Wednesday, September 28, 2022

White House calls on oil cartel OPEC to boost production as gas prices rise

WASHINGTON – Concerned over rising gas prices, the Biden administration has called on oil producing countries, including Saudi Arabia and Russia, to increase their oil production. Crude oil prices have risen in recent months on a strong recovery in global demand and a fall in US supplies.

National Security Advisor Jake Sullivan issued a statement on August 11 calling on the Organization of the Petroleum Exporting Countries and Russia (OPEC+) to address rising gasoline prices.

“High gasoline costs, if left unchecked, could hurt the ongoing global recovery,” Sullivan warned.

In July, OPEC+ ministers agreed to boost oil production by 0.4 million barrels per day (BPD) on monthly basis from August till the end of the year. The decision comes amid a surge in global demand.

But this growth is not enough to ensure “reliable and stable global energy markets,” according to the White House.

“OPEC+ has recently agreed to increase production, but these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic until 2022,” Sullivan said in the statement.

“At a critical moment in global reform, it is simply not enough.”

OPEC+ last year cut production by a record 10 million bpd due to a lack of demand due to the pandemic. In July the cut was reduced to about 5.8 million bpd.

Gas prices in the United States increased by more than 40 percent compared to last year. The national average gas price was $3.185 per gallon on 11 august

“President Biden has made it clear that he wants Americans to have access to affordable and reliable energy, including pumps,” Sullivan said. “We are engaging with relevant OPEC+ members on the importance of competitive markets in setting prices.”

West Texas Intermediate (WTI) crude was priced at $68.48 on August 10, up over 40 per cent this year and Brent crude was trading at $70.77, up 36 per cent.

“Oh, blame OPEC,” Phil Flynn, senior energy analyst at Price Future Group, wrote in a report.

“It is very hypocritical to blame OPEC when it has been the fault of the Biden administration that we are too dependent on OPEC oil,” he said.

It is unclear whether OPEC will respond to calls by the Biden administration and increase its output.

“Unless COVID shuts down the global economy, we’re still going to have very little supplies at the end of this year,” Flynn said.

Oil industry experts have been critical of the Biden administration’s climate policies, claiming these policies are making the country more dependent on foreign oil producers.

This year, Russian oil imports into the United States hit a record despite strained relations between Washington and Moscow.

Crude oil and petroleum products imports from Russia reached 26.71 million barrels in May, according to the Energy Information Administration (EIA), the highest level ever.

US crude stocks continue to fall and oil exports are falling, raising concerns over the price of WTI. According to analysts, US oil production is lower than last year, and a large part of the void is being filled by Russia.

US production averaged 11.2 million bpd in July, down from about 13 million before the pandemic EIA data is shown.

The White House also called on US regulators to monitor prices at the pump.

In a letter sent to Federal Trade Commission Chair Lena Khan, the White House called on regulators to “address any illegal conduct that could contribute to price increases.”

“During this summer’s driving season, there has been a gap between oil prices and the price of gasoline at the pump,” Brian Deese, director of the National Economic Council, said in the letter.

“While many factors can affect gas prices, the president wants to make sure that consumers are not overpaying for gas because of anti-competitive or other illegal practices.”

Amell Akan is a White House economic policy reporter in Washington, DC, having previously worked in the financial sector as an investment banker at JPMorgan and an advisor at PwC. He graduated from Georgetown University with a master’s degree in business administration.

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This News Originally From – The Epoch Times

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