One of President Joe Biden’s most persistent political headaches — high oil prices — could make an unwelcome return just in time for the summer driving season.
That’s because in a surprise move over the weekend, members of the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, announced plans to cut the amount of oil they produce. Experts said the 1.16-million-barrel-a-day cuts could help send global oil prices above $100 a barrel by summer, just when driving demand typically pushes up prices at the pump for U.S. drivers.
The production cuts are another sign of the shifting geopolitics of oil. Russia, Saudi Arabia and China are increasingly aligned, and the United States has seen its influence blunted by Saudi Arabia’s determined effort to keep prices high and Russia’s pursuit of higher-priced oil to pay for its war in Ukraine.
All in all, the news is sure to be a real drag for the White House. Not only do the hounds of inflation dog the president, but he’s also gearing up for a reelection battle.
“It’s a really bad time to add an energy spike on top of underlying inflation,” Paul Bledsoe, a former White House official in the Clinton administration, told Power Switch. “This is a tremendous political challenge for the White House.”
The political problem of volatile energy prices seemed to peak for Biden in mid-2022. Low oil output and the war in Ukraine joined up with a global supply-chain crunch to drive prices higher across the economy.
Analysts at ClearView Energy Partners said “some degree of frustration” was likely to flow out of the White House.
Still, presidents can’t do much about the cost of oil and gasoline in the short term. And attempts to do so by releasing oil from the Strategic Petroleum Reserve, for example, have proved politically fraught.
Biden has time. He doesn’t face reelection until 2024. What could be a problem is the great unknown: the implication of rising oil prices in line with other economic hurdles.
Layer on top of that the seismic shift in Saudi Arabia’s attitude toward Washington and changing alliances — “a further knitting together of an alternative to the U.S.-led, G-7-centered Western alliance,” according to the analysts at ClearView Energy Partners.
But Bledsoe warned not to read too much into the production cuts yet. “Washington and Riyadh still have very close relationships on a whole range of issues,” Bledsoe said. “This is not the last word.”
It’s Monday— thank you for tuning in to POLITICO’s Power Switch. I’m your host, Heather Richards. Your regular host, Arianna Skibell, will be back soon! Power Switch is brought to you by the journalists behind E&E News and POLITICO Pro Energy. Send your tips, comments and questions to [email protected].
Today in POLITICO Energy’s podcast: Following the Treasury Department’s release of highly anticipated guidance on eligibility for $7,500 electric vehicle tax credits in the Inflation Reduction Act, POLITICO’s James Bikales digs into what this means for car buyers, the auto industry and U.S. trade relations.
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Lingering questions remain even after the Biden administration proposed tax guidance for electric vehicles meant to help car companies make investment decisions and to help consumers understand what they might be able to afford.
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Parisians rejected allowing electric rental scooters to zip along their century old streets in a referendum over the weekend that only pulled in less than 7.5 percent of eligible voters. The New York Times reports that the failure of rental scooters to woo Parisians shows how the city came to see them as a public nuisance with little environmental benefit rather than a convenience.
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Climate change poses considerable risks to hydropower, but according to a watchdog report out last week, the entities that run massive dams across the United States aren’t ready.
A massive power producer that serves six Western states says it will quadruple wind and solar resources by 2032, accelerating the demise of coal-fired power in the Mountain West.
But some coal is hanging on longer than expected, thanks to delays in a nuclear demonstration project planned in Wyoming.
Even as tensions between Beijing and Washington rise over issues like spy balloons and Chinese President Xi Jinping’s recent visit to Russia, natural gas exporters are making a pro-China case to U.S. lawmakers.
Some industry experts say Chinese contracts are critical to secure project financing and support the United States’ liquefied natural gas boom. Turns out, there’s little appetite in D.C. to curb the flow of liquefied natural gas to China, even from frequent China critics.
That’s it for today, folks! Thanks for reading.
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