• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 1 hour How Far Have We Really Gotten With Alternative Energy
  • 9 days What fool thought this was a good idea...
  • 9 mins Bad news for e-cars keeps coming
  • 7 days A question...
  • 12 days Why does this keep coming up? (The Renewable Energy Land Rush Could Threaten Food Security)
  • 13 days They pay YOU to TAKE Natural Gas
5 Stocks To Play The AI Power Boom

5 Stocks To Play The AI Power Boom

Goldman Sachs: escalating electricity needs…

Robert Rapier

Robert Rapier

More Info

Premium Content

Here’s How Biden Could Bring Oil Prices Down

  • While President Biden has reached out to Venezuela, Saudi Arabia, and Iran in an attempt to bring down oil prices, there are actors at home he has yet to engage with.
  • The historical tensions between the Democratic party and the U.S. oil industry are well documented, but they need to be put aside with oil prices well above $100.
  • On the demand front, Biden could look for inspiration from the pandemic, when demand fell due to a large portion of the population working from home.

If you have ever wondered what it would be like if a major oil-producing country suddenly went offline, you are getting a preview of that now. I am sometimes asked whether there are any potential scenarios in which crude oil rises to $200 a barrel (bbl) and I typically say “That could happen if war broke out in Saudi Arabia and it took that country’s oil production offline.” Well, that also applies to Russia, which was producing more oil than Saudi Arabia when the 2021 BP Statistical Review of World Energy was released.

To be clear, Russian oil production isn’t being impacted directly by the war. Rather, the oil market is responding to the idea that Russian oil might be boycotted in places like Europe and the U.S. The idea that a substantial chunk of global oil production might go offline is what has rapidly driven oil prices above $100/bbl. In reality, China will gladly buy oil that is rejected by the West. What a boycott really means is that oil flows around the world will shift.

As I documented in Russia Is A Major Supplier Of Oil To The U.S., Russia was the 3rd largest supplier of crude oil and oil products (e.g., gasoline) to the U.S. For the entire year of 2021, the U.S. averaged 670,000 barrels per day (BPD) of imports from Russia (per the Energy Information Administration). That represented 7.9% of total U.S. imports for the year — a significant number given our large appetite for oil.

In response to the potential loss of this oil — as well as oil prices that are rising unabated — the Biden Administration has sent a team to Venezuela to try to improve relations there. They are discussing a trip to Saudi Arabia to try to patch up that relationship as well.

I have another idea regarding a relationship they should work on patching. It is true that the U.S. oil industry is quite conservative. It’s also true that Democratic administrations tend to be hostile toward the U.S. oil and gas industry. I don’t know which came first, the conservatism of the oil industry, or the hostility of Democrats, but that dynamic has existed for a long time.

Related: Some Much Needed Substance On The Russian Oil Debate

But I can’t get over the terrible optics of having a hostile relationship with the U.S. oil industry while reaching out to Venezuela and Saudi Arabia in the hope that they can provide us with more oil.

I think one of the first things the Biden Administration should have done is convene a high-profile summit of U.S. oil producers. Invite the CEOs of ExxonMobil, Chevron, ConocoPhillips, EOG Resources — all of the major players to the White House. Ask them what needs to be done to get U.S. oil production back to pre-pandemic levels.

Although U.S. oil production has risen over the past year — and is now 2 million BPD above the pandemic lows — it is still 1 million BPD below the pre-pandemic levels. So, before making concessions to Venezuela or Saudi Arabia, isn’t it worth gaining a better understanding of what could be done in the U.S. to boost production? U.S. producers are certainly highly incentivized to produce at these levels, but the Biden Administration should take the time to listen and understand what other factors are holding them back — and address them if possible.

Meanwhile, the Biden Administration should also look into whether there are mechanisms to quickly reduce U.S. oil consumption. One example could be to incentivize more four-day workweeks. We saw oil consumption plummet in 2020 when stay-at-home orders were put in place. It is certainly reasonable to believe that wider adoption of this strategy could take a bite out of U.S. oil consumption and help close the supply/demand gap.


By Robert Rapier

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • DoRight Deikins on March 10 2022 said:
    It is very simple for the US administration to reduce gas consumption.

    Regulate the federal tax on gasoline or any petroleum product equal to the price of that product, effectively doubling the price.

    I realize that currently the Executive Branch can't pass taxes. But being that this is a state of emergency, perhaps they could be called sanctions. I mean, who knows what might happen if CO2 levels keep increasing?
  • Lee James on March 10 2022 said:
    Yes, convene big oil, big guys, by all means. Get their suggestion about how to make up for taking away Russian oil.

    I wish that the major U.S. oil company CEOs were more on record for responsible corporateship. They seem to be happy with just making money. But they didn't make money for a few years, until recently, so lately they are doubling down on money-making over corporate citizenship. Just ask their boards, who are starting to ask for a wider perspective from them that includes impact on health of the planet.

    Convene them. I would like to see what they say -- hopefully something besides relax EPA rules and open-up public lands for fracking.

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News