The Biden administration issued a statement pressuring OPEC to increase oil production. So, it looks like messaging from U.S. officials is a little mixed right now. There’s a conflict here, considering Biden’s rhetoric on climate and on putting electric cars on the road.
The statement claims that OPEC needs to do more to support the “global recovery” from the ongoing pandemic. Gas prices going up are a threat to that recovery, but I would hesitate to call whatever we’re doing now a recovery in the first place, because that implies the pandemic is behind us. In any case, gas prices are higher now than they’ve been the last few months, as the Financial Times details:
US petrol prices have risen alongside soaring motor fuel demand as the American economy has reopened following coronavirus-related lockdowns. Petrol is selling for an average of $3.19 a gallon across the country, up almost 50 per cent from the same time last year, according to the AAA, an automobile association. The highest recorded national average price was more than $4.10 a gallon, in 2008.
The reason that gas prices have gone up is that global oil production is down, as a result of the pandemic. OPEC+ slashed its production by millions of barrels per day, according to a report from Reuters, due to the downturn in oil demand during the lockdowns:
OPEC+ had implemented a record output cut of 10 million bpd, about 10% of world demand, as global energy demand slumped during the pandemic, but has been gradually raising output since. As of July, the cut had been eased to about 5.8 million bpd.
Last month, the member countries of the organization met and agreed to start increasing production. From Reuters:
At a meeting held in July, OPEC+ agreed to boost output by 400,000 bpd a month starting in August until the rest of the 5.8 million bpd cut is phased out. OPEC+ is scheduled to hold another meeting on Sept. 1 to review the situation.
But, apparently, the pace OPEC+ set for increasing production is not enough for the Biden administration, which said in their statement that the increased production is taking too long:
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.
Again, this calls into question the administration’s plans to fight climate change. We can’t successfully transition away from fossil fuels if gas prices going up will prompt the White House to give the go-ahead to drill some more. And I get it.
This is all giving me flashbacks to the recession when gas cost over four bucks a gallon. On the one hand, I worry that will happen again. On the other hand, I understand that we’ve been doing bad shit to the environment for too long, and it’s troubling that our answer to higher gas costs in the so-called developed world is to literally go back to that well.
