OPINION: Given US President Joe Biden’s pledges to reduce harmful emissions from the energy sector, his administration’s recent call for foreign oil producers in Opec+ to increase their output was a stunning blunder.
“President Biden has made clear that he wants Americans to have access to affordable and reliable energy, including at the pump,” National Security Advisor Jake Sullivan noted in the 11 August statement, which called for Opec+ to produce more oil to support economic recovery from the Covid-19 pandemic.
The administration’s bid to drive down gasoline prices did not also call on US oil producers to join in boosting supply, even though the shale revolution has equipped them with the tools to help in the effort. Calling on US producers to supply more oil in the short run to ease prices at the pumps could have helped to shore up the struggling US economy.
Shipping in supplies from countries that lack the US industry’s growing focus on decarbonising oil operations could add to global emissions compared with boosting domestic supply. Shell chief executive Ben van Beurden recently made a similar argument about the benefits of UK oil production over increased reliance on imports.
Therefore, US oil producers — and elected officials in producing states — have valid reasons to be upset about the call for help from Opec+.
"Texas can do this," Texas Governor Greg Abbott wrote to Biden in a 12 August Twitter message. “Our producers can easily produce that oil if your Administration will just stay out of the way.”
Texas may not be able to provide as much as 400,000 additional barrels per day, like Opec+ says it will do, but the state can significantly ramp up output.
Turning to Opec+ for greater production adds insult to the injury which Biden inflicted on the North American oil industry by blocking the Keystone XL pipeline and suspending leases on federal lands and waters. The moratorium on offshore leasing was overturned by a federal court in June, but no lease sales have since taken place.
Those decisions will affect the US economy and could be a disservice to the wider world. It would be better to seek more short-term US oil — with its tougher associated standards and where shareholders demand companies adopt a more environmentally conscious approach.
Beyond the domestic backlash, the administration’s courting of Opec+ has also raised a cry from key US allies. The UK’s Guardian newspaper said Biden’s decarbonisation agenda “was well and truly buried” by such a move, while the minister of energy for the oil-rich Canadian province of Alberta said it “smacks of hypocrisy” in the wake of the Keystone XL cancellation.
The US economy is still recovering from the Covid-19 pandemic. Jobs are needed, but turning to Opec+ — rather than domestic producers — for additional help could affect job creation at home.
The administration’s missteps could also give ammunition to Republican efforts to return both houses of Congress to Republican control in 2022.
If Biden wants to help the US economy while minimising damage to the environment, he needs to adopt a more consistent energy strategy that favours US energy companies over Opec+.
(This is an Upstream opinion article.)