Grid Brief: White House Humiliates Itself With OPEC+
My friend Emmet Penney runs an excellent daily energy newsletter called Grid Brief. I highly encourage to you subscribe to it by clicking here. The piece below is from the October 6, 2022 edition.
Biden offered to buy 200 million barrels of OPEC+ oil at $80 a pop to refill the Strategic Petroleum Reserve in hopes of persuading the cartel to keep up its production.
In response, a panel of OPEC+’s ministers recommended cutting production by 2 million barrels per day. Such a cut, “shared pro rata, would require just eight countries to reduce actual production and would deliver a real cut of only 880,000 barrels a day, according to Bloomberg calculations based on September output figures,” Bloomberg reports. “It would still be the biggest OPEC+ production cut since 2020, a move that risks adding another shock to a global economy that is already battling inflation driven by high energy costs.”
This is a humiliating blow to the Biden White House, as it has tried unsuccessfully to get the cartel to increase its output twice this year. It also reveals the administration’s line on the fossil fuel industry as reckless and spasmodic.
“[I]n the spring of 2020, [Democrats] killed a proposal by President Donald Trump to replenish the SPR with oil from American producers, not OPEC+ ones, and at a price of $24 a barrel, not the $80 a barrel that the Biden White House promised to OPEC+. At the time, Trump was seeking to stabilize the American oil industry after the Covid-19 pandemic massively reduced oil demand,” reports Michael Shellenberger. “Trump and Congressional Republicans proposed spending $3 billion to fill the SPR. Senate Democratic Leader Chuck Schumer successfully defeated the proposal and later bragged that his party had blocked a ‘bailout for big oil.'”
Rather than expanding American oil and gas production, the Biden administration has throttled lease auctions, talked a big game about “ending the fossil fuel industry,” and threatened the industry with all sorts of attacks. And now it seems the administration will drain the SPR to keep prices low until the midterms.