© Reuters Silence before the storm: The White House and Congress are considering how to react as OPEC cuts production
Financial Associated Press, October 9 (by Ma Lan) OPEC’s decision to cut production on Wednesday really broke the heart of the White House.
According to media reports, the White House and Congress are now considering measures to protect American consumers, including wresting control of the oil market from OPEC, limiting energy exports to American companies, and forgoing energy sanctions against some. hostile countries.
US President Biden said the US is considering many policies (to reduce production), but hasn’t made a decision yet.
So far, the White House has pledged to work with Congress to develop a bill that would allow the United States to sue OPEC for violating antitrust laws by suing OPEC for a market monopoly. Many bipartisan lawmakers have already proposed the bill, but the White House has remained silent.
Senate Majority Leader Chuck Schumer responded in a statement following the decision to cut production, saying all legislative tools are being studied to address OPEC’s shocking and outrageous behavior.
Kevin Book, chief executive of research firm ClearView Energy Partners, said this is the first time a US president has expressed support for the bill and that Congress appears to support it and that previously unthinkable things are coming true.
But the consensus among market analysts is that policies that will actually lower gasoline prices in the US require long-term planning, so all lawmakers can do now is keep quiet.
Rachel Ziemba, a senior member of the Center for a New American Security, a US think tank, said now is not a good time to be tough. Instead, before the midterm elections, Democrats should emphasize the positive impact of past bills on lowering gasoline prices.
Alternative plans By reviewing past bipartisan and Biden comments, the market also has a vague idea of how the White House and Congress will respond to OPEC.
The aforementioned antitrust law, known as the NOPEC Act, would prohibit any country that produces and exports oil from forming a cartel and would allow the United States Department of Justice to sue countries that restrict energy transactions such as oil and natural gas.
But it is clear that the NOPEC Act requires the United States to have a strong voice in the international energy market. As a result, Republicans also mocked the fact that unless the Democrats agreed to increase domestic power extraction in the United States, the bill would be nothing more than a piece of paper.
Analysts said the bill would elevate the confrontation between the US and OPEC to an unprecedented level, at which point there could be further panic in the oil market, pushing prices higher again.
A more modest approach would be to limit exports from US domestic energy producers. The US Department of Energy and oil companies have been debating this for months and the current oil export limit is set at 4 million barrels per day.
But Bob Ryan, chief commodity and energy strategist at analytics firm BCA, said it would also be very disruptive to global markets.
Other countries, especially Europe, which are in short supply due to their distance from Russian energy, will be simultaneously closed by the United States and prices will rise further.
Another option is to open a strategic fuel reserve, adding a stock of gasoline and diesel to the strategic reserve of crude oil.
But the real problem is that gasoline only has a shelf life of six months, so this war stock needs to be constantly renewed to ensure gasoline doesn’t deteriorate. In addition, the types of gasoline used in different regions also vary, which requires a more complex design of the war reserve.
Furthermore, US politicians are also considering easing sanctions against Iran and Venezuela, one of the most likely possibilities for lowering oil prices.
The return of the two oil producing countries will bring more supply to the global market, easing price pressures.
A more radical approach would be to ease restrictions on energy extraction in the United States, which Republicans are hoping for.
But the problem is that it runs counter to Biden’s emphasis on environmental protection, and his recent behavior in issuing licenses to drill oil and gas has angered environmental groups.
