Big OPEC+ Oil Production Cut Provokes Pointed Responses

The response from the Biden administration and the domestic oil and gas industry was swift after OPEC+ ministers announced on Wednesday an agreement to further reduce the cartel’s oil exports by two million barrels of oil per day (bopd).

The reductions double the one million barrel cut that had been anticipated over the previous week. The agreement came despite pre-meeting warnings from the Biden administration that the U.S. would consider deep production cuts a “total disaster” and a “hostile act,” according to CBS News.

Such pushback from the U.S. administration is unprecedented during the 6-year history of the OPEC+ group.

Since its formation in November, 2016, the cartel has made no secret that its purpose is to exert influence over oil markets to ensure a robust price for crude.

When OPEC+ started, then-President Barack Obama, made no similar statements despite the fact that he and his Vice President, Joe Biden, fully understood that more robust crude oil prices would inevitably mean U.S. consumers would pay higher prices for gasoline at the pump.

Similarly, then-President Donald Trump also avoided any similar aggressive language in response to the announcement by OPEC+ in mid-2020 that it would implement a massive cut of eight million barrels of oil in response to the impacts of the COVID-19 pandemic. Trump officials remained restrained despite the fact that Trump was then in the midst of a bitter re-election campaign, and so did his opponent that year, Joe Biden.

But today, with the mid-term elections barely a month away and with Democrats fighting to hold onto their razor-thin majorities in both houses of congress, U.S. restraint in the face of a cut that is a fraction of the 2020 reduction has suddenly disappeared.

White House and Pentagon spokesman John Kirby told Fox News said in response to the OPEC+ announcement, the U.S. needs to become less dependent on foreign oil.

“We absolutely do agree that we need to be less dependent on OPEC+ and foreign producers of resources like oil,” Kirby said.

Kirby speaks for a President and administration that have spent the last 21 months doing everything in their power to inhibit domestic U.S. oil production.

At the same time, the President and his advisors have repeatedly pleaded with foreign producers like Saudi Arabia, the United Arab Emirates and even Venezuela to put more of their own crude onto the open market whenever U.S. gasoline prices have spiked.

But the irony of today’s remarks appears to be lost on the White House. In a statement in response to the OPEC+ announcement, National Security Advisor Jake Sullivan and NEC Director Brian Deese said the President is “disappointed” in what they called a “shortsighted decision by OPEC+ to cut production quotas.”

Both of Biden advisors also promised that “the Biden Administration will…consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices.”

But the irony of the administration’s self-created predicament was not lost on fossil fuel advocate Alex Epstein, author of the best-selling book “Fossil Future,” who tweeted that “The Biden Administration is calling an OPEC production cut a ‘hostile act.’ But if it hadn’t been been for the hundred+ ‘hostile acts’ toward the US oil industry of President Joe ‘I guarantee you, we’re going to end fossil fuel’ Biden we wouldn’t be so vulnerable to OPEC.”

Nor was the irony of the situation lost on Dan Kish, Senior Vice President at the pro-fossil fuels Institute for Energy Research.

“President Biden and his administration have done everything within their power from day one to unilaterally disarm American energy production and he now wants to blame everyone else for his dangerous policies,” says Kish. “His routine is well past getting old, and Americans are going to pay the price for his continuing assault on American energy.”

In an email, Tim Stewart, President of the U.S. Oil and Gas Association, said “The White House has one option left and it is the one option they should have never turned away from in the first place – the U.S. based oil and gas industry. Life comes at you pretty fast. Unfortunately, the Administration’s colossal energy policy failure now constitutes our industry’s emergency.”

Other industry leaders expressed similar thoughts.

“OPEC’s decision to cut production is not good news for American families and business who are already struggling with record high inflation, and it reinforces the need for American energy in the world,” said Anne Bradbury, the CEO of the American Exploration and Production Council, an organization representing the nation’s large independent producers.

“This Administration’s energy policies are nonsensical and making us more dependent on foreign sources. Instead, the Biden Administration should be focused on increasing production here in the US through thoughtful and comprehensive energy policy that helps bring down costs and makes us less reliant on foreign sources,” Bradbury said.

In an appearance on Fox News, American Petroleum Institute President, Mike Sommers was equally blunt, saying that “This is really bad news for American consumers. The truth of the matter is the dependency on foreign countries for American oil and gas is a choice and it’s a choice this administration has made repeatedly.”

Indeed it is a choice, and, in the wake of the August passage of the Inflation Reduction Act, a bill laden with $349 billion in new subsidies for renewables, electric vehicles and other alternatives to oil and gas production, it’s a choice that appears destined to continue in the United States for the duration of Biden’s first term and likely beyond. It is a choice designed in part to raise the cost of energy of all kinds in order to make renewables and EVs more market competitive, consistent with the overarching goals of the energy transition.

If U.S. consumers are frustrated by the rising cost not just of energy, but of all consumer goods right now, they should try to understand that this is what they voted for in 2020, whether they realized it at the time or not. In that campaign, Biden was quite blunt about his plans to “end” U.S. reliance on oil, ban hydraulic fracturing, end offshore drilling and leasing for oil and gas exploration on federal lands and waters, and basically do whatever he can to inhibit domestic mineral energy production.

Biden has worked to keep those commitments made during his campaign, and here we are with the inevitable results. OPEC+ is not the cause of America’s energy situation; its actions are merely a response to it.