HOUSTON – When President Biden meets with Crown Prince Mohammed bin Salman in Saudi Arabia, he will follow in the footsteps of presidents such as Jimmy Carter, who flew to Tehran in 1977 to exchange toasts with the shah of Iran on the night of New Year’s Eve.
Like the prince, the shah was an unelected monarch with a deteriorating human rights record. But Mr. Carter was forced to celebrate with him for a cause that was of great concern to his people: cheaper gasoline and secure oil supplies.
As they knew Mr. Carter and other presidents, Mr. Biden has few precious tools to reduce bomb costs, especially when Russia, one of the world’s largest energy producers, has started an unprovoked war against a smaller neighbor. In Carter’s time, the oil supplies needed by Western countries were threatened by revolutions in the Middle East.
During the 2020 campaign, Mr Biden pledged to turn Saudi Arabia into a “pria” for the assassination of a prominent dissident, Jamal Khashoggi. But officials said last week that he planned to visit the kingdom this summer. It was only the last sign that oil has regained its centrality in geopolitics.
Just a few years ago, many Washington lawmakers and oil and gas executives in Texas were turning their backs on an energy boom that had turned the United States into a net exporter of oil and petroleum products and had made more energy independent. With prices rising, this achievement now seems illusory.
The United States is the world’s largest producer of oil and natural gas, but accounts for only about 12 percent of the world’s oil supply. The price of oil, the main cost of gasoline, can still skyrocket or fall depending on events around the world. And no president, no matter how powerful or competent, can do much to control it.
These facts are a cold consolation for Americans who discover that a stop at the gas station can easily cost a hundred dollars, much more than just a year before. As fuel prices rise, consumers are demanding action and may turn against presidents who seem unwilling or unable to bring them back down.
Always looking to the next election, when their jobs or the power of their party are at stake, presidents may find it impossible not to try to convince or beg foreign and domestic oil producers to extract and pump more oil, more quickly. .
“A president has to prove it,” said Bill Richardson, Clinton administration secretary of energy. “Unfortunately, there are only bad options. And any alternative option is probably worse than asking the Saudis to increase production.”
Two other oil-producing countries that could increase production, Iran and Venezuela, are US opponents that Western sanctions have largely eliminated from the global market. Making any deal with its leaders without making big concessions on issues such as nuclear enrichment and democratic reforms would be politically dangerous for Mr Biden.
Energy experts said that even Saudi Arabia, which is considered to have the most reserved production capacity ready to use it, could not bring prices down quickly on its own. This is due to the fact that Russian production is falling and could fall much further as European countries reduce their purchases in the country.
“Presidents may be the most powerful figure in the US government, but they cannot control the price of oil at the bomb,” said Chase Untermeyer, the US ambassador to Qatar in the George W. Bush administration. “Even if prices fall for reasons beyond their control, President Biden probably won’t get much credit for that either.”
Some Republican oil lawmakers and executives have argued that Mr. Biden could do more to increase national oil and gas production by opening more federal land and water to oil drilling in places like Alaska and the Gulf of Mexico. It could also ease regulations on the construction of pipelines so that Canadian producers could send more oil south.
But even these initiatives, which are opposed by environmentalists and many Democrats because they would delay efforts to combat climate change, would have little immediate impact as new oil wells take months to start producing and pipelines can take years. to be built.
“If the administration had access to all aspects of the industry’s wish list, it would have a modest impact on current prices because it would be mostly production in the future,” said Jason Bordoff, director of the Center. Columbia University Global Energy. politics and was an adviser to President Barack Obama. “And it would come with substantial political, social and environmental disadvantages.”
Mr. Biden and his aides have been jaw-dropping U.S. oil executives for pumping more oil with little success. Most oil companies are reluctant to expand production because they fear that drilling more now will lead to an excess that will bring down prices. They remember when oil prices fell below zero at the start of the pandemic. Large companies such as Exxon Mobil, Chevron, BP and Shell have largely clung to the investment budgets they set last year before Russia invaded Ukraine.
