President Joe Biden has pledged to wean the U.S. off of fossil fuels, and never has that call been more urgent than now, with United Nations-backed scientists warning of a point of no return.
And yet, his administration has called on Saudi Arabia and its allies to unleash more crude onto global markets, stressing the importance of “affordable energy.” It’s not that the U.S. president has suddenly become anti-clean energy, but he has to face the reality that the vast majority of Americans still drive gasoline- and diesel-fuelled vehicles.
The jarring contradiction highlights the challenges that politicians around the world face in pushing for a transition away from oil and toward clean energy resources while also seeking to keep a lid on prices at the pump.
As it tries to navigate the political hurdles of fighting climate change without burdening voters, the administration is also stoking accusations of hypocrisy — especially as it has sought to appeal to climate advocates by getting tough on fracking and oil pipelines at home.
(In January, Biden revoked the permit for the Keystone XL pipeline, which would have moved 830,000 bbls/d of crude from Alberta to the Texas Gulf Coast.)
“The White House doubles down on favouring OPEC production while giving the middle finger to American energy jobs, American energy consumers, [and] climate-advantaged American production,” said Scott Angelle, a Republican former lieutenant governor of Louisiana and secretary of natural resources.
The administration’s appeal to OPEC came just two days after Monday’s rallying cries to shift away from fossil fuels amid epochal warnings from the world’s top climate scientists to eliminate carbon emissions as quickly as possible. John Kerry, the U.S. special presidential envoy on climate, urged “aggressive climate action.”
Meanwhile, oil prices are up more than 40 per cent this year even after a pullback in recent days. Average gasoline prices at the pump have been above US$3 a gallon since May.
After more than a decade of low inflation, rising prices have steadily taken hold across almost all parts of the U.S. economy, from housing to consumer goods, with supply-chain shortages leaving some industries almost at breaking point. Higher oil prices inevitably make everything worse.
“President Biden has made clear that he wants Americans to have access to affordable and reliable energy, including at the pump,” the White House said in a statement. OPEC’s current plan to increase production slowly “is simply not enough.”
After massive growth since 2010, production from America’s shale fields and offshore oil platforms plunged during 2020, removing more than an entire U.S. Gulf of Mexico’s worth of output. It has since plateaued at around 11.3 million bbls/d as producers focus on banking profits from higher oil prices rather than investing in expanding output. That has given OPEC more pricing power in the global oil market.
While in no way as severe, runaway U.S. consumer prices and a presidential appeal to the Middle East to manage oil prices recalls the inflationary crises of the 1970s.
“The Biden administration is under enormous political pressure due to inflation, with galloping gasoline the most publicly visible and vexing,” said Bob McNally, president of consultants Rapidan Energy Group and a former White House official.
As candidate, Joe Biden called for phasing out the nation’s oil industry, saying the environmental costs were too great not to transition to renewable energy.
“The oil industry pollutes significantly,” Biden said during an October 2020 political debate with his rival Donald Trump. “It has to be replaced by renewable energy over time.”
Trump soon seized on the remarks to warn swing-state voters in energy producing states like Pennsylvania that a Biden presidency would cost jobs, and Biden sought to down play his on-stage comment, promising that oil workers wouldn’t lose their jobs.
“We’re not going to get rid of fossil fuels for a long time,” he told reporters as he prepared to depart Nashville.
Less than a year into his first term, Biden is making sure that his administration doesn’t alienate voters in the squeezed American middle class, despite his rhetoric on climate change, according to Kevin Book, managing director of research firm ClearView Energy Partners.
“This seems intended more for the American driver than the overseas producer, and it probably has more to do with November of 2022 than August of 2021,” he said. “Congressional margins are tight. The Biden agenda won’t get very far if a GOP-controlled Congress can shut the government down.”
© 2021 Bloomberg L.P.