OPEC to Biden: Joe Who?

I have written before about the way that President Biden’s mission to persuade OPEC (and its associates) to boost production has not proved to be much of a success.

Here’s more, via the Financial Times:

The Opec+ oil alliance is planning a substantial cut in production to prop up falling prices, according to people close to the discussions, as the group prepares to meet in person for the first time since March 2020.

The oil group, which is led by Saudi Arabia and Russia, is expected to discuss a production cut that could total more than 1mn barrels a day at the meeting on Wednesday. This is by far the largest since early in the coronavirus pandemic and equivalent to more than 1 per cent of global supplies. . . .

The Opec+ oil alliance is planning a substantial cut in production to prop up falling prices, according to people close to the discussions, as the group prepares to meet in person for the first time since March 2020.

The oil group, which is led by Saudi Arabia and Russia, is expected to discuss a production cut that could total more than 1mn barrels a day at the meeting on Wednesday. This is by far the largest since early in the coronavirus pandemic and equivalent to more than 1 per cent of global supplies.

Climate policy-makers can argue as much as they want about how the answer to this sort of pressure is to pour money into renewables. But these are technologies that, at least in the case of solar and wind, are not yet ready for prime time. (The problem posed by intermittency — the sun doesn’t always shine, and the wind does not always blow — has yet to be resolved.) Moreover, building more solar facilities and wind farms is going to take time. Equally, building new nuclear power plants (something that is clearly part of the longer-term solution) will take years.

The quickest way to undercut the OPEC+ cartel continues to be for American, Canadian, and other Western oil producers to boost production. Some of that can be done quite quickly, but if enough is to come onstream to do the trick on, well, a “sustainable” basis, that’s going to take somewhat longer, and will require a fair amount of investment (including, incidentally, in pipelines). However, even the prospect that that investment is coming ought logically to act as a brake on OPEC+ plans for production cuts. The best way for OPEC+ to discourage new investment by Western oil companies is to keep the price of oil down.

But OPEC+ may not have to make that sacrifice. Investment by Western oil companies will not be forthcoming if governments and regulators (and their corporatist associates in ESG world) in the U.S. and elsewhere in the West continue to campaign against oil companies in the way that they are now doing.

If today’s climate policy-makers want to continue enriching OPEC+ and impoverishing everyone else, that’s up to them, but they should be honest enough to admit that that is the direction in which their agenda is taking us.