Speaking to the press at the COP26 climate summit in Scotland on Tuesday, President Joe Biden has blamed OPEC and Russia for increasing US energy prices by refusing to pump more oil, even as he implements policies to curtail domestic oil and natural gas production.
After starting the year below $2.50/mmBtu, the key natural gas benchmark, Henry Hub, is nearing $6/mmBtu in Nymex futures trading. Since the beginning of 2021, prices for the leading US crude benchmark, West Texas Intermediate (WTI), have surged from $48 to around $84 per barrel.
Biden pointed that OPEC’s decision to keep a lid on output increases has profound impact on working class families just to get back and forth to work, noting it’s not right.
Gasoline prices in the United States are at a seven-year high and are increasingly contributing to the nation’s highest inflation rate in 13 years though Biden said that inflation more broadly is being spurred by the COVID pandemic’s impact on supply chains.
US Energy Secretary Jennifer Granholm, on the other side, came out with even more blunt statement, directly blaming ’the OPEC cartel’, as he called it, for keeping prices high explaining that gas prices are based on a global oil market controlled by a cartel – and that cartel is OPEC.
Granholm also noted that the higher prices are also resulting from the tight supply since the oil industry could not “flip a switch” for production as it recovers from the effects of the pandemic.
Biden administration has raised in August the ire of major US producers, who argued that it should be encouraging higher domestic supplies instead of calling on OPEC to help bring oil prices down.
The US has managed to achieve net energy independence in 2019 – first time since the 1950s – after it became the world’s largest crude producer in 2018, surpassing Russia and Saudi Arabia, and the third-biggest exporter of liquefied natural gas in the year after.
However, US oil and gas output stumbled amid the Covid-19 pandemic in 2020 and is projected to decline again in 2021.
As part of his plan to slash reliance on fossil fuels,Biden revoked a federal permit for a new pipeline aimed to bring more Canadian oil to US refiners the day he took office in January, and suspended the leasing of new oil and gas properties on federal lands and waters a week later.
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