The left wing of the Democratic Party wants to end mining and oil & gas production in the US, and the moderates want to grow the economy. The compromise policy agenda for natural resources and the environment is to fuel the economic recovery in the medium term by increasing imports from OPEC.
WASHINGTON—The White House urged OPEC to boost oil production Wednesday, saying recent planned increases are insufficient as countries around the world seek to emerge from the Covid-19 pandemic.
National security adviser Jake Sullivan said in a statement that recent planned production increases by the Organization of the Petroleum Exporting Countries would “not fully offset previous production cuts” made by OPEC and its oil-producing allies during the pandemic.
“At a critical moment in the global recovery, this is simply not enough,” Mr. Sullivan said.
Brent crude, the international oil benchmark, fell 0.8% to $70.04 a barrel after the White House announcement. Oil prices have experienced volatility in recent days due to concerns over the Delta variant of Covid-19.
In July, OPEC and a group of Russian-led oil producers agreed to unleash millions of barrels of crude over the next two years, committing to restore all the cuts they made at the start of the Covid-19 pandemic. The group chose to move gradually, with monthly installments of new oil through the latter end of 2022.
The Biden administration’s move comes as it has sought to push back against concerns about inflation. Inflation remained elevated in July, but showed evidence of cooling as the economic recovery continued amid pandemic-related supply problems.
Consumer prices rose 5.4% in July from a year earlier, the same pace as in June and the highest 12-month rate since 2008, the Labor Department reported Wednesday. Energy prices rose 1.6% in July from June, following a 1.5% rise in June from May. Gasoline prices were up 2.4% last month, after climbing 2.5% the prior month. Both categories fell steeply last year during the pandemic and have soared this year.
Republicans have criticized President Biden’s energy policies and rising fuel prices, pointing to decisions such as the cancellation of the Keystone XL pipeline as indications that Mr. Biden’s administration has sided with environmental interests over oil-and-gas companies.
Sen. John Cornyn (R., Texas) said after Mr. Sullivan’s statement that “begging the Saudis to increase production while the White House ties one hand behind the backs of American energy companies is pathetic and embarrassing.”
Previous U.S. administrations have called on key OPEC members to raise output at times of high oil prices, sometimes with success.
OPEC delegates on Wednesday said they saw no need to bring back oil faster. Saudi officials said they were confused by the Biden administration’s stance, which is seeking to reduce oil consumption, while asking OPEC to pump more oil.
“Isn’t [Biden] about climate change and the impact of oil on the environment?” asked a Saudi oil official. “How come now they are asking for more?”
Other delegates also said the world had yet to turn the page on the pandemic.
“The Delta variant is still there,” said a representative from an African OPEC country, referring to a strain of the Covid-19 virus that has devastated India and China, the world’s fastest-growing oil consumers. “We are not out of the woods yet when it comes to the pandemic.”
OPEC delegates also warned that lower oil prices could hinder spending on oil and gas projects, which could in turn bring about a bigger spike in prices in the future, particularly at a time when big oil companies are already under pressure to cut fossil-fuel investments in response to climate change.
The White House also asked the Federal Trade Commission in a letter to use “all of its available tools” to monitor the U.S. gasoline market and take action against “any illegal conduct that might be contributing to price increases for consumers at the pump.”
“With its suite of tools to monitor industry prices, review merger-and-acquisition activity, conduct market studies, and investigate market manipulation and anti-competitive practices, the FTC is well placed to lead the effort to evaluate what is happening in the U.S. gasoline market and take any necessary steps to address illegal conduct,” National Economic Council director Brian Deese wrote in the letter to FTC chair Lina Khan.
The letter urged the FTC to join with the Justice Department, the Federal Energy Regulatory Commission, the Commodity Futures Trading Commission and state attorneys general on the effort.
Write to Ken Thomas at firstname.lastname@example.org