Houston – When President Biden meets with Crown Prince Mohammed bin Salman in Saudi Arabia, he will follow in the footsteps of presidents like Jimmy Carter, who flew to Tehran in 1977 to exchange toasts with the Shah of Iran on New Year’s Eve. .
Like the prince, the shah was an unelected monarch with tarnished human rights. But Mr. Carter had to celebrate with him for a cause that was of great concern to people at home: cheaper gasoline and a secure supply of oil.
As Mr Carter and other presidents have learned, Mr Biden has few valuable tools at his disposal to reduce pump costs, especially as Russia, one of the world’s largest energy producers, launches an unprovoked war against a smaller neighbor. Under Mr Carter, the oil supplies that Western countries needed were threatened by revolutions in the Middle East.
During the 2020 campaign, Mr. Biden promised to turn Saudi Arabia into a “pariah” for the assassination of prominent dissident Jamal Kashoghi. But officials said last week he planned to visit the kingdom this summer. This was only the last sign that oil had regained its central place in geopolitics.
Just a few years ago, many lawmakers in Washington and oil and gas executives in Texas patted themselves on the back for an energy boom that turned the United States into a net exporter of oil and petroleum products and made them more energy independent. With rising prices, this achievement now seems illusory.
The United States is the world’s largest producer of oil and natural gas, but accounts for only about 12 percent of global oil supplies. The price of oil, the main price of gasoline, may still rise or fall depending on world events. And no president, no matter how powerful or competent, can do much to control him.
These facts are a cold consolation to Americans who find that shutting down a gas station can easily cost a hundred dollars, much more than just a year earlier. When fuel prices rise, consumers demand action and can turn against presidents who seem unwilling or unable to bring them down.
Always looking ahead to the next election, when their work or the retention of power of their party is at stake, presidents may find it impossible not to try not to try to beg or beg foreign and domestic oil producers to drill and pump more oil faster.
“The president has to try,” said Bill Richardson, energy secretary in the Clinton administration. “Unfortunately, there are only bad options. And any alternatives are probably worse than asking the Saudis to increase production.
Two other oil-producing countries that could boost production – Iran and Venezuela – are opponents of the United States, which Western sanctions have largely cut off from the global market. Making any deal with their leaders without providing big concessions on issues such as nuclear enrichment and democratic reforms would be politically dangerous for Mr Biden.
Energy experts say even Saudi Arabia, which is believed to have the most spare production capacity ready for use, cannot cut prices quickly on its own. This is because Russian production is declining and may fall much more as European countries reduce their purchases from the country.
“Presidents may be the most powerful figure in the US government, but they cannot control the price of pump oil,” said Chase Untermeier, the US ambassador to Qatar under George W. Bush. “Even if prices fall for reasons beyond his control, President Biden probably won’t get much credit for that either.
Some Republican lawmakers and oil executives say Mr. Biden could do more to increase oil and gas production by opening up more federal land and oil wells to places like Alaska and the Gulf of Mexico. It could also ease pipeline regulations so Canadian producers can ship more oil to the south.
But even these initiatives – which environmentalists and many Democrats oppose because they would slow efforts to combat climate change – would have little immediate impact because it takes months to start producing new oil wells and building pipelines. it may take years.
“If the administration joins every aspect of the industry’s wish list, it would have a moderate impact on today’s prices, because it would be mostly about future production,” said Jason Bordoff, director of the Center for Global Energy. at Columbia University Politics and was an adviser to President Barack Obama. “And that would have significant political, social and environmental downsides.
Mr. Biden and his aides have led U.S. oil executives to pump more oil with little success. Most oil companies are reluctant to expand production because they fear that more drilling will now lead to oversaturation, which will lead to falling prices. They remember when oil prices fell below zero at the start of the pandemic. Large companies such as Exxon Mobil, Chevron, BP and Shell are largely sticking to the investment budgets they set last year before Russia invaded Ukraine.
