White House: Falling Gas Prices Mean More Than OPEC Figures
President Joe Biden visited Saudi Arabia last month on the possibility that he could get additional oil production from OPEC+ in the coming weeks, but the cartel and other countries have announced a small increase Wednesday.
The White House responded by emphasizing that what matters is the steady decline in oil and gasoline prices from summer highs, not the steps taken by OPEC+ to pump 100,000 barrels. additional oil in September. White House press secretary Karine Jean-Pierre noted that the decline began on June 14, the day the administration disclosed plans for Biden’s trip to Israel and Saudi Arabia.
“The fact is that oil and gas prices are falling,” Jean-Pierre told reporters during his briefing. “As he announced his trip, we saw gasoline and oil prices drop.”
While there may be a correlation, it’s unclear whether the advertised trip resulted in lower prices. Oil prices can be determined by a wide range of factors, including changes in supply, the pace of economic growth, geopolitical events and extreme weather conditions.
Behind Jean-Pierre in the briefing room was a blue chart that showed a 17% drop in average US gasoline costs since prices peaked at around $5 a gallon. AAA puts the current national average at $4.16 per gallon. Crude oil prices fell to just below $91 a barrel on Wednesday, from more than $120 in early June.
Yet gasoline prices are 31% higher than last year, frustrating voters ahead of the midterm elections and heightening concerns about an economic slowdown in the United States and Europe then. central banks are trying to control inflation.
Energy prices jumped after Russia, a major energy producer, invaded Ukraine in late February. This prompted a series of sanctions and other measures at a time when refining capacity was tight and oil production was still recovering from the pandemic that began in 2020. The Biden administration called OPEC + as well as domestic producers and refineries to increase production, an effort the administration has attempted to fill by releasing 1 million barrels per day from the U.S. strategic reserve.
The war in Ukraine quickly turned world politics upside down. Natural gas shortages threatened Europe, and Biden’s approval ratings plummeted as pump prices rose. Biden’s trip to Saudi Arabia was something of a flip-flop, given that in a 2019 debate during the presidential campaign, Biden called the kingdom a ‘pariah’ for the murder of Washington Post contributor Jamal Khashoggi. .
Yet after Biden met with Saudi Crown Prince Mohammad bin Salman in mid-July, Biden hinted that a significant amount of supply could hit the market. Asked what impact his meeting would have on oil prices, he said “you won’t see it for two weeks” in what appeared to be a reference to Wednesday’s meeting of the OPEC oil cartel.
In a world that uses almost 100 million barrels of oil a day, the extra production amounted to a tiny 0.1% increase. At a previous meeting, OPEC increased oil production by 648,000 barrels per day in July and August.
But in a statement, OPEC+ warned of why it was being cautious about adding oil to the market. The countries of the cartel, led by Saudi Arabia, were to keep part of their oil capacity in reserve in case of future disruptions. They also noted the “chronic” lack of investment in oil production that has coincided with wealthier countries abandoning fossil fuels to fight climate change.
Biden is trying to reduce America’s dependence on fossil fuels. Democratic allies are pushing through the Senate on a measure that includes $369 billion in climate change strategies over the next decade. These expenditures would include tax breaks for wind and solar as well as for the purchase of electric vehicles.