Late or early? – OpEd – Eurasia Review
By Wael Mahdi*
From a market perspective, what signals can we take from the news that US President Joe Biden has finally decided to visit Saudi Arabia?
The easy answer is more oil supply.
Still, I think that would signal a mixed energy policy for an administration that is halfway through its term.
If this visit shows anything, it shows that the United States has not implemented a sound energy policy; and if there is, it is most likely a highly reactive issue.
Setting long-term goals without addressing or focusing on short-term needs will not help a country like the United States.
The current energy crisis has shown that gasoline prices are at the heart of US policy – no matter how much its officials claim they care less about fossil fuels.
It’s 2022 and the success of any US president still hinges on what citizens think about gas station prices.
However, it has taken the current US administration a long time to signal that it has finally succeeded and that it will do its best to ensure that American taxpayers will not suffer when they go to fill up their vehicles.
Frankly, the White House went a bit far when it called on refiners to lower gasoline prices out of sympathy for consumers.
It’s a “patriotic duty” now to lower prices and not respond to the laws of supply and demand after gasoline hits historic $5 a gallon.
So, again, it is unclear what energy policy or economic thinking is at work when market actions are influenced by political motives.
For President Biden’s visit to be a success, it must be part of a larger program or a grand energy project.
He must point out that the United States is committed to reasonable policies regarding energy transitions and he must point out that working with the Organization of the Petroleum Exporting Countries is and always will be a priority for any American administration.
The United States cannot afford to avoid OPEC because it is the only force capable of stabilizing the market with OPEC+, the supreme being who is now responsible for almost half of the world’s production of oil.
This journey can only be the beginning of a better and clearer global energy policy, because the United States needs it.
From releasing strategic oil reserves to calling on refiners to ramp up production and forfeit profits, the US administration has done everything to avoid working closely with OPEC. It took seeing the price per gallon jump to $5 to realize they needed a turn.
So, is it late or early for President Biden to make that trip to Saudi Arabia?
I think it’s late considering the gas price situation, but it may be early if you start thinking about the future.
The future is not green or renewable, the future is affordable.
When gasoline prices are at $2 a gallon, it’s easy to turn our backs on fossil fuels and think of an ideal world without OPEC and zero carbon emissions.
But when gasoline is $5 a gallon and economic pain is all people feel every day, people don’t care about carbon emissions and they’ll think of working with any party to ease the pain , even if it’s OPEC.
I don’t know if the United States is ready for a new way of thinking, but hopefully $5 a gallon will be an eye-opener for Americans.
The world needs more collaboration to ensure that our citizens do not feel economic pain.
The present and the future of our economies will require all sources of energy.
The energy transition is a journey that we must take together and we must ensure that we all move at the same pace or at least leave no one behind.
And last but not least, the United States needs OPEC and OPEC needs an American administration with a clear energy policy.
• Wael Mahdi is an independent energy commentator specializing in OPEC and co-author of “OPEC in a Shale Oil World: Where to Next?