Biden administration calls on OPEC to increase oil production as gas prices rise

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The White House on Wednesday called on OPEC and its allies to boost oil production as gas prices continue to climb, threatening the nation’s economic recovery.

National Security Adviser Jake Sullivan said in a statement the administration has spoken with OPEC members urging the group to increase production.

OPEC, which stands for the Organization of Petroleum Exporting Countries, reached an agreement last month with its non-OPEC allies, known as OPEC+, to increase oil production by 400,000 barrels per day.

But Mr. Sullivan said that isn’t enough to bolster the oil supply.

“While OPEC+ recently agreed to production increases, these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022,” Mr. Sullivan said. “At a critical moment in the global recovery, this is simply not enough.”

“We’re engaging with relevant OPEC+ members on the importance of competitive markets in setting prices,” the statement continued. “Competitive energy markets will ensure reliable and stable energy supplies and OPEC+ must do more to support the recovery.”

Separately, the White House also sent a letter to the Federal Trade Commission asking the agency to scrutinize the oil industry for any illegal conduct that may contribute to an increase in gas prices.

Such illicit activity could include market manipulation on gas prices or mergers and acquisitions that reduce competition, Brian Deese, director of the National Economic Council, wrote in a letter to the FTC.

“During this summer driving season, there have been many divergencies between oil prices and the cost of gasoline at the pump,” Mr. Deese wrote. “While many factors can affect gas prices, the president wants to ensure that consumers are not paying more for gas because of anti-competitive or other illegal practices.”

Mr. Deese also called on the Federal Energy Regulatory Commission, the Commodity Futures Trading Commission, the Justice Department and state attorneys general to address the issue.

Gas prices continue to rise across the country, according to data from AAA.

The national average price for a gallon of gas is $3.185 as of Wednesday morning, the travel organization said. That’s up from $3.144 per gallon a month ago and $2.174 a gallon during this time last year.

In May, the national average passed $3 for the first time since 2014, and last week, gasoline demand reached its highest level of 2021.

Those numbers could drop slightly as vacation season ends and schools reopen for fall, but it is not clear if the decline will be enough to offset prices that have risen steadily over the past year.

Also fueling demand is a loosening of pandemic restrictions that required workers to shelter in their homes and forced millions of Americans to cancel their travel plans.

The OPEC allies scaled back production to match the lower demand, but that reduced the oil supply, sending prices north as demand spiked this summer.
 
During the pandemic, crude oil prices dropped so much, they were trading at negative prices. A form of crude in Europe was being sold at $9 a barrel, its lowest price in decades, according to the U.S. Energy Information Administration. 

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