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Italy’s Prime Minister Mario Draghi has suggested after a meeting with U.S. President Joe Biden this week that oil consumers unite to form a cartel with the goal of capping oil prices.
Draghi visited the White House on Tuesday to discuss, among other things, the state of the energy market. According to Draghi, both he and President Biden have agreed that the current structure of the energy market isn’t working.
Draghi also suggested pressuring OPEC to produce more—an idea that is not only not new, but has been attempted, both by India and the United States, both without success.
Now, President Biden is set to travel to Japan and South Korea later this month—two countries that are among the world’s top five crude oil importers and behind only China, the United States, and India.
Italy has already undertaken some measures to alleviate the high cost of energy for its vulnerable families, including energy price subsidies and tax credits for businesses struggling with the rising costs of energy. Italy will finance these costly measures by a new windfall tax on energy companies.
In the United States, President Biden has begged OPEC and Brazil to produce more crude oil, and has agreed to release a million barrels a day from the country’s Strategic Petroleum Reserve in hopes of bringing retail gasoline prices down.
While Draghi is talking about the prospect of price collusion to rein in prices that have topped $100 per barrel, the United States is busy legislating against the world’s largest oil production cartel, OPEC—a measure that OPEC insists will drive oil prices even higher by allowing the United States the ability to sue any foreign producer who engages in price collusion or market manipulation.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.