Prof. ST Hsieh
Director, US-China Energy Industry Forum
October 6, 2022
Quote: President Biden and the White House are taking on big oil companies, the Organization of the Petroleum Exporting Countries (OPEC), Russia and anyone else who might be to blame for high gas prices in the U.S.
“Against whoever” is not a productive response to any challenge. Biden’s reaction this time is the same to any previous major challenge “all options are on the table!” It may sound like a tough response, but it also means that “Biden has not anticipated such a development and there is no actionable plan now.” Because, Biden also said that “he is disappointed by OPEC+’s decision to slash production.”
There are also some mixed messages from Biden as usual. First of all, OPEC+’s decision directly impacts the global crude oil market. But Biden is clearly focused on US domestic gas price. But global crude oil price is not the only factor that influences US domestic gas price. The US is the largest energy producer in the world and the largest energy consumer too. In terms of US domestic crude oil supply, we export crude oil to the global market. US gas price varies from State to State, it has to do with refinery capacity, location, and pipeline and local environmental protection regulation. As an example, we live in California, and we pay the highest gas price in the US. A major factor is that California has the most stringent clean air regulation in the US. Global crude oil price is not the primary factor here.
Biden’s anger does not draw much attention because he is focused on lowering US gas prices as the US mid-term election is 32 days away. Voters have many fundamental issues with his administration other than high gas prices.
US voters in general are not focused on a single issue. The US mid-term election is a judgement time for any administration’s overall performance half-way of the President’s tenure. For Biden, a major challenge is his failure to provide a comprehensive vision for uniting the nation and moving forward. The US is more divided, and people are frustrated more than before Biden moved into the White House in 2021.
Biden’s foreign policy is not clear and not effective compared to what he has promised. Biden has been tagged as a “preacher” hyping human rights and universal moral values around the world. But his acts have been very inconsistent with his messages. People around the world have lost confidence as well as patience in Biden’s presidency.
Now, Biden announced that he will run for re-election in 2024! It is already a record that an 82-year-old man will run for the highest office in the US. But US voters surely will show him the way out.
The so called “NOPEC” legislation has been on the table for a while, it is nothing new. Obviously, it is not a free ride for the US. Otherwise, it should have been a US law many years ago, such as after the 911 terrorist attack. It is even more challenging now because Russia had joined the OPEC for the new OPEC+. OPEC used to depend on US military protections, so the US has had a lot leverages. After the war in Ukraine, US and Russia are de-facto advisories. Russia has already armed Saudi Arab, any US action against OPEC will only solidify Russian influence over OPEC.
US emergency oil supply shrinks to 40-year low as Biden keeps tapping reserve
Megan Henney Thu, October 6, 2022 at 1:52 PM
President Biden is once again tapping into the country’s emergency stockpile of oil as the White House tries to prevent gasoline prices from spiking again, reducing the petroleum reserve to its lowest level in four decades.
The nation’s Strategic Petroleum Reserve had 416.4 million barrels in the week ended Sept. 30 – the lowest level since 1984 – after the Biden administration released another 6.2 million barrels, according to Department of Energy data.
Biden had tapped the emergency oil stash four times over the past year in hopes of lowering gas prices, including in March, when he ordered a record-setting 180 million barrels of oil released from the reserve – 1 million barrels per day over six months.
With the releases scheduled to finish this month, the White House said on Wednesday that it would release 10 million additional barrels in November.
The decision to further drain the oil reserves came hours after a coalition of oil-producing countries led by Russia and Saudi Arabia – known as OPEC+ – announced it would slash oil production by 2 million barrels, the first major cut in two years. The move – which came despite lobbying from U.S. officials to do otherwise – threatens to raise oil prices at a time when the world is already combating record-high inflation.
The White House condemned the production cuts, which threaten to push gas prices higher with midterm elections just one month away.
Proponents of releasing barrels from the emergency stockpile say that doing so increases oil supplies and reduces prices at the pump, while also generating billions in revenue for the federal government. But critics say that releasing emergency supplies is a short-term fix and does not increase the country’s oil production capabilities.
The Biden administration announced plans earlier this year to replenish the oil reserve with a call for bids to repurchase 60 million barrels of oil – roughly one-third of the emergency supply released by the president in March.
US Tapping Strategic Oil Plays Into OPEC’s Hands, Blanch Warns
Jonathan Ferro and Joe Carroll Thu, October 6, 2022 at 7:22 AM
US President Joe Biden’s use of the Strategic Petroleum Reserve to blunt surging energy prices threatens to inflate OPEC’s sway over global oil markets, said Bank of America Corp.’s Francisco Blanch.
In the wake of the OPEC+ alliance’s decision to slash production limits by 2 million barrels a day, the White House has few options remaining to head off higher prices and their impact on consumers, Blanch, the bank’s head of global commodities and derivatives research, told Bloomberg Television on Thursday.
One of those options — selling or loaning more crude from the strategic reserve — may prove counterproductive for the US in the long run, he warned.
“I don’t think it’s a great idea given the incredibly tense geopolitical world we live in today,” Blanch said. By depleting the reserve, the US puts itself “more in the hands of OPEC+,” and “eventually you’re just ceding more and more market control.”
U.S. bill pressuring OPEC+ after oil production cut gains momentum
Timothy Gardner Thu, October 6, 2022 at 2:40 PM
WASHINGTON (Reuters) -Top U.S. senators from both parties on Thursday gave momentum to a bill pressuring OPEC+ after the group this week announced a deep cut in oil production despite lobbying by President Joe Biden’s administration to keep the taps open.
The so-called No Oil Producing and Exporting Cartels (NOPEC) bill gained interest after OPEC+, a group led by Saudi Arabia and Russia, decided on Wednesday to cut oil production by 2 million barrels per day. OPEC+ made the move despite tight oil global supplies worsened by Russia’s war in Ukraine.
NOPEC easily passed the Senate Judiciary Committee in May. It passed a House committee last year.
If passed by both chambers of Congress and signed by President Joe Biden, NOPEC would change U.S. antitrust law to revoke the sovereign immunity that has protected OPEC+ members and their national oil companies from lawsuits.
If Washington were to sue other countries for collusion, the United States could face criticism for its attempts to manipulate markets by, for example, its release of record amounts of oil from emergency reserves between May and November.
U.S. reviewing ‘response options’ on Saudi relations after OPEC+ cuts, Blinken says