BUCHAN: Biden Could Kick Off An Energy Trade War … With Ourselves

  • Post category:News / US News

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On Oct. 5, the perpetual boogeyman of the Biden administration, the Organization of Petroleum Exporting Countries and it’s plus one Russia (OPEC+), announced a collective supply-side action—a production cut of two million barrels of oil per day.

The action is sending the Biden administration into its latest panic as election day looms. What could follow is an energy trade war of the Biden administration’s own making that leaves hardworking Americans footing the bill. The OPEC+ action also underscored the lack of respect the Biden administration has on the international stage to the peril of American energy independence.

Recall in August when the Minister of Energy of Saudi Arabia decried the “erroneous” signals being sent to the market, while in the same breath, the minister hinted that OPEC+ “has the means to deal with such challenges including cutting production at any time.” This was as direct a warning of production cuts as one could expect.

So why is OPEC+ cutting production in the depths of a global energy crisis? Well, petrostates are big fans of steep profits.

Beyond the obvious, however, there is the adherence to anti-fossil fuel ideology, and the fears of forced demand reduction (known to Europeans as fuel rationing).

There is also the fact that the Biden administration has been dumping America’s Strategic Petroleum Reserve (SPR) onto the market without considering the implications for American producers — the only sustainable off-ramp from this year’s energy catastrophe.

The Biden administration continually fails to see the forest through its green-tinted shades. Depleting strategic stockpiles without providing remedies to increase domestic production is a recipe to utter disaster.

Across the country, American stockpiles are reaching record lows. The SPR is at its lowest levels since 1984, having been liquidated by some 34% under the Biden administration. Stockpiles of critical fuels, like diesel — the workhorse of the American economy — are at an eight-year low.

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And, of course, there is the sad story of America’s refining capacity. Our ability to produce our own gasoline, diesel, jet fuel and New England’s favorite, heating oil, has also been slashed under the Biden administration by more than one million barrels per day. Some estimates point toward a return of $6 a gallon of gasoline.

It’s no wonder the administration is frightened. They’ll soon have to explain to hardworking Americans why they spent over $1.5 trillion on the wrong kind of energy. This is already proving to be a tough few weeks for the administration as gasoline prices were already climbing upward before the OPEC+ action.

Moreover, Americans are nervously anticipating their utility bills as cold weather approaches and U.S. natural gas supplies are strained between rising demand the world over.

What about the U.S. reprising its role as a swing producer? Not so fast. American production has been largely stagnant under the Biden administration’s war on energy. Without the threat of a market deterrent, OPEC+ is free to raid the pocketbooks of Americans as they please.

In response, the Biden administration is again opening the door to a disastrous exports ban. The move would see prices continue to skyrocket as markets react to a complete disruption in long-held supply chains — after all, oil is a global market in every sense. Beyond price increases for Americans, our strategic stockpiles of fuel would only be further plundered — the energy equivalent of a bank run.

Meanwhile, this action would undermine the ongoing efforts of the Biden administration to aid our European allies with non-Russian energy supplies and increase energy inflation in Latin America — the very region where scores of illegal migrants are fleeing economic destitution for America and the Biden administration’s open border policies.

The economic consequences for America are no better. A recent study by the American Council for Capital Formation found that the return of the export ban would further reduce our already stifled domestic refining capacity by an additional 1.3 million barrels per day. More significantly, such a ban could slash U.S. GDP by more than $44 billion next year and kill 85,000 American jobs.

It’s time for the Biden administration to end this senseless trade war on our own American economy, and that begins with recognizing basic supply and demand fundamentals.

The solution lies here at home. Not in isolating American energy from global trade during a global energy crisis but in empowering American producers to balance against the price-fixing OPEC cartel.

Samuel Buchan is the Director of the Center for Energy & Environment at the America First Policy Institute. He previously served as the Director of International Economic Policy at the White House National Economic Council and as the Senior Advisor to Secretaries Rick Perry and Dan Brouillette.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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