Bashing Exxon Profits, Meeting With Saudi Prince

  • Biden has few options for reducing gas prices and avoiding political annihilation.
  • He’s making a big bet by bashing Exxon and heading to Saudi Arabia next month.
  • “Asking oil from MBS will not reduce gas prices,” California Rep. Ro Khanna said in an interview.

President Joe Biden eyes political annihilation within months.

A spike in oil and gas prices threatens to hand the Democrats a decisive midterm defeat in November. The national average for a gallon of regular gasoline topped $5 last weekend for the first time. That’s a 10% jump from last month, reflecting huge consumer demand outpacing available oil supply, coupled with severe aftershocks in energy markets following the war in Ukraine.

The White House’s bleak political outlook was compounded by a worse-than-expected inflation report by many economists. It showed the prices of groceries, plane tickets and rents rising at their fastest rate in four decades. Biden has since doubled down on his pledge to tackle rising prices and make it the top national priority.

But soaring gasoline prices are underpinning the current inflationary spiral. It burdens businesses with higher bills for electricity, air travel and shipping, raising prices across the board for Americans. It appears there are few options left in the White House to reverse the supply crisis. It has already pledged to release one million barrels a day from the strategic oil reserve in May, eased regulations on ethanol fuels and tried to unclog ports.

“President Biden is basically using the full suite of tools available,” Jonathan Elkind, senior fellow at Columbia University’s Center on Global Energy Policy, told Insider. “It seems to me that the Biden administration has done many types of things that make sense.”

But those measures failed to relieve the pump, and it prompted Biden to make a big bet with rising gasoline prices with no end in sight. He slammed Exxon and berated other big oil companies for making huge profits in a letter, signaling a more aggressive approach against a sector he is urging to rapidly ramp up production.

He is set to meet Saudi Crown Prince Mohammad Bin Salman in July, despite promising to make Saudi Arabia an international pariah following the murder of Jamal Khashoggi, a prominent critic of the Saudi royal family and a journalist who resided in the United States.

It remains to be seen whether chasing one bogeyman in the form of Big Oil and closing in on another in the form of a dodgy ally will be enough to alter gas prices and prevent the Democrats from losing one or more two houses of Congress this fall.

Democrats are not comfortable turning to Saudi Arabia for more oil

Ron Wyden Schumer

Sen. Debbie Stabenow (D-MI), Sen. Ron Wyden (D-OR), Sen. Majority Leader Chuck Schumer (D-NY) and Commerce Secretary Gina Raimondo attend a press conference on the issues of the supply chain.

Joshua Roberts/Getty Images

The possible image of Biden shaking hands with a Saudi leader believed to be the alleged mastermind of Khashoggi’s assassination is enough to spark unease and criticism among his Democratic allies.

Sen. Tim Kaine of Virginia told Insider he thought the meeting was a ‘bad idea’, adding that it was his ‘hunch’ that the president’s trip was at least partly aimed at getting Riyadh to increase production of petroleum.

“Asking for oil from MBS will not reduce gas prices,” Rep. Ro Khanna of California, a prominent House progressive, told Insider. He added that Biden should set preconditions such as pushing the Saudi government to lift its devastating blockade of Yemen.

“I see very little evidence that the Saudis will lower gas prices,” Sen. Ron Wyden of Oregon said Wednesday. “I see a lot of evidence of their horrific human rights abuses.”

Riyadh has very limited room to increase oil production – known as “spare capacity” – and analysts say that even if Saudi Arabia pumped more crude, it still might not. not curb soaring gas prices. “It’s not like throwing a switch,” Elkind said. “It’s not like it would instantly affect things.”

Some are pushing the Biden administration to think outside the box. Skanda Amarnath, executive director of the left-wing think tank Employ America, says the federal government should briefly guarantee demand from oil producers among other administrative maneuvers and prioritize long-term clean energy initiatives.

“It’s disgusting for Democrats to talk about doing things that are somehow industry-friendly,” Amarnath told Insider. “But there are actually things if you do them right you will prevent oil prices from collapsing and having that boom and bust cycle again.”

“There is nothing the president controls less than gas prices”

Gasoline prices above $6 are displayed at a gas station in Sacramento, Calif., Friday, May 27, 2022.

Gas prices are at their highest level on record, topping $6 in California.

Rich Pedroncelli/AP

Experts say the White House is virtually at the mercy of global energy markets that have been severely disrupted by the war in Ukraine. “There’s nothing the president controls less than gas prices and nothing people want him to control more than gas prices,” said Jason Furman, a former top economist at the Obama administration, to Insider.

Congressional Democrats are struggling to hold on to their narrow majorities. Republicans beat Democrats as liberals on the tax and spending package that made inflation worse with the stimulus bill last year and stifled national energy production.

Some Democrats accuse big oil companies of raking in huge profits at the expense of Americans who are being rushed at the gas pump. Wyden is set to unveil a plan that would impose a 21% surtax on oil companies on profits deemed excessive, as well as tax companies buying back their shares.

“You have Big Oil doing immensely well under the federal tax code at the expense of the consumer,” Wyden told Insider, adding that he thinks his measure will “connect” with people. Separate polls from the left-leaning Groundwork Collaborative and the Washington Post show a majority of voters blaming oil companies for trying to profit from soaring gas prices.

“The profits are four times what they were before the war in Ukraine,” said Lindsay Owens, executive director of the Groundwork Collaborative which has conducted extensive research on the subject, in an interview. “Oil company executives rake in huge profits and brag about it to shareholders in earnings calls.”

Senators Bernie Sanders of Vermont and Sheldon Whitehouse of Rhode Island also released their own exceptional tax proposals. These are inspired by programs recently set up in Italy and the United Kingdom to provide checks to the poorest families.

The Biden administration also left the door open for a windfall tax. But some liberal and conservative economists criticize the windfall taxes as potentially inflationary and detrimental to efforts to increase crude production.

“Part of the Wyden plan would be passed on to consumers in the form of higher prices and discourage production,” Furman said. “That’s not the right approach.”

“I think the fact that the Biden administration is proposing a windfall tax or is going to consider it shows that it’s in blame shifting mode, not really constructive mode,” Donald Schneider said. deputy director of US policy at Piper. Sandler and a former House Republican aide, told Insider.

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