[WaPo Opinion] How to recover from President Biden’s Saudi Arabia failure

https://www.washingtonpost.com/opinions/2022/10/08/biden-saudi-arabia-opec-oil-production-cut/

How to recover from President Biden’s Saudi Arabia failure
By the Editorial Board
October 8, 2022 at 7:00 a.m. EDT

Wednesday’s decision by the Organization of the Petroleum Exporting Countries and Russia — also known as OPEC Plus — to slash crude oil production by 2 million barrels per day is not quite as big of a shock as the embargo OPEC imposed on the United States between October 1973 and March 1974. It is nevertheless a setback for President Biden’s foreign policy and a blow to the United States and its allies on several fronts. The situation calls for a coolheaded short-term response followed by smart longer-term strategy.

The political essence of the decision is a tilt by Saudi Arabia and other Gulf states in favor of Russia, which shares their interest in higher oil prices. The move will not only create economic risks for the United States and Europe but also make it more difficult for them to implement a planned price cap on Russian oil exports in December. All of that can only help Russia pursue its flagging war against Ukraine.

There could be no more troubling evidence of how badly Mr. Biden’s efforts earlier this year to mend fences with the de facto Saudi ruler, Crown Prince Mohammed bin Salman, have failed. Not only has MBS, as he is known, refused to raise oil production, as Mr. Biden wanted. He appears to be doubling down on hostility toward the president, in retaliation for the latter’s — accurate — depiction of him as the author of Post contributor Jamal Khashoggi’s murder and other human rights violations that make Saudi Arabia worthy of “pariah” status. Announced just a month before a crucial midterm election in which Republicans are blaming Mr. Biden for high U.S. gas prices, the crown prince is effectively joining hands with Russian President Vladimir Putin to drive those prices, which had been falling, back up.

It looks for all the world like an attempt by MBS to influence internal U.S. politics, to the advantage of the party of former president Donald Trump, who dealt warmly with him. Dictatorial and impetuous, MBS is also young — only 37 years old — and likely to dominate the kingdom for many years. Democratic members of Congress are calling for a reassessment of the long-standing strategic relationship between the United States and Saudi Arabia in light of that reality, and they should be.

The United States cannot yield to this kind of pressure. It should press ahead with the plan for a price cap on Russian oil, appropriately adjusted to account for the OPEC Plus production cut. At the same time, Congress and the Biden administration should avoid any action, in the heat of an election campaign, that might make matters worse.

One probably counterproductive step would be restricting U.S. exports of petroleum products. Supporters argue that this would shield domestic customers from foreign competition, thus reducing upward price pressure. More likely, it would punish the Latin American and European countries that buy U.S. products while reducing incentives for U.S. refiners to expand production for everyone. The net impact could even be higher prices at the pump.

Also unwise would be further releases from the Strategic Petroleum Reserve, which is already at its lowest levels since the mid-1980s. Legislation to lift the sovereign immunity of OPEC’s state-owned oil companies, subjecting them to U.S. price-fixing lawsuits — the so-called NOPEC bill — is worth considering but also fraught with potential unintended consequences, including retaliatory legal action against the United States and its businesses.

Another reason to take a deep breath: The real-world impact of the OPEC Plus production cut might be less than the headline numbers suggest. Though a production cut of 2 million barrels per day is 2 percent of the global supply, OPEC Plus was already missing its daily quotas this year by as much as 3 million barrels, according to the Wall Street Journal.

As the world’s second- and third-largest crude oil producers, Saudi Arabia and Russia have leverage — in the short run. Reducing that leverage and restoring U.S. freedom of action over the longer term mean taking advantage of our domestic supplies of fossil fuels and green energy, as the climate provisions of the Inflation Reduction Act will ensure. Legislation to facilitate the build out of transmission lines and other critical energy infrastructure is now doubly urgent. And Congress and states can do more to encourage conservation, including through increased fuel taxes, which several states have implemented in recent years but at which Congress still balks. Yes, fuel taxes raise per-gallon prices, but at least the ultimate destination of the money is the Highway Trust Fund, not Riyadh or Moscow.

Ultimately, the 1973 oil embargo backfired on its authors because it shocked the United States and other industrialized countries to use energy much more efficiently. A smart response can turn the OPEC Plus production cut to the United States’ ultimate advantage as well.
​

​

 

well, I find it difficult to stay away from Murdoch- owned corporate media