United States looking for options to resolve fuel crisis
The United States, faced with sharp fuel price increases on its domestic market, keeps looking for a wide range of options to solve the problem – ranging from pressure on OPEC countries to a coalition with Asian consuming nations to sales of oil from strategic reserves or the re-introduction of the embargo on U.S. oil sales, lifted in 2015.

Prices of diesel fuel and petrol on U.S. markets have hit a seven-year high. Rising prices for oil products put pressure on electricity prices, threatening consumers with big end-of-year bills.

    The United States called on OPEC+ before its last meeting at the beginning of November to boost oil production in December by 800,000 barrels per day. But OPEC+ countries paid no heed to the persuasive arguments and decided to stick to their plan of keeping the December production increase to only 400,000 bpd.

   As Saudi Oil Minister Abdulaziz bin Salman said, that decision was taken in the interests of all market participants.

    “As for the United States, we had discussions at all levels and we still believe that we are doing a good job,” the minister told a news conference after the OPEC+ meeting.

    U.S. President Joe Biden noted that the position of exporters like Russia and Saudi Arabia came as no  surprise.

     “There are other tools in the arsenal that we have to deal with other (exporting) countries at an appropriate time,” Biden said.

    In the end, the United States, the world’s largest oil producer, approached China, India, Japan and South Korea with a request to study the possibility of selling oil from national strategic reserves as a way to bring down world prices.

    For the moment, the Asian response to the U.S. appeals is unknown. 

   China, the world’s biggest oil importer, said only that it was working on releasing stocks, but it had already used small amounts of oil from reserves in September prior to the U.S. request. Japan said for the moment that by law it could not use released stocks from reserves to influence oil prices. South Korea said it was studying the matter.

     The United States had earlier resorted to using its “oil stash” in 2011 during the war in Libya – an OPEC member.

   For the moment, pre-pandemic levels of oil production have not been restored in the United States. Production levels this year are expected to stand at about 11 million bpd, compared to 13 million in 2019.

    In an effort to deal with prices, Biden asked the Federal Trade Commission to look into whether oil and gas companies were illegally maintaining high petrol prices on U.S. markets.

   In a letter to the commission’s head, Biden said there was “mounting evidence of anti-consumer behaviour by oil and gas companies…The largest oil and gas companies in America are generating significant profits off higher energy prices.”

   Eleven Democratic senators, meanwhile, wrote last week to the president urging him to resort to make use of different measures. “This includes a release from the Strategic Petroleum Reserve and a ban on crude oil exports,” they wrote.

   High prices, the senators wrote, “placed an undue burden on families and small businesses trying to make ends meet”.


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November 2021