White House Calls on OPEC+ to Boost Production as Gasoline Prices Soar

By Emel Akan
Emel Akan
Emel Akan
reporter
Emel Akan is White House economic policy reporter in Washington, D.C. Previously she worked in the financial sector as an investment banker at JPMorgan and as a consultant at PwC. She graduated with a master’s degree in business administration from Georgetown University.
August 11, 2021 Updated: August 11, 2021

WASHINGTON—Worried about rising gas prices, the Biden administration has called on oil-producing countries including Saudi Arabia and Russia to raise their oil production. Strong recovery in global demand and slow growth in supplies have been pushing crude oil prices higher in recent months.

National security adviser Jake Sullivan issued a statement on Aug. 11 asking the Organization of the Petroleum Exporting Countries and Russia (OPEC+) to address rising gasoline costs.

“Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery,” Sullivan warned.

In July, OPEC+ ministers agreed to boost oil production by 0.4 million barrels per day (bpd) on a monthly basis from August until year-end. The decision came amid a strong rebound in global demand.

But this increase isn’t enough, according to the White House, to ensure “reliable and stable global energy markets.”

“While OPEC+ recently agreed to production increases, these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022,” Sullivan said in the statement.

“At a critical moment in the global recovery, this is simply not enough.”

OPEC+ last year cut production by a record 10 million bpd due to the slump in demand caused by the pandemic. The cut had been eased to about 5.8 million bpd in July.

Gas prices in the United States have risen by more than 40 percent from a year ago. The national average gas price stood at $3.185 per gallon on Aug. 11.

“President Biden has made clear that he wants Americans to have access to affordable and reliable energy, including at the pump,” Sullivan said. “We are engaging with relevant OPEC+ members on the importance of competitive markets in setting prices.”

The price of West Texas Intermediate (WTI) crude was at $68.48 on Aug. 10, up more than 40 percent this year and Brent Crude was trading at $70.77, up 36 percent year-to-date.

It’s unclear whether OPEC will respond to calls by the Biden administration to boost output.

“Unless COVID shuts down the global economy, we’re still going to be very undersupplied into the end of this year,” Phil Flynn, senior energy analyst at Price Future Group, said in a report.

Oil industry experts have been criticizing the Biden administration’s climate policies, claiming that these policies are making the country more dependent on foreign oil producers.

This year, Russian oil imports to the United States have set a record, amid a strained relationship between Washington and Moscow.

Imports of crude oil and petroleum products from Russia reached 26.71 million barrels in May, the highest level yet, according to the Energy Information Administration (EIA).

Kathleen Sgamma, president of Western Energy Alliance, which represents 200 oil and gas companies in many Western states, criticized the administration’s policies toward domestic producers.

“The Biden Administration has embarked on an anti-American oil agenda on many fronts, including canceling KeystoneXL and banning federal leasing even as it encourages producers in Russia and OPEC,” Sgamma told The Epoch Times in an email.

“Instead of begging OPEC to increase production, why doesn’t the White House just go to American producers and promise to back off plans to regulate us out of business.”

Sgamma also urged the Biden administration to ensure that the Securities and Exchange Commission doesn’t “distort energy markets with regulations aimed at denying the oil and natural gas industry access to capital.”

U.S. crude oil stocks continue to fall, raising concerns about the price of WTI. U.S. oil production is down compared to last year, and a large part of the void is being filled by Russia, according to analysts.

U.S. production averaged 11.2 million bpd in July, down from nearly 13 million before the pandemic, the EIA data showed.

The White House also called on U.S. regulators to monitor prices at the pump.

In a letter sent to Federal Trade Commission Chair Lina Khan, the White House asked regulators to “address any illegal conduct that might be contributing to price increases.”

“During this summer driving season, there have been divergences between oil prices and the cost of gasoline at the pump,” National Economic Council Director Brian Deese said in the letter.

“While many factors can affect gas prices, the president wants to ensure that consumers are not paying more for gas because of anti-competitive or other illegal practices.”

Emel Akan
Emel Akan
reporter
Emel Akan is White House economic policy reporter in Washington, D.C. Previously she worked in the financial sector as an investment banker at JPMorgan and as a consultant at PwC. She graduated with a master’s degree in business administration from Georgetown University.