The Russia-Ukraine war and the global economy
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A powerful conflict. Russia’s invasion of Ukraine has had a domino effect all over the world, adding to stock market problems. The conflict has caused dizzying spikes in gas prices and product shortages, and is pushing Europe to reconsider its dependence on Russian energy sources.
Global growth is slowing. The aftermath of the war has hampered the efforts of major economies to recover from the pandemic, injecting new uncertainty and undermining global economic confidence. In the United States, inflation-adjusted gross domestic product fell 0.4 percent in the first quarter of 2022.
Russia’s economy is facing a slowdown. While pro-Ukraine countries continue to impose sanctions on the Kremlin in response to its aggression, the Russian economy has so far avoided a crippling collapse thanks to capital controls and rising interest rates. But the head of Russia’s central bank warned that the country is likely to face a severe economic recession as its inventory of imported goods and parts runs out.
Trade barriers are increasing. The invasion of Ukraine has also unleashed a wave of protectionism as governments, desperate to secure goods for their citizens amid scarcity and rising prices, set up new barriers to stopping exports. But restrictions make products more expensive and even more difficult to obtain.
Prices of essential metals are rising. The price of palladium, which is used in car exhaust systems and mobile phones, has skyrocketed amid fears that Russia, the world’s largest metal exporter, could be cut off from global markets. The price of nickel, another key export from Russia, has also risen.
Energy traders have become so convinced that supply will remain limited that U.S. and global oil benchmark prices have risen after it became known that Biden was scheduled to travel to Saudi Arabia. The price of oil rose about $ 120 a barrel on Friday and the national average price of a gallon of regular gasoline was $ 4.85 on Sunday, according to AAA, more than 20 cents more than a week earlier and 1.80 dollars more than a year ago.
Another effort by the Biden administration that seems to have failed is the decision to release one million barrels of oil a day from the Strategic Oil Reserve. Analysts said it was difficult to discern any impact of these releases.
Biden’s team has also been in talks with Venezuela and Iran, but progress has stalled.
The administration has recently renewed a license that partially exempts Chevron from U.S. sanctions aimed at paralyzing the oil industry in Venezuela. In March, three government officials traveled to Caracas to persuade President Nicolás Maduro to negotiate with the political opposition.
In a further easing of sanctions, Repsol of Spain and Eni of Italy could start sending small quantities of oil from Venezuela to Europe in a few weeks, Reuters reported on Sunday.
Venezuela, once a major exporter to the United States, has the largest oil reserves in the world. But its oil industry has been so paralyzed that it could take the country months or even years to substantially increase exports.
With Iran, Mr. Biden seeks to revive a 2015 nuclear deal from which President Donald J. Trump withdrew. An agreement could free Iran from exporting more than 500,000 barrels of oil a day, alleviating the global supply crisis and offsetting some of the barrels that Russia does not sell. Iran also has about 100 million barrels stored, which could be released quickly.
But nuclear talks seem to be embroiled in disagreements and are not expected to bear fruit any time soon.
Of course, any agreement with Venezuela or Iran could become a political responsibility for Mr. Biden because most Republicans and even some Democrats oppose compromises with the leaders of those countries.
“No president wants to remove Iran’s Revolutionary Guards from terrorist list,” Ben Cahill, an energy expert at the Washington Center for Strategic and International Studies, said. . “Presidents are wary of any movement that seems to make political sacrifices and give victory to US opponents.”
Foreign policy experts say that while war crises during the war are inevitable, they always seem to surprise administrations, which are generally unprepared for the next crisis. Obama’s adviser Bordoff suggested the country invest more in electric cars and trucks and encourage more efficiency and conservation to reduce energy demand.
“The history of oil crises shows that when there is a crisis, politicians run like chickens with their heads cut off, trying to figure out what they can do to provide immediate relief to consumers,” Bordoff said. American leaders, he added, need to be better prepared …