Updates for the oil and gas industry
Sign up to myFT Daily Digest to be the first to know about oil and gas industry news.
The White House has called on OPEC to ramp up oil production in a bid to curb high gasoline prices, which Biden officials say “risks damaging the ongoing global recovery.”
Jake Sullivan, the national security adviser, said in a statement Wednesday that while OPec and its allies had “recently agreed to production increases,” the additional production “would not fully offset the previous production cuts imposed by OPEC+ during the pandemic well into 2022.” . ”.
“At a critical juncture in the global recovery, this just isn’t enough,” added Sullivan, who said the US “entered into discussions with relevant OPEC+ members about the importance of competitive markets in pricing”.
Gasoline prices in the US have risen along with rising demand for motor fuel as the economy reopened after the corona-related lockdowns. Gasoline sold for an average of $3.19 a gallon, up nearly 50 percent from the same time last year, according to the AAA, an automotive association.
The highest recorded national average price was over $4.10 per gallon in 2008.
International oil prices fell about 1 percent after the announcement, but recovered and were stable in Asian trade on Thursday. Brent oil traded at just under $71.50 a barrel and West Texas Intermediate, the US benchmark, traded at about $69.30.
The White House intervention marked an abrupt shift in policy from Donald Trump during last year’s oil market crash, when the former president pressured Opec to raise prices in a bid to help U.S. shale companies experience one of the worst market dips in the world. endure for decades.
But the latest pivot has been a return to the average for US governments — including Trump’s — which have often called for the Opec cartel to pump more oil to lower prices.
George HW Bush, Bill Clinton and George W Bush all urged the producer group to increase supplies during periods of rising gasoline prices or US military interventions in the Middle East.
Trump, who accused Opec of “manipulating” oil prices and robbing Americans, struck a deal with Saudi Arabia in 2018 to increase oil production, just before withdrawing the US from the Iran nuclear deal and imposing sanctions. to its oil industry. He then leaned on Opec to implement the deepest budget cuts ever in 2020.
OPEC’s production cuts and vaccine breakthroughs at the end of last year helped oil prices soar to more than $70 a barrel, although analysts grew increasingly concerned that a resurgence of the coronavirus could hamper global demand.
The Opec+ group, which includes the United Arab Emirates, Saudi Arabia, Russia, Iraq and Kuwait, agreed last month to increase production by about 2 million barrels per day, or more than 2 percent of global appetite, until the end 2021 and all the inventories it reduced last year by the end of 2022.
Opec declined to comment on Sullivan’s statement on Wednesday. Asked if Riyadh had responded to the request, White House spokesman Jen Psaki said: “This is not necessarily intended as an immediate response; it is intended as a long-term commitment.”
The White House also released a letter Wednesday from National Economic Council director Brian Deese to Federal Trade Commission chair Lina Khan calling on the FTC to address any collusion in the US gasoline market.
Energy is the world’s indispensable business and Energy Source is the newsletter. Every Tuesday and Thursday, straight to your inbox, Energy Source brings you essential news, cutting-edge analysis and insider intelligence. Register here.
Deese urged the agency to “consider using all of its available tools to monitor the U.S. gasoline market and address any illegal behavior that could contribute to price hikes for consumers at the pump.”
Joe Biden told reporters he was concerned that lower crude oil prices were not being passed on to consumers. “Recently we’ve seen the price oil companies pay for a barrel of oil start to fall, but the cost of gas at the pump for more Americans hasn’t gone down,” he said. “You don’t expect that in a competitive market.”
Inflation has become a powerful political problem, with Republicans accusing Democrats of inflating prices for consumers, including at the pump, through reckless federal spending. Senate Democrats this week approved a $1 trillion infrastructure package and a $3.5 trillion budget resolution.
The latest data from the Bureau of Labor Statistics, released Wednesday, showed that the rapid pace of US consumer price increases remained at its highest level in 13 years in July, with the CPI rising 5.4 last month. percent increased compared to a year ago.
The oil industry and its allies criticized Biden’s request as inconsistent with his actions to curtail domestic fossil fuel production, such as an attempt to pause federal oil and gas lease sales.
“Begging the Saudis to increase production while the White House is tying a hand behind the backs of American energy companies is pathetic and shameful,” said John Cornyn, a Republican senator from Texas.
Additional reporting by Hudson Lockett in Hong Kong