The Biden administration accused the OPEC+ exporting cartel of siding with Russia — and announced the release of still more oil from America’s Strategic Petroleum Reserve — after the group agreed to snub US outreach and collectively reduce production.
OPEC+, led by Saudi Arabian Prince Abdulaziz bin Salman, said it would collectively reduce output by 2 million barrels per day beginning in November despite Biden’s July trip to Saudi Arabia to woo Saudi Arabian Crown Prince Mohammed bin Salman.
Biden responded by abruptly announcing that he would release 10 million more barrels from the US strategic reserve next month to offset the cuts by OPEC+, which are likely to boost prices at the pump ahead of the Nov. 8 midterm elections.
“At the president’s direction, the Department of Energy will deliver another 10 million barrels from the Strategic Petroleum Reserve to the market next month,” the White House said in a statement, which also said “the Biden Administration will also consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices.”
An OPEC+ memo outlining cuts shows that Saudi Arabia and Russia will make the biggest individual reductions of 19 countries doing so, lowering output by 526,000 monthly barrels apiece.
Biden previously ordered the release of 180 million gallons from the strategic reserves over six months ending in September to tamp down soaring prices following Russia’s Feb. 24 invasion of Ukraine.
As recently as Tuesday, White House press secretary Karine Jean-Pierre said Tuesday that “we’re not considering new releases.”
Aboard Air Force One 24 hours later, Jean-Pierre told reporters, “it’s clear that OPEC+ is aligning with Russia with today’s announcement.”
Prince Abdulaziz bin Salman, chairman of OPEC+, is believed to be attempting to orchestrate a reversal of demand-driven declining global prices — despite Biden’s attempt to patch up relations with the Saudi government by visiting the crown prince in July after previous attempts to sideline the country’s de facto leader for allegedly ordering the 2018 murder of Washington Post columnist Jamal Khashoggi.
“This is completely not what the White House wants, and it is exactly what Russia wants,” said Bill Farren-Price, director of macro oil and gas analysis at research firm Enverus, told the New York Times of the OPEC+ production cuts.
“It seems clear that this is not the outcome that Biden wanted when he went over to Saudi Arabia looking for more oil,” says Jacques Rousseau, managing director of ClearView Energy Partners, told NPR. “And so that could definitely be an issue going forward.”
The average cost of a gallon of regular gas in the United States is $3.83, according to AAA data. Although the average price is down significantly from all-time highs over $5 in June, the cost is creeping higher — up seven cents over the past week.
Patrick De Haan, the head of petroleum analysis at GasBuddy, predicted on Twitter that gas prices would change by between 15 and 30 cents per gallon as a result of the OPEC+ move — with the Gulf Coast, South, Southeast, East Coast and Northeast bearing the brunt of the sticker shock.
Gas prices historically are bad news politically for the party in power in Washington and the surge in prices earlier this year contributed to plunging approval ratings for Biden, which have since recovered slightly. Other US goods also are more costly amid the highest annual inflation since 1981 — with overall prices up about 8.3% in August.
Biden faces some skepticism about his plan to further drain the strategic reserve after releasing about one-third of the oil stored there.
“Biden’s on track to practically empty our strategic oil reserves to get Democrats elected in November,” tweeted political commentator Eddie Zipperer of Georgia’s Reinhardt University. “Cancelling the Keystone Pipeline was a history-book-level screw up.”
The US Oil and Gas Association trade group also took a whack at Biden’s policies.
“OPEC says no, SPR options all but gone…” the organization tweeted. “The WH has one option left and it is the one option they should have never turned away from in the first place – the US based oil and gas industry. Life comes at you pretty fast….”