Goldman Sachs expects crude oil prices to reach US$80 per barrel this summer.
President Joe Biden’s Administration began with radical actions against the oil and gas industry, in line with his goal of achieving net-zero emissions by no later than 2050. However, a progressive advance towards clean energy that does not directly impact the economy of the general population, particularly that of minorities and lower income segments, has yet to be considered.
Biden’s policies thus far have demonstrated a negative impact on domestic oil and natural gas production, placing U.S. energy security at risk, in terms of supply and affordability.
To this end, the American Automobile Association (AAA) stated in a press release that increases in gasoline demand and decreases in supply, given high crude oil prices, have caused price fluctuations, and this price in the end, is paid by the general population.
In addition, the organization made it clear that in the case of gasoline, the cost of crude oil represents more than 50% of what drivers pay at service stations.
While an increase in fuel prices is not directly part of the President’s policies, the impact is a consequence of a lack of production and increased demand. However, there are other actions that signal indications that having affordable energy under his tenure will be difficult. Such is the case with suspension of oil drilling leases in the Arctic Wildlife Refuge (ANWR), a pause to new oil and gas leases on federal lands, plus halting of the Keystone XL pipeline and potential higher taxes on the industry.
Dean Foreman, chief economist of the American Petroleum Institute (API), writes the following in the institution’s blog, “limiting access to oil and natural gas reserves, canceling pipelines, neglecting energy infrastructure, and targeting the U.S. energy industry for higher taxes, which hinders investment and reinvestment, are all measures that should make Americans wonder where the energy they depend on a day-to-day basis, will come from under this administration. If it’s not going to be American-made natural gas and oil, which supplies nearly 70% of the energy we use, where will we source the affordable energy we need to keep the lights on and our cars running?”
Separately, according to Dan Eberhart in Forbes, Goldman Sachs expects crude oil prices to reach US$80 dollars this summer, as COVID-19 vaccination rates increase and the world economy heads towards recovery. In addition, the International Energy Agency informs in its monthly report that OPEC producing nations will need to increase production to meet demand, which will reach pre-pandemic levels.
The organization’s goal points to oil supply increases to 1.4 million barrels per day beyond the current plan, for the term between July 2021 and March 2022, according to the media report. But the US, which used to bridge these gaps, would be constrained. “Domestic producers are now handcuffed by Biden administration policies that are punishing fossil fuel companies while the White House promotes unrealistic climate objectives,” says Eberhart.
In addition, Eberhart is concerned that as a result of the same current policies, the country’s solid energy security, built up over the past decade as a result from shale, will be passed on to “Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin.”
The nation’s economic recovery in 2021, for the year, has had a direct relationship with affordable and reliable energy, according to API data demonstrating this close relationship. “Leading economic indicators have continued to rise, as well as oil demand, even as domestic oil supply and extraction have fallen,” according to the institution.
Should we stay the course, then providing affordable energy to those communities in greatest need will be a challenge, particularly if we do not look to progressive, industry-inclusive, market-driven steps.