White House Calls on Oil Cartel OPEC to Boost Production as Gas Prices Soar

WASHINGTON—Worried about rising gas prices, the Biden administration has called on oil producing countries including Saudi Arabia and Russia to raise their oil production. Strong recovery in global demand and declining U.S.  supplies have been pushing crude oil prices higher in recent months.

National Security Advisor Jake Sullivan issued a statement on Aug. 11 asking the Organization of the Petroleum Exporting Countries and Russia (OPEC+) to address rising gasoline costs.

“Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery,” Sullivan warned.

In July, OPEC+ ministers agreed to boost oil production by 0.4 million barrels per day (bpd) on a monthly basis from August until year end. The decision came amid a strong rebound in global demand.

But this increase is not enough according to the White House to ensure “reliable and stable global energy markets.”

“While OPEC+ recently agreed to production increases, these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022,” Sullivan said in the statement.

“At a critical moment in the global recovery, this is simply not enough.”

OPEC+ last year cut production by a record 10 million bpd due to the slump in demand caused by the pandemic. The cut had been eased to about 5.8 million bpd in July.

Gas prices in the United States rose by more than 40 percent compared to last year. The national average gas price stood at $3.185 per gallon on Aug. 11.

“President Biden has made clear that he wants Americans to have access to affordable and reliable energy, including at the pump,” Sullivan said. “We are engaging with relevant OPEC+ members on the importance of competitive markets in setting prices.”

The price of West Texas Intermediate (WTI) crude was at $68.48 on Aug. 10, up more than 40 percent this year and Brent Crude was trading at $70.77, up 36 percent year-to-date.

“Oh sure, blame OPEC,” Phil Flynn, senior energy analyst at the Price Future Group wrote in a report.

“It is very hypocritical to blame OPEC when it has been the Biden administration’s fault that we are more dependent on OPEC oil,” he said.

It is unclear whether the OPEC will respond to calls by the Biden administration and raise its output.

“Unless COVID shuts down the global economy, we’re still going to be very undersupplied into the end of this year,” Flynn said.

Oil industry experts have been criticizing Biden administration’s climate policies, claiming that these policies are making the country more dependent on foreign oil producers.

This year, Russian oil imports to the United States have set a record despite the strained relationship between Washington and Moscow.

Imports of crude oil and petroleum products from Russia reached 26.71 million barrels in May, the highest level yet, according to the Energy Information Administration (EIA).

U.S. crude oil stocks continue to fall and oil exports are plunging, raising concerns for the price of WTI. U.S. oil production is lower compared to last year, and a large part of the void is being filled by Russia, according to analysts.

U.S. production averaged 11.2 million bpd in July, down from nearly 13 million before the pandemic, the EIA data showed.

The White House also called on U.S. regulators to monitor prices at the pump.

In a letter sent to Federal Trade Commission Chair Lina Khan, the White House asked regulators to “address any illegal conduct that might be contributing to price increases.”

“During this summer driving season, there have been divergences between oil prices and the cost of gasoline at the pump,” National Economic Council Director Brian Deese said in the letter.

“While many factors can affect gas prices, the president wants to ensure that consumers are not paying more for gas because of anti-competitive or other illegal practices.”

Emel Akan

Emel Akan

reporter

Emel Akan is White House economic policy reporter in Washington, D.C. Previously she worked in the financial sector as an investment banker at JPMorgan and as a consultant at PwC. She graduated with a master’s degree in business administration from Georgetown University.

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