U.S. again Presses OPEC+ as It Weighs Reserve Release

November 22, 2021

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by Timothy Gardner and Alexandra Alper (Reuters) ... The White House on Friday pressed the OPEC producer group again to maintain adequate global supply, days after U.S. discussions with some of the world's biggest economies over potentially releasing oil from strategic reserves to quell high energy prices.

The Biden administration has asked a wide range of countries, including China for the first time, to consider releasing stocks of crude. President Joe Biden faces slipping approval figures as Americans cite inflation as a growing problem.

White House spokeswoman Jen Psaki said the administration wants to "ensure that the OPEC member countries and OPEC as an organization meets the demand needs that are out there with the adequate supply. That is something we've pressed them on in the past."

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his week, Secretary General Mohammad Barkindo said OPEC expects an oil supply surplus to begin building next month.

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The average cost per gallon is $3.41 nationwide, according to the American Automobile Association.

Other countries have been pressing OPEC, including China and India. read more

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In recent years, the shale boom has boosted U.S. output to rival that of Saudi Arabia and Russia, making the United States to lessdependent on imports from other nations, particularly OPEC members. READ MORE

PRETTY PLEASE? (Politico's Morning Energy)

More oil now, less oil later: Biden’s tricky message on energy (Washington Post)

US to release 50 million barrels of oil to ease energy costs (Associated Press)

An oil release and a lot of finger pointing (Politico's Morning Energy)

Biden urges world to go green but pushes for cheap gasoline at home (Bloomberg)

Much of Biden’s oil release will likely end up in China, India (Bloomberg)

NOPEC: (Politico's Morning Energy)

As Biden Searches For Solution To Climbing Oil Prices That He Helped Create, Grassley Presses Admin To Hold OPEC Accountable (Office of Senator Charles Grassley (R-IA))

Senator Grassley blames White House policies for increase in gas prices (Radio Iowa)

U.S. energy envoy says Biden stands ready to release even more oil reserves to cool markets (CNBC)

Oil policy that burns from both ends: THE ADMIN'S OIL AGENDA: (Poltico's Morning Energy)

Oil, gas firms give more cash to Democrats resisting carbon fees (Roll Call)

Democrats among lawmakers asking Biden not to ban oil exports (Bloomberg)

Excerpt from Politico's Morning Energy: PRETTY PLEASE? The Biden administration asked OPEC+ again Friday to increase its oil output to help relieve high gas prices, Reuters reports. The plea comes just after the U.S. discussed the issue with other major oil consumers, including China, South Korea and Japan, and danced with the idea of a coordinated release from national petroleum reserves. Oil prices also started to dip toward the week’s end as Covid cases continue to climb and Europe considers more shutdowns. READ MORE

Excerpt from Politico's Morning Energy: And while the White House took credit for the recent pullback in crude oil prices from the highs near $84 a barrel by foreshadowing its decision, the oil market was less impressed once the announcement was made, with January crude futures rallying more than 2 percent to $78.50 a barrel.

The U.S. release of 18 million barrels and exchange of 32 million barrels will take place in conjunction with releases by China, India, the U.K., Japan and South Korea from their national crude oil stockpiles, making it the largest ever cooperative release.

And Energy Secretary Jennifer Granholm encouraged other countries to join in on the effort Tuesday, though she recognized not every country has a national petroleum reserve and none are as large as the U.S. holds. Granholm also stressed that the precedent-setting coordinated release was not a sustainable strategy to keep prices low, acknowledging it won’t have a lasting impact and may not be immediately visible.

But she pivoted to tout the Biden plan to develop renewables like wind and solar to try to avoid the type of swings that Americans have faced for decades from oil prices. “Relying upon volatile sources or relying upon fuel from countries that may not have our best interests at heart hurts the American people in the long-end and the short-run,” she said at a White House briefing on Tuesday.

Other Democrats including Senate Majority Leader Chuck Schumer and environmental groups also called on the administration to lean into efforts to move off the global fossil fuel markets to domestically produced renewable energy. Kassie Siegel, director of the Center for Biological Diversity’s Climate Law Institute, said in a statement that “price volatility will always be part of Big Oil’s playbook.”

Granholm also hinted that the administration is exploring other measures to bring down retail fuel prices, but left it to Biden to announce those himself.

