Biden's Oil Price Dilemma: How Far Will He Go To Keep Prices Down Before Election?

By Victor Smiroff | Wednesday, 01 May 2024 09:20 PM
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Image Credit : Business Standard

In the months leading up to crucial elections, the Biden administration has been observed to lean on adversarial regimes to maintain low oil prices.

On Monday, the Treasury Department declared that it would extend sanctions relief for ten Russian financial institutions involved in the energy sector. This relief was set to expire on November 1, barring any further action. This move is aimed at mitigating the risk of a global oil price surge over the summer. It follows a series of similar decisions involving Iran and OPEC countries, aimed at keeping oil prices low ahead of significant elections.

This extension of sanctions relief stands in stark contrast to the administration's previous rhetoric about employing sanctions to "squeeze" and "confront" Russian President Vladimir Putin. The decision to prolong the relief for another six months comes on the heels of a Bank of America forecast that oil prices could surge to $95 per barrel this summer. Some analysts are even predicting that national average gas prices could reach or surpass $4 per gallon.

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The Treasury Department has characterized the extension of sanctions for the ten Russian firms as standard practice. "This is a standard renewal authorizing energy transactions that has occurred every six months since the start of the war," a Treasury Department spokesperson informed the Daily Caller News Foundation. The spokesperson further explained that the relief extension was "regular and expected."

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Despite the Biden administration's fervent desire to support and arm Ukrainian forces, it has reportedly urged the Ukrainians to refrain from attacking Russian oil refineries. This caution stems from concerns that such strikes could cause a surge in global energy prices, as reported by The Washington Post.

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In 2022, ahead of the crucial midterm elections, President Joe Biden reportedly lobbied OPEC to ramp up oil production in an attempt to curb soaring prices. However, the oil cartel, which includes countries like Iran, Saudi Arabia, and Libya, disregarded Biden's appeals and reduced production by 2 million barrels per day in October of that year. To address the high energy costs, the administration released approximately 180 million barrels from the Strategic Petroleum Reserve (SPR) over 2021 and 2022. This action left the key oil supply at its lowest levels in roughly four decades, according to the U.S. Energy Information Administration.

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Moreover, the administration seems to have adopted a lenient stance on enforcing oil sanctions against Iran, a state identified as a sponsor of terrorism by the State Department. Since Biden assumed office in 2021, Iranian oil exports have exceeded $100 billion, an estimated $40 billion more than the regime would have seen if export volumes had not increased from levels observed towards the end of former President Donald Trump's term, according to the Foundation for the Defense of Democracies.

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The administration also attempted to negotiate an oil-for-democracy deal with the socialist regime of Venezuelan President Nicolás Maduro. The Biden administration agreed to ease sanctions on Venezuela's crucial oil sector in October 2023 if Maduro would hold free and fair elections. However, the Biden administration reimposed the sanctions earlier in April after the Venezuelan regime continued to harass opponents and engage in other anti-democratic activities.

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All these decisions to prevent global energy prices from rising have been made while the administration has taken several steps to curb domestic energy production. These key decisions include issuing a bare-minimum offshore oil and gas leasing schedule, imposing a moratorium on new liquefied natural gas (LNG) export terminals, and imposing significant restrictions on Alaskan oil.

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These decisions have generally made Biden a popular figure within the environmentalist movement and its major organizations. Several of these organizations have already endorsed Biden's campaign and pledged to spend heavily to help keep him in office.

The White House did not immediately respond to a request for comment.

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