The Russia-Ukraine war and the global economy
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Extensive conflict. Russia’s invasion of Ukraine has had a ripple effect around the world, adding to stock market problems. The conflict has sparked dizzying spikes in gas prices and food shortages, prompting Europe to rethink its dependence on Russian energy sources.
Global growth is slowing. The aftermath of the war has thwarted major economies’ efforts to recover from the pandemic, creating new uncertainty and undermining economic confidence around the world. In the United States, inflation-adjusted gross domestic product fell 0.4% in the first quarter of 2022.
Russia’s economy is facing a slowdown. Although pro-Ukrainian countries continue to impose sanctions on the Kremlin in response to its aggression, Russia’s economy has so far avoided a crippling collapse thanks to capital controls and rising interest rates. But the head of Russia’s central bank has warned that the country is likely to face a sharp economic downturn as its inventories of imported goods and parts dwindle.
Trade barriers are rising. The invasion of Ukraine has also unleashed a wave of protectionism as governments, desperate to provide goods for their citizens amid shortages and rising prices, raise new barriers to stopping exports. But restrictions make products more expensive and even harder to find.
Prices of base metals are rising. The price of palladium, used in car exhaust systems and mobile phones, is rising amid fears that Russia, the world’s largest metal exporter, could be cut off from world markets. The price of nickel, another key Russian export, is also rising.
Energy traders became so convinced that supply would remain limited that US and world oil prices rose after news broke that Mr. Biden was planning to travel to Saudi Arabia. Oil prices rose to about $ 120 a barrel on Friday, and the average national price per gallon of regular gasoline was $ 4.85 on Sunday, according to AAA, more than 20 cents higher than a week earlier and 1.80 dollars over a year.
Another effort by the Biden administration that seems to have failed is the decision to release a million barrels of oil a day from the Strategic Oil Reserve. Analysts said it was difficult to distinguish any impact from these publications.
Biden’s team is also in talks with Venezuela and Iran, but progress has stalled.
The administration recently renewed a license that partially relieves Chevron of US sanctions aimed at crippling Venezuela’s oil industry. In March, three administration officials traveled to Caracas to bring President Nicolas Maduro into talks with the political opposition.
With another easing of sanctions, Repsol of Spain and Eni of Italy could start delivering small quantities of oil from Venezuela to Europe in a few weeks, Reuters reported on Sunday.
Venezuela, once a major exporter to the United States, has the world’s largest oil reserves. But its oil industry is so crippled that it could take months or even years for the country to significantly increase exports.
With Iran, Mr Biden seeks to revive the 2015 nuclear deal, which President Donald J. Trump withdrew. The deal could free Iran from exporting more than 500,000 barrels of oil a day, easing the global supply crisis and offsetting some of the barrels that Russia does not sell. Iran also has about 100 million barrels in stock that could potentially be released quickly.
But the nuclear talks appear to be mired in disagreements and are not expected to bear fruit any time soon.
Of course, any deal with Venezuela or Iran in itself could become a political obligation for Mr. Biden, because most Republicans and even some Democrats oppose compromises with the leaders of those countries.
“No president wants to remove Iran’s Revolutionary Guard from the list of terrorists,” said Ben Cahill, an energy expert at the Center for Strategic and International Studies in Washington, D.C., on one of the contentious points in talks with Iran. “Presidents are wary of any move that looks as if they are making political sacrifices and giving victory to America’s opponents.”
Foreign policy experts say that while energy crises during the war are inevitable, they always seem to surprise administrations that are generally unprepared for the next crisis. Mr Bordeaux, Obama’s adviser, suggested the country invest more in electric cars and trucks and promote greater efficiency and savings to reduce energy demand.
“The history of oil crises shows that when there is a crisis, politicians run like chickens with their heads cut off, trying to figure out what they can do to provide immediate relief to consumers,” Mr Bordeff said. US leaders, he added, need to prepare better …
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