Meanwhile, Republicans and industry groups panned the move as a quick political salve. Senate Energy Ranking Member John Barrasso stuck to his talking points and said the administration and congressional Democrats were “waging a war on American energy” by temporarily pausing new federal oil and gas lease sales earlier this year.

That message was amplified by Christopher Guith, senior vice president for the U.S. Chamber of Commerce’s Global Energy Institute. “America’s real strategic petroleum reserve is in places like the Permian Basin and the Gulf of Mexico,” he said in a statement. “The Department of Energy’s reserve should only be used for supply disruptions. Instead of ineffectual band aids, the White House should focus on policies that will encourage domestic production of oil and natural gas."

Republicans’ criticism comes despite the fact that it was legislation passed under the GOP-controlled House during the Trump administration that helped pave the way for the sale, since it had ordered the government to sell more than 100 million barrels from the SPR by between 2022 and 2027 to raise money to cover tax cuts and other items. Ben has more on the release for Pros.

Granholm points finger at industry: When asked why the U.S. hasn’t returned to its pre-pandemic oil production levels, Granholm pointed to oil companies’ reluctance to spend on new output.

“Oil production is lagging behind as the economy roars back to life after the shutdown,” she said. “[Companies] have not rehired. They have not turned on the rigs. They have not taken advantage of the permits that they have on the land that they have,” Granholm added.

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SHOW YOUR PROOF: Two Republicans on the Federal Trade Commission are asking the White House for any proof of illegal activity by the oil and gas industry to raise gasoline prices, which Biden asked FTC Chair Lina Khan to investigate last week. Commissioners Noah Phillips and Christine Wilson requested evidence “so that we might consider how to proceed,” Reuters reports.

Biden’s request had pointed to the price difference between unfinished gasoline and the prices at the pump, saying the two had diverged over the previous month, which the White House said could indicate market manipulation. Energy analysts, however, have said those type of fluctuations have happened fairly regularly, and that the short time frame cited indicated that there was little cause to suspect wrongdoing. READ MORE

Excerpt from Politico's Morning Energy: NOPEC: Sen. Chuck Grassley is unimpressed with the Biden administration’s calls to OPEC+ to increase production in hopes of lowering gas prices. In a letter to Biden sent Wednesday, the Iowa Republican re-upped his bipartisan legislation that would allow the Justice Department to sue the international cartel for antitrust law violations. Some iteration of the bill has been regularly introduced in Congress for years, with Grassley introducing the latest version with Sens. Amy Klobuchar (D-Minn.), Mike Lee (R-Utah) and Patrick Leahy (D-Vt.).

“As President today, you have the power to take action on an issue crucially important to the American people that you supported during the Clinton and Bush Administrations,” Grassley wrote. “Your and your administration’s support of NOPEC would help to enact this bill into law and ensure a fair and competitive marketplace.” READ MORE

Excerpt from Politico's Morning Energy: Oil policy that burns from both ends: THE ADMIN'S OIL AGENDA: The Biden administration’s fossil fuel strategy is sending mixed signals to environmentalists and the oil and gas industry, making no one happy,....

Green groups had held onto President Joe Biden’s campaign pledge to end federal oil and gas leasing as an indicator of an aggressive climate agenda but were disappointed that the Interior Department’s latest review on the leasing program didn’t call for an end to new lease sales. They’ve also raised the alarm about new lease sales for exploration in the Gulf of Mexico after a federal court found the administration’s pause earlier this year was unlawful.

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The administration was also compelled to respond to spiking fuel prices, calling on OPEC+ to increase its output to the frustration of domestic producers, while also making up to 50 million barrels of oil available to refiners to help bring down gasoline prices, which irked environmental groups who said it sent the wrong signal as the White House sought to promote its climate change efforts.

Prices have since started to cool amid concerns about the omicron Covid variant, and analysts told Ben it makes sense to keep oil and natural gas flowing to address short term effects while moving toward a longer-term transition to renewable energy. But the messaging that strategy sends could fall flat, further threatening Democrats in next year’s midterm elections.

The administration’s “actions have not been as detrimental as the oil and gas industry associations claim, nor as bad as the environmental community seems to think,” said Morgan Bazilian, director of the Payne Institute for Public Policy at the Colorado School of Mines. “Still, their work to date does not seem to have a terribly elegant strategy associated with it.” Read more from Ben here. READ MORE