Don’t expect your gas prices to decrease anytime soon.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies reportedly plan to reject a petition from the Biden administration to pump more oil into the world market.
OPEC+, a coalition of oil-rich countries led by Russia and Saudi Arabia, believes that there is no need for the cartel to bump up its schedule for planned increases in oil output, according to Reuters. Biden requested last week that OPEC+ countries increase output to aid the global economic recovery.
One of the four sources, speaking on condition of anonymity, said there was no need to release extra oil more quickly, while another said there was no concern that the planned schedule of increases would leave any demand unmet.
Two other OPEC+ sources said the latest data from OPEC and from the West’s energy watchdog – the International Energy Agency (IEA) – also indicated there was no need for extra oil.
OPEC+ is an international cartel of major oil producers which includes the 13-nation OPEC and 10 other countries. The cartel came together in 2016 when OPEC, led by Saudi Arabia, struck an agreement with a group of non-OPEC countries led by Russia to limit oil production with the goal of influencing the global price of oil.
National security advisor Jake Sullivan said in a statement released by the White House last week that OPEC+ should increase its oil output to help drive down prices to help pull the global economy out of a recession caused by widespread government lockdowns and the spread of COVID-19. Sullivan said:
Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery. The price of crude oil has been higher than it was at the end of 2019, before the onset of the pandemic.
While OPEC+ recently agreed to production increases, these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022. At a critical moment in the global recovery, this is simply not enough.
The Biden administration’s petition to Russia and Saudi Arabia comes as the White House has pursued an anti-fossil fuel agenda in the United States, shutting down major oil and gas industry projects and pushing greater investment in green energy.
As one of his first acts as president, Biden revoked a permit from the Keystone XL Pipeline project allowing the planned pipeline to cross over from Canada into the United States. Biden’s action effectively killed the pipeline, costing thousands of jobs. If completed, the pipeline would have shipped over 800,000 barrels of oil a day from Alberta, Canada, to refineries on the Gulf Coast of Texas.
In June, Biden suspended oil and gas leases in the Arctic National Wildlife Refuge’s 1002 area, a massive oil preserve located in Alaska. Former President Donald Trump finalized a plan to open the area to oil development in 2020 after decades of Alaskan officials lobbying the federal government.
Author: Elizabeth Tierney