Americans are paying the most expensive Labor Day weekend gasoline prices since 2014 amid constrained stock levels and high benchmark crude oil prices. The end of the U.S. driving season comes just a few days after OPEC+ ignored the Biden Administration's call for higher-than-planned increases in the alliance's oil production in order to ease high gasoline prices and continue supporting the economic recovery.
"President Biden has made clear that he wants Americans to have access to affordable and reliable energy, including at the pump," National Security Advisor Jake Sullivan said last month, noting that the OPEC+ plan to ease the cuts by 400,000 bpd each month "is simply not enough."
OPEC+, however, signaled this week that the planned monthly increases are just enough to meet the accelerating recovery despite concerns about COVID variants surging in many economies.
One of the shortest—and most uneventful—meetings of the group in recent months noted that "while the effects of the COVID-19 pandemic continue to cast some uncertainty, market fundamentals have strengthened and OECD stocks continue to fall as the recovery accelerates."
OPEC+ left its production cuts easing plan unchanged. The White House welcomed the group's decision.
"We're glad that OPEC is continuing gradual increases in oil production, just like they agreed to increase production in July," a White House spokesperson said, as carried by Reuters, adding that the U.S. continues to engage with OPEC+ on the importance of "doing more to support the recovery."
Yet, average U.S. gasoline prices at $3.183 a gallon as of September 2 were nearly a dollar higher than last year's average price at this time, $2.234.
The Biden Administration, like all other U.S. Administrations before that, fears high gasoline prices, which impact consumers' purchasing power. Those consumers are also voters, who could easily punish an administration with an emotional vote as early as in next year's mid-term elections, in which the Democrats have slim majorities in Congress to defend.
U.S. gasoline prices generally do not depend on who's the president, but President Biden has drawn criticism for his policies aiming to stop oil and gas leasing on federal land and in federal waters as part of a focus on renewable energy and electric vehicles.
Therefore, the call on OPEC+ to boost production more than planned was seen by Republicans and the oil lobby as a hypocritical betrayal of America's economy and oil industry.
Progressives and environmentalists weren't happy with the plea to OPEC+, either, albeit for different reasons.
"Biden can't be the climate leader he thinks he is if he's lobbying oil states to produce more fossil fuels," campaign director Deirdre Shelly at progressive environmentalist group Sunrise Movement said, as carried by The Hill.
"We must ask Biden, what are your real priorities?"
The Administration's priorities continue to be the greening of the U.S. power grid, making 50 percent of all new vehicles sold in the United States in 2030 zero-emission vehicles, and boosting wind and solar power installations.
Those longer-term priorities, however, clash with the short-term necessity of alleviating prices at the pump for American consumers/voters.
The Biden Administration's plea to OPEC+ also highlights a key aspect of the longed-for energy transition—it does not and will not happen overnight.
Since EV sales are still less than 3 percent of all U.S. car sales, and EV charging networks outside the big cities are insufficient, consumers (read voters) will care much more about the price of gasoline and its effect on personal finances than how America would achieve net-zero emissions by 2050.
High gasoline prices could also endanger the Administration's efforts to continue pursuing its ambitious green energy policies, some analysts say.
"To have political support to put in place these policies, you can't have gasoline prices go nuts," Bob McNally, president of Rapidan Energy Group and former top international and domestic energy adviser on the White House staff from 2001 to 2003, told Washington Examiner's Josh Siegel last month.
If the Biden Administration wants to reconcile its climate agenda with the need to keep gasoline and energy prices affordable, it could gain more political and consumer/voter support with policies encouraging—or at least not burdening further—the U.S. oil and gas industry, instead of asking Saudi Arabia and Russia to come to the rescue.
By Tsvetana Paraskova for Oilprice.com
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