prices fell below zero at the start of the pandemic. Large companies such as ExxonMobil, Chevron, BP and Shell have been heavily obsessed with the investment budget set last year before Russia invaded Ukraine.

Energy traders are confident that supplies will remain limited, so prices in the U.S. and global oil benchmarks have risen after news reports that Mr Biden is planning a trip to Saudi Arabia. .. According to AAA, oil prices on Friday rose to about $ 120 a barrel, and the national average price for a gallon of regular gasoline on Sunday was $ 4.85, more than $ 20 cents higher than a week ago and $ 1.80 higher than a year ago. rice field.

Another Biden administration’s effort, which appears to be leveling off, is the decision to release one million barrels of oil daily from its strategic petroleum reserves. Analysts said it was difficult to identify the impact of these releases.

The Biden team is also in talks with Venezuela and Iran, but progress has stopped.

The administration recently renewed its license to partially exempt chevron from US sanctions aimed at destroying Venezuela’s oil industry. In March, three executives visited Caracas and pulled President Nicolas Maduro into negotiations with opponents.

As another mitigation of sanctions, Repsol of Spain and Eni of Italy could start shipping small amounts of oil from Venezuela to Europe within a few weeks, Reuters reported on Sunday.

Once a major exporter to the United States, Venezuela has the largest oil reserves in the world. However, the oil industry is so dysfunctional that it can take months or years for a country to significantly increase exports.

Biden, along with Iran, is trying to revive the 2015 nuclear deal that President Donald J. Trump withdrew. The agreement will allow Iran to export more than 500,000 barrels of oil per day, mitigating the global supply crisis and supplementing some of the barrels Russia does not sell. Iran has approximately 100 million barrels of storage and can be released soon.

However, nuclear negotiations seem to be in disagreement and are not expected to bear fruit soon.

Of course, dealings with Venezuela or Iran could be Biden’s political responsibility, as most Republicans and even some Democrats oppose compromises with leaders in these countries. I have.

Ben Kayhill, an energy expert at the Center for Strategic and International Studies in Washington, said one of the difficulties in meeting with Iran was that “no president wants to remove the Iranian Revolutionary Guard Corps from the terrorist list.” Said. “The president is wary of any move that appears to be handing victory over American enemies at their political sacrifice.”

Foreign policy experts say that the energy crisis during the war is inevitable, but it always seems to surprise the general government, which is not preparing for the next crisis. Obama’s adviser, Bordoff, suggested that the country invest more in electric vehicles and trucks and encourage more efficiency and savings to reduce energy demand.

“The history of the oil crisis is that when a crisis strikes, politicians run around like a decapitated chicken and think about what they can do to provide consumers with immediate relief. It shows, “said Mr. Boldov. US leaders added that the country needs to be better prepared for “the next inevitable oil crisis.”