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The OPEC-announced policy to cut oil production by 1.6 million barrels a day is an embarrassing indication that President Joe Biden’s repeated pleas to Saudi Arabia to increase oil output have fallen on deaf ears.
What is worse is that it has been Biden’s anti-fossil fuels climate change policies that have given OPEC new life to control world energy prices.
Before Biden’s policies, the U.S. had been the world’s marginal producer, significantly offsetting OPEC production cuts with our own production increases. Our dynamic oil industry had sharply curtailed OPEC’s influence over world oil prices.
Biden’s war on American oil and gas changed all that. U.S. domestic oil production– in states such as Alaska, North Dakota, Oklahoma, Pennsylvania Texas, West Virginia – has been reduced by an average of roughly 2.7 million barrels a day. That is a cumulative total of 2 billion barrels, and counting.
To make matters worse, by taking U.S. oil and gas out of the world picture, OPEC has been emboldened to reach into consumers’ wallets by reducing its own production, which it now pledges to reduce by about 1.6 billion barrels. That’s 4.3 million barrels a day missing from the world market.
In some ways, Biden has become the best friend of OPEC nations and his policies have raised the world price of oil thus helping finance the Russia war machine in Ukraine.
With the gas price now headed back up to $4 a gallon in the weeks ahead, the Biden energy policies are in effect a tax of at least $1 a gallon on American motorists and U.S. industries.
Remember, oil prices were averaging about $2.59 a gallon when Trump left office.
These economic losses do not include the reduction in natural gas and coal production – which could and should be higher than ever, given that the world is using more coal and gas than ever before. When adding these reductions from Trump levels, the Biden administration’s assault on American energy has so far cost the U.S. economy more than $200 billion in lost real income since Biden entered office.
This war on American energy has been carried out through new (threatened and actual) taxes on the domestic energy industry, more expensive regulations on American energy production, ESG rules that discourage investment in oil and gas companies, restrictions on drilling permits, and the cancellation of oil and gas infrastructure starting with the killing of the Keystone XL pipeline.
Returning to the Trump pro-production energy policies would be the most effective way to ensure that America’s economy is not held hostage — as was the case in the 1970s and early 1980s — to nations that are often hostile to our nation’s economic and security interests. It also would lower prices at the pump to American consumers and lower Bidenflation.
Stephen Moore is the co-founder of the Committee to Unleash Prosperity and an economist at the Heritage Foundation.