Will Biden Get OPEC on Board and Bring Gas Prices Down?


Aug. 12 2021, Published 12:25 p.m. ET

What does a call for 50 percent EV sales by 2025 and a request for increased global oil production have in common? They both came from President Biden, the leader of a surface-level sustainable administration that also seems to be seeking refuge in old comforts like global oil production to help bring gas prices down.

Article continues below advertisement

Biden approached OPEC (Organization of the Petroleum Exporting Countries) to increase oil production in hopes that it will bring gas prices down. Will it work. If it does, will Biden be able to reckon with his juxtaposing imprints in America?

Gas prices are soaring, and Biden is looking for answers.

According to AAA, the national average for gas prices on Aug. 12 is $3.19 per gallon.

Article continues below advertisement

The highest of these prices are on the West Coast in states like California, Oregon, and Washington. Currently, California gas is priced at $4.40 per gallon.

Gas prices are increasing in the long term and short term. One year ago, the national average was about $2.18 per gallon. One month ago, the prices were at $3.15. The costs are climbing, and it's becoming a major issue for the average American, but also for Biden who represents them.

Article continues below advertisement

Biden is scrambling for ways to trim the front-facing costs of oil, even if it means sacrificing his sustainability goals.

How OPEC impacts gas prices

OPEC nations (made up of 15 member countries, plus others in OPEC+) contribute about 40 percent of crude oil across the globe. That means this one organization holds a major stake in gas prices everywhere, including the U.S.

Article continues below advertisement

As a result, Biden has contacted OPEC to increase the oil output. With a higher supply, consumer costs would decrease dramatically. Of course, it would also majorly increase our carbon footprint as a country and across the globe. Just days after the IPCC released a nearly 4,000-age report stating that Earth is in code red for climate change, Biden's move feels especially backward.

The COVID-19 Delta variant could keep oil demand down, and OPEC might not take Biden's suggestion.

OPEC isn't keen on increasing oil output with the looming threat of the COVID-19 Delta variant, which could cause road travel to decrease yet again (especially once summer ends in the U.S.). The organization trimmed production at the beginning of the pandemic and hasn't brought it back up to previous levels yet.

Article continues below advertisement

If the organization remains resistant to Biden's request, he might not have other options in terms of reducing gas prices domestically.

Can Biden reckon his economic and environmental goals?

Biden's call for increased oil production directly juxtaposes his previous sustainability efforts, like calling for 50 percent of all car sales to be electric as soon as 2025. The infrastructure bill that's crawling its way through the government as we speak reserves a portion of funding for "sustainable transportation options," according to the fact sheet. Biden also shut down the Keystone XL pipeline project in June.

Article continues below advertisement

How does increasing oil production line up with this? Biden's sustainability goals are long term, and most of the changes would take place in the future. Gas prices are an issue as we speak, and he's trying to quell those costs with an "easy" fix.

But that fix might not prove so easy after all if OPEC doesn't bite.


More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.