OPEC and out

The political fallout from the OPEC+ decision to cut its oil production target by two million barrels a day – which would leave the world economy around six million barrels a day short of its pre-pandemic peak – is sufficient to push us closer to collapse.  The Biden administration, who optimistically believed the President had secured a 200-million-barrel deal with the Saudis to replenish the USA’s strategic reserve, have treated the announcement as tantamount to a declaration of war.  Although there is no law of physics that says oil producing states have to provide the west with cheap oil.

The decision is yet another Western own goal in an economic war that the west is clearly losing.  It was the Biden administration’s decision to refuse new licenses for US domestic production which, despite depletion, could still fill the gap left by OPEC+ cuts (although the USA – like the UK – still needs to import heavy oil).  It was also their decision to empty the strategic reserve, which is meant for dire emergencies, solely to keep pump prices down ahead of next month’s mid-term elections.  Elections that Biden’s team may well lose, as Michael Shellenberger reminded Americans this week, the situation:

“… poses political risks for Democrats who, in the spring of 2020, killed a proposal by President Donald Trump to replenish the SPR with oil from American producers, not OPEC+ ones, and at a price of $24 a barrel, not the $80 a barrel that the Biden White House promised to OPEC+. At the time, Trump was seeking to stabilize the American oil industry after the Covid-19 pandemic massively reduced oil demand…

…click on the above link to read the rest…