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Biden has ‘just bad options’ to bring down oil prices

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

Like the prince, the Shah was a non-elected king with a tainted human rights record. But Mr. Carter was obliged to celebrate with them the cause of great concern for the people at home: cheap gasoline and safe oil supplies.

As Mr Carter and other presidents have learned, Mr Biden has some valuable tools to reduce costs at the pump, especially when Russia, one of the world’s largest energy producers, launches an unprovoked war against small neighbors. In Mr. Carter’s time, the oil supplies needed by Western countries were threatened by revolutions in the Middle East.

During the 2020 campaign, Mr. Biden has vowed to turn Saudi Arabia into a “pariah” for the assassination of prominent dissident Jamal Qasogi. But officials said last week that they plan to visit the state this summer. This is the latest sign that oil has regained its center in geopolitics.

Just a few years ago, many lawmakers in Washington and Texas oil and gas executives were patting their backs for an energy boom that turned the United States into a net exporter of oil and petroleum products and made it more energy independent. With the price rise, that achievement now seems illusory.

The United States is the world’s largest producer of oil and natural gas, but it accounts for just 12 percent of global petroleum supply. The price of oil, the major price of gasoline, may rise or fall based on events around the world. And no president, no matter how powerful or capable, can do much to control it.

For those Americans who find that parking at a gas station can easily cost a hundred dollars, those things are a cold comfort, more than a year ago. When fuel prices rise, consumers want action and can turn against a president who is unwilling or unable to bring them back.

A president who always looks forward to the next election when his jobs or his party’s power is at stake, may find it impossible to ask or appeal to foreign and domestic oil producers to drill more and pump faster.

“The president must try,” said Bill Richardson, the energy secretary in the Clinton administration. “Unfortunately, there are only bad options. And any alternative options are probably worse than asking the Saudis to increase production.

The other two oil-producing countries that could increase production – Iran and Venezuela – are the US opponents whose Western sanctions have largely cut off the global market. It is politically dangerous for Mr Biden to strike any deal with his leaders without making major concessions on matters such as nuclear enrichment and democratic reform.

Fuel experts say Saudi Arabia, which is widely regarded as having a very high spare capacity, is not ready to use. This is because Russian production is slipping and European countries can decline even further as they reduce their purchases from the country.

“The president may be the most powerful person in the American government, but he cannot control the price of oil at the pump,” said Chase Untermeyer, US ambassador to Qatar in the George W. Bush administration. “Even if prices are low for reasons of his control, President Biden probably won’t get much credit for it.”

Some Republican lawmakers and oil executives have argued that Mr. Biden could do more to boost domestic oil and gas production by opening up more federal land and water to drill in places like Alaska and the Gulf of Mexico. Canadian manufacturers may ease regulations on pipeline construction to send more oil to the south.

But those initiatives – which environmentalists and many Democrats oppose because they reverse climate change efforts – because new oil wells can take months to begin production and take years to build pipelines.

“If the administration accepts every aspect of the industry’s wish list, it will have a modest effect on today’s prices because it will most likely be about production in the future,” said Jason Bordoff, director of the Center for Global Energy at Columbia University. Policy and President Barack Obama was a consultant. “And it comes with significant disadvantages politically, socially and environmentally.”

Mr. Biden and his aides have jailed US oil executives for pumping more oil with little success. Most oil companies are hesitant to expand production because now they fear that too much drilling will lead to gluttony, which will bring down prices. He remembers when oil prices fell below zero at the beginning of the epidemic. Large companies such as ExxonMobil, Chevron, BP and Shell largely stuck to the investment budget they set last year before Russia invaded Ukraine.

Fuel traders are very convinced that prices for US and global oil standards have soared after the news that Mr Biden was planning to travel to Saudi Arabia. Oil prices rose to about $ 120 a barrel on Friday, and according to AAA, the national average price for a gallon of regular gasoline was $ 4.85 on Sunday, 20 cents more than a week ago and $ 1.80 a year ago.

The decision to release one million barrels of oil every day from the Strategic Petroleum Reserve is another biden administration effort that seems to be flattening. Analysts say it is difficult to identify any impact from those releases.

The Biden team is in talks with Venezuela and Iran, but progress has been halted.

The administration has recently renewed its license to partially exempt Chevron from US sanctions aimed at weakening Venezuela’s oil industry. In March, three administration officials traveled to Caracas to meet President Nicolas Maduro with political opposition.

In another softening of sanctions, Repsol of Spain and Italy’s Eni may begin shipping small amounts of oil from Venezuela to Europe in a few weeks, Reuters reported on Sunday.

Venezuela, once the leading exporter to the United States, has one of the world’s largest petroleum reserves. But its oil industry is so fragile that it could take months or even years for the country to increase exports significantly.

With Iran, President Donald J. Biden is trying to revive Trump’s 2015 nuclear deal. An agreement could free Iran to export more than 500,000 barrels of oil per day, ease the global supply crisis, and offset some barrels that Russia does not sell. Iran also has approximately 100 million barrels in storage, which can be released quickly.

But the nuclear talks seem to be steeped in disagreements and are not expected to yield any time soon.

Of course, any deal with Venezuela or Iran could become a political liability to Mr. Biden himself, as most Republicans and some Democrats oppose compromises with the leaders of those countries.

“No president wants to remove Iran’s revolutionary guards from the list of terrorists,” Ben Cahill, an energy specialist at the Center for Strategic and International Studies in Washington, said of a sticking point in talks with Iran. “The president is vigilant of any moves that seem to be making political sacrifices and handing the victory over to American opponents.”

Foreign energy experts say that although power crises are inevitable during the war, they always surprise the regime that is usually unprepared for the next crisis. Mr. Bordoff, an Obama adviser, advised the country to invest more in electric cars and trucks and promote greater efficiency and conservation with less energy demand.

“The history of the oil crisis shows that in times of crisis, politicians run their heads like shaved hens, trying to figure out what they can do to provide immediate relief to consumers,” Mr Bordoff said. US leaders, he said, need to better prepare the country for “the next time the inevitable oil crisis comes.”

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