© Archyde.com. The silence before the storm?The White House and Congress are considering how to fight back as OPEC cuts production
Financial Associated Press, October 9 (Editor Ma Lan) OPEC’s decision to cut production on Wednesday really broke the heart of the White House.
According to the media, the White House and Congress are now considering some measures to protect American consumers, including wresting control of the oil market from OPEC, restricting energy exports from American companies, and waiving energy sanctions on some unfriendly countries.
U.S. President Biden said that the United States is considering many policies (to reduce production), but has not yet made up its mind.
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 proposed the bill before, but the White House has remained silent.
Senate Majority Leader Chuck Schumer responded in a statement following the decision to cut production, saying that all legislative tools are being studied to deal with (OPEC)’s shocking and outrageous behavior.
Kevin Book, managing director of research firm ClearView Energy Partners, said this is the first time a U.S. president has expressed support for the bill, and 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 U.S. gasoline prices require long-term planning, so all lawmakers can do now is keep silent.
Rachel Ziemba, a senior fellow at the Center for a New American Security, a U.S. think tank, said now is not a good time to be harsh. 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, markets also have 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 producing and exporting oil from forming a cartel, and would allow the U.S. 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 scoffed that unless Democrats agreed to increase domestic energy 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 United States and OPEC to an unprecedented level, at which point there might be further panic in the oil market, pushing up prices once more.
A more modest approach would be to limit exports from U.S. domestic energy producers. The U.S. Department of Energy and oil companies have been arguing over this for months, and the current oil export limit is set at 4 million barrels per day.
But Bob Ryan, chief commodities and energy strategist at analyst 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 shut down by the United States, and prices will rise further.
Another option is to open a strategic fuel reserve, adding a gasoline and diesel stockpile to the strategic crude oil reserve.
But the real problem is that gasoline has a shelf life of only six months, so this war stock needs to be constantly renewed to ensure that gasoline does not spoil. In addition, the types of gasoline used in different regions also vary, which requires a more complex design of the war reserve.
In addition, U.S. politicians are also considering the possibility of easing sanctions on Iran and Venezuela, one of the most likely possibilities to lower oil prices.
The re-entry of the two oil-producing countries will bring more supply to the global market, easing price pressures.
A more radical approach would be to loosen restrictions on energy extraction within the United States, which Republicans have been 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 for oil and gas has angered environmental groups.