OPEC and Russia, its co-conspirators, are running wild and U.S. consumers are getting trampled.
The cartels, which are meeting this week, are planning to roll over production cuts with little or no opposition from the Biden administration. OPEC Plus is asserting its authority over global oil prices, driving up gasoline prices and sucking the cash from U.S. consumers. Even so, the Biden administration is talking about mileage taxes on gas and pushing ahead with green energy — no matter what the cost.
TickerSecurityLastChangeChange %USOUNITED STATES OIL FUND L.P.41.17-0.75-1.79%Powered by
Recent data shows that OPEC Plus is still withholding 8 million barrels of oil a day from the global market. That is 8% of the global supply. This comes as “fact-checkers” tell us the Biden administration policies ‒ despite canceling the Keystone Pipeline and a wide-ranging moratorium on new oil and gas leasing on US lands drilling ‒ are having no impact on oil or gasoline prices.
This is a distinct difference from the last administration. Under Donald Trump, his policy of challenging the OPEC Plus cartel had OPEC change direction on production cuts at a time when the economy could ill afford it. As prices soared close to $70 a barrel in 2018 he tweeted that “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!"
In a reversal, the Biden administration is allowing OPEC Plus to raise oil and gas prices by withdrawing supply at a time when the global economy is reopening and needs more oil. Oil prices have risen over 40% on Biden’s watch and gas prices are at $2.86 a gallon according to AAA, which is $0.15 more expensive on the month and $0.84 more expensive on the year.
Yet while Americans face the challenges of bank-breaking fillups at the pump, Biden is silent. This suggests that the Biden administration supports an OPEC cut. It suggests too that OPEC Plus policies of higher prices for oil and gasoline are favored, which means a rollover of their recent cut will likely continue.
News that Russia is on board with a rollover as long as they could get a small production increase so they could meet domestic demand is a signal that all is well in the OPEC Plus cartel. While Saudi Arabia hasn’t commented yet, the market believes that this will be acceptable to them as they are benefiting from the revenue from the increased price of oil.
This oil cut basically ensures the U.S. will be facing gasoline prices over $3.00 a gallon this summer. If OPEC keeps cuts in place beyond, prices could surge even higher. OPEC, for its part, will benefit at the expense of the U.S. consumer. In the meantime, Biden's policies are also discouraging U.S. production. The Biden administration is happy to take away the role of global swing producer from the U.S. and allowing OPEC Plus to set the oil price.
Phil Flynn is senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at [email protected].