Last Week, In “Games” That May Influence The Future Of Energy, President Biden Played Two Weak Hands.
Originally published on Forbes.com on July 17, 2022
The failure of Biden’s card hand in the Middle East left the oil and gas industry happy with the price of $100/barrel oil, at least for now.
Cards in the right hand.
President Biden was in the Middle East last week trying to work a deal with Saudi Arabia and other OPEC countries to increase their oil production. This would lower the international price of oil, now about $100 per barrel, and would result in lower gasoline prices everywhere.
In the US, as in other countries, gasoline prices are higher than they’ve been in years. They are part of the inflationary surge that is agitating US citizens mindful of mid-term congressional elections coming up in November.
But this hand of cards would increase carbon emissions because oil and gas fuels contribute 50% of global greenhouse gases. It was an unusual hand of cards for the president to hold.
The right hand was not a strong enough hand. The Crown Prince of Saudi Arabia, Mohammed bin Salman (or MBS), which exports more oil than any other country, rebuffed Biden’s initiative.
In his statements to the summit of the extended Gulf Cooperation Council, MBS took an opportunity to blame climate policies that would restrict fossil energies and would continue to heat the inflation surge.
“Adopting unrealistic policies to reduce emissions through the exclusion of the main sources of energy [oil and gas], without taking into consideration the impact of these policies on the social and economic pillars of sustainable development and global supply chains, will lead in the coming years to unprecedented inflation, increased fuel prices, increased unemployment and exasperation of dangerous social and security problems including poverty, famine, escalation of crime, extremism and terrorism,” the Crown Prince said.
So Biden’s right hand of cards promoting greater production of oil, a reversal of his administration’s climate signature, was not strong enough to get a deal.
Despite the pushback, it’s expected oil production will be increased after the OPEC+ cartel meets in early August.
Cards in the left hand.
Also last week, Senator Joe Manchin, Democrat from West Virginia, pushed back on President Biden’s playing hand designed to expand government policy on climate initiatives. The Democrats have been promising reforms on climate and taxes since 2020 but Manchin has rejected these more than once.
His is a critical voice because the US senate is split 50-50 and his vote would be needed to pass any bill. He declared last week he would only support a healthcare bill, at least until inflation data for July arrived.
The timing is critical because any bill in the US Senate not passed by August is likely to be swamped by concerns for the mid-term elections in November.
So Biden’s left hand of cards for greater climate policy, a signature of his administration, was not strong enough to deliver a promised climate bill in the US Senate.
A democratic senator from New Mexico, the second oil-producing state after Texas, lamented the standoff with Senator Manchin.
“We have an opportunity to address the climate crisis right now,” Senator Heinrich said. “Senator Manchin’s refusal to act is infuriating. It makes me question why he’s chair of the Senate Committee on Energy and Natural Resources.”
President Biden, apparently keeping the mid-term elections in focus, said the Senate should submit a reduced bill, a healthcare bill, which Democrats have been trying to pass for about 20 years. Biden said he would sign it.
The only recourse the president has for his senate climate initiative is to keep playing a depleted hand of cards by invoking executive action. Possible actions include requiring big industry to capture and store their carbon emissions, and to enforce tighter controls on emissions from coal- and gas-fired power plants, as well as gasoline/diesel vehicles.
Biden has committed to executive actions but has not been specific.
President Biden last week played both sides of the climate table, with the cards in the right hand aiming to reduce US frustration over the price of oil and gasoline/diesel – ahead of mid-term elections.
Although displaying Biden’s famous flexibility for getting deals done, both of his card hands under-performed. Both hands left folks who were pushing for climate change a little disappointed if not confused.
But the failure of Biden’s right hand in the Middle East left the oil and gas industry happy with the price of $100/barrel oil, at least for now.