Las Vegas Sun

March 28, 2024

Biden has ‘only bad options’ for bringing down oil prices

HOUSTON — When President Joe Biden meets Crown Prince Mohammed bin Salman in Saudi Arabia — now probably sometime next month — he will be following in the footsteps of presidents such as Jimmy Carter, who flew to Tehran in 1977 to exchange toasts with the Shah of Iran on New Year’s Eve.

Like the crown prince, the shah was an unelected monarch with a tarnished human rights record. But Carter was obliged to celebrate with him for a cause that was of great concern to people back home: cheaper gasoline and secure oil supplies.

As Carter and other presidents learned, Biden has precious few tools to bring down costs at the pump, especially when Russia, one of the world’s largest energy producers, has started an unprovoked war against a smaller neighbor. In Carter’s time, oil supplies that Western countries needed were threatened by revolutions in the Middle East.

During the 2020 campaign, Biden pledged to turn Saudi Arabia into a “pariah” for the assassination of a prominent dissident, Jamal Khashoggi. But officials said last week that he planned to visit the kingdom this summer. It was just the latest sign that oil has again regained its centrality in geopolitics.

Just a few years ago, many lawmakers in Washington and oil and gas executives in Texas were patting themselves on the back for an energy boom that had turned the United States into a net exporter of oil and petroleum products and made it more energy independent. With prices rising, that achievement now looks illusory.

The United States is the world’s biggest oil and natural gas producer, but it accounts for only about 12% of the global petroleum supply. The price of oil — the principal cost in gasoline — can still shoot up or tumble depending on events halfway around the world. And no president, no matter how powerful or competent, can do much to control it.

Always looking ahead to the next election when their jobs or their party’s hold on power is at stake, presidents can find it impossible not to try to cajole or plead with foreign and domestic oil producers to drill and pump more oil, faster.

“A president has to try,” said Bill Richardson, an energy secretary in the Clinton administration. “Unfortunately, there are only bad options. And any alternative options are probably worse than asking the Saudis to increase production.”

Two other oil-producing countries that could increase production — Iran and Venezuela — are U.S. adversaries that Western sanctions have largely cut out of the global market. Striking any deal with their leaders without securing major concessions on issues such as nuclear enrichment and democratic reforms would be politically perilous for Biden.

Energy experts said even Saudi Arabia, widely considered to have the most spare production capacity ready to be put to use, could not bring down prices quickly on its own. That’s because Russian output is sliding and could fall much further as European countries reduce their purchases from the country.

Some Republican lawmakers and oil executives have argued that Biden could do more to increase domestic oil and gas production by opening up more federal lands and waters to oil drilling in places such as Alaska and the Gulf of Mexico. He could also ease regulations on pipeline construction so Canadian producers could send more oil south.

“Were the administration to accede to every aspect of the industry’s wish list, that would have a modest impact on today’s prices because it would mostly be about production in the future,” said Jason Bordoff, who is director of Columbia University’s Center for Global Energy Policy and was an adviser to President Barack Obama. “And it would come with substantial downsides politically, socially and environmentally.”

Biden and his aides have been jawboning U.S. oil executives to pump more oil with little success. Most oil companies are reluctant to expand production because they fear that drilling more now will lead to a glut that will send prices tumbling. Big companies such as Exxon Mobil, Chevron, BP and Shell have largely stuck to the investment budgets they set last year before Russia invaded Ukraine.

This article originally appeared in The New York Times.