OPINION: It wasn’t that long ago that US President Joe Biden called for an investigation into Big Oil’s gasoline pricing strategies, suggesting that something nefarious was driving the gasoline prices higher.
At that time, a gallon of gasoline cost $3.19. Some eight weeks later that price sits 30 cents higher, at $3.49 per gallon, according to auto club AAA.
The drama that has since played out on the global stage has elements that even William Shakespeare would recognise.
From spurned advances to not-so-veiled threats of inciting a price war, Biden has searched high and low for a way to cool red-hot oil prices that he sees as driving inflation.
With the rebuffing of his hat-in-hand appeals to Opec+, he turned to tapping the Strategic Petroleum Reserves — the equivalent to taking a hammer to the emergency piggy bank — flooding the market with enough oil to bring market prices lower.
Biden is also facing pressure from the ranks of his Democratic party to reinstate the 40-year ban on US crude exports, removed by the Obama administration in 2015.
As for Opec+, Biden seems to be resorting to one of the oldest plays in the presidential playbook: when your constituency is forced to choose between paying rent or paying for fuel, give the public an enemy to blame for its troubles.
Time may be the solution for the inflation issue, but this may come too late to help the Democratic Party as the clock ticks closer to the 2022 midterm elections.
Time also has given US producers the incentive needed to finally begin ramping up production, given the sustained rally, and they may, at last, be responding.
The International Energy Agency in its latest oil report raised its forecast for the US by 300,000 barrels per day for the fourth quarter of 2021 and by 200,000 bpd on average in 2022.
That looks like the largest increase in supply of any country, but Biden could bear the burden of what comes next.
(This is an Upstream opinion article.)