U.S. Mostly a Spectator While Others Address Supply-Demand Pinch
Posted July 8, 2021
The Biden administration says it is keeping a close eye on the OPEC+ talks on crude oil production because, as White House Press Secretary Jen Psaki said, it wants “Americans to have access to affordable and reliable energy at the pump.”
Unfortunately, the U.S. is mostly a spectator as OPEC+ debates crude oil supply, which continues to be outpaced by demand, putting upward pressure on crude costs. Because the cost of crude is the biggest factor in gasoline prices, U.S. pump prices have reflected this mismatch between demand and supply. Asked what President Biden is doing to help regular Americans, Psaki said:
“[O]ur team is constantly monitoring gas prices and directly communicating with OPEC parties to get to a deal and allow for proposed production increases to move forward. … I think there sometimes is a misunderstanding of what causes gas prices to increase – to convey to the American people that we are working on it, and certainly the supply availability of oil has a huge impact.”
We’ve already explained the basic factors affecting gasoline prices. The difficulty for the administration is that it seems the White House is more focused on asking OPEC+ to increase crude oil supply than supporting U.S. and Canadian oil production.
Since Day 1 in office the administration has made policy choices – including pausing new federal oil and natural gas leasing and canceling the Keystone XL pipeline – which could impact North American production that historically put downward pressure on crude oil costs and ultimately benefited consumers. A Wall Street Journal editorial:
President Biden’s explicit policy goal is to reduce U.S. oil and gas production, limiting the global supply of fossil fuels in the name of fighting climate change. Yet his Administration is now imploring the OPEC oil cartel to pump more oil so U.S. gasoline prices don’t rise more than they already have on Mr. Biden’s watch. … [R]educing U.S. production means reduced global supply even as demand surges. This means more pricing leverage for OPEC and Russia – and for Iran if Mr. Biden lets Tehran escape sanctions on its oil exports as part of a renewed nuclear deal. So Russia and Iran will benefit from Mr. Biden’s fossil-fuel disarmament while Americans pay more for energy.
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.