Supply growth from OPEC+ could balance out a declining rate of demand for crude: Energy analyst
President Joe Biden urged OPEC countries to reverse pandemic-era production cuts, calling it an essential step to make gasoline prices more affordable for Americans.
The president’s comments capped a series of actions taken Wednesday by his administration to address the rising cost of oil, as the White House eyes inflation as a potential threat to the strength of the economic recovery.
“I want to make sure that nothing stands in the way of oil-price declines leading to lower prices for consumers,” Biden said in remarks at the White House. He stopped short of specifying how fully or quickly the OPEC+ group should reverse output cuts.
Earlier Wednesday, National Security Advisor Jake Sullivan said in a statement that recent production increases by OPEC and its allies were “simply not enough.”
National Economic Council Director Brian Deese also asked Federal Trade Commission Chair Lina Khan to use all available tools -- including monitoring prices, reviewing merger-and-acquisition activity and investigating market manipulation -- to stem price increases.
“Recently, we’ve seen the price that oil companies pay for a barrel of oil begin to fall, but the cost of gasoline at the pump for more American people hasn’t fallen. That’s not what you’d expect in a competitive market,” Biden said.
Oil prices rose nonetheless Wednesday as a weaker dollar offset a government report that showed a smaller-than-expected decline in crude stockpiles, thanks in turn to a surge in COVID-19 cases. Futures were up 1.4 per cent as of 2:27 p.m. in New York after falling as much as 2.4 per cent earlier in the wake of Sullivan’s call on the OPEC+ alliance to boost output.
The world’s largest oil-consuming nation has seen gasoline prices firmly above US$3 a gallon in recent months, putting pressure on drivers who are back on the road as pandemic restrictions ease.
The U.S. has urged OPEC+ in the past to increase supply, most recently in April when Energy Secretary Jennifer Granholm called her Saudi counterpart, Prince Abdulaziz bin Salman, to highlight the importance of “affordable energy.”
The 23-nation OPEC+ alliance, led by Saudi Arabia and Russia, agreed in July to revive the rest of the production they halted during the pandemic in careful installments, of 400,000 barrels a day each month.
Biden’s economic agenda includes a promise to not raise taxes on middle-class Americans, including at the pump.