October 6, 2022
Here’s what the President said today when asked what he and the United States can do about the decision by OPEC+ to cut oil production by 2 million barrel a day.
So what alternatives are on the table?
First, you need to understand the President does not have a magic wand and cannot say gas prices will be 2-dollars a gallon. That’s not how global markets works. And generally, there’s not a lot a President can do to control gas prices.
That said there are some options on the table here in the US. Here are just three of the ones you’re going to be hearing about.
One – The President says he wants to “work with congress.” But what can Congress do to foreign countries – like the oil producing countries known as OPEC+ that control more 40% of the world’s oil production? There are several pieces of legislation that have been moving through Congress.
There’s a bipartisan bill called NOPEC that has been circulating for years. NOPEC stands “no oil producing and exporting cartels” act. The bipartisan bill would tweak US antitrust law and allow the attorney general to sue members of OPEC+, such as Saudi Arabia, in federal court for orchestrating and manipulating global crude oil prices. Though that could lead to blowback in many different ways. There’s a bill that would give the US trade representative the power to initiate a dispute against OPEC+ at the World Trade Organization. Some lawmakers have even suggested the United States could retaliate by pulling back on the sales of our military equipment to certain OPE countries like Saudi Arabia. Of course there’s geopolitical downsides to every one of those options.
Another option is — continuing to release oil from the United States’ strategic petroleum reserve. I’ve been telling you for the last 6 months, the President ordered one million barrels a day released from the SPR to help regulate the cost of gasoline. That has helped some. But that million barrel a day release is set to stop at the end of this month. Now the White House is committed to releasing another 10 million barrels in November. But the President could continue the release reserve oil to offset some of the OPEC+ cuts.
And the last option is one that US oil companies don’t like. The White House is considering limiting the amount of refined oil products like gasoline and diesel that u-s oil companies can export. In case you didn’t know, US oil producers don’t just sell US crude oil and oil related products to America – those products go to the highest bidder on the global market. The oil industry says banning or limiting those exports would actually hurt American consumers at the gas pump. According to the US Energy Information Agency– the US has the refining capacity of more than 18 million barrels of crude oil per day and exports an average of more than 3.5 million barrels per day of several petroleum product including gasoline.
Most recent stats from the EIA on petroleum imports and exports here.
Details on petroleum refining capacity in the US here.
