Biden's Saudi trip won't help gas prices

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Jul 11, 2022 View in browser   By Arianna Skibell Presented by ExxonMobil An oil derek near the Saudi Arabian border. | Joe Raedle/Getty Images President Joe Biden is set to visit Saudi Arabia later this week, on a trip he says is intended to shore up global supply chains and encourage diplomacy and cooperation. But the question many are asking is: What could it mean for gas prices? That's because Saudi Arabia has the second-largest oil reserves in the world — and the U.S. has made it clear it wants all the Persian Gulf's oil states to boost their output. The conventional wisdom is that more oil produced means cheaper gas at the pump. The reality is more complicated. Saudi Arabia doesn't have a lot more oil to give; it's struggling to meet its own production targets. The release of any more oil also would require the kingdom to forge a consensus among the OPEC+ alliance. "There's no way of visiting Saudi Arabia without it being in some sort of relationship to oil," said Paul Sankey, lead analyst at Sankey Research, a research firm. "But in this instance, it's not obvious that there's anything that can be done." Even if the Saudis flooded the global market with more oil, that's not a guarantee gasoline prices would come down. That's because the volatility in oil prices over the past few weeks has little to do with supply disruptions, says Ben Cahill, senior fellow at the Center for Strategic and International Studies. The uncertainty caused by Russia's invasion of Ukraine has roiled global oil markets. "A lot of the price run-up is due to geopolitics and financial speculation," Cahill said. "If you look at the physical market, the actual demand and trading of the physical barrels of crude, there's really no disruption anywhere." So why the trip? The president has sought to downplay the idea that his trip is meant to bring down fuel prices: Biden told reporters last month that hewon't ask Saudi leaders directly to increase oil production. But Cahill says the president has few available options for dealing with soaring gasoline prices, which today averaged $4.678 a gallon nationwide, according to AAA, down from over $5 last month. And asking OPEC for help is one of them. "That won't have an immediate impact, but this kind of dialogue between Washington and Riyadh is constructive and it should be welcomed," he said. Still, Cahill said the trip itself likely has more to do with regional security issues than oil production. As a presidential candidate, Biden pledged to make Saudi Arabia a "pariah" after a U.S. intelligence report determined Saudi Crown Prince Mohammed bin Salman was responsible for the murder and dismemberment of Washington Post journalist Jamal Khashoggi. But in a Washington Post op-ed this weekend, Biden defended his trip saying it is necessary for U.S. security interests. The region is "essential to global trade and the supply chains we rely on," especially in light of sanctions on Russia as punishment for its invasion of Ukraine, he said.   It's Monday — thank you for tuning into POLITICO's Power Switch. I'm your host, Arianna Skibell.  Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to askibell@eenews.net.   A message from ExxonMobil: Producing for today. Investing in tomorrow. We're doing both . At ExxonMobil, we're investing to increase supplies of oil and gas to help meet today's demand. We're producing more oil and gas than any other American company and adding capacity to refine U.S. crude oil by 250,000 barrels per day. We're also investing over $15 billion in lower-emission initiatives through 2027 to support society's net-zero future. Learn more at ExxonMobil.com/supply   Trends Atlas EV Hub Automakers are continuing to invest billions of dollars in electric vehicles and, as of this month, the industry has announced a whopping 120,000 EV manufacturing jobs around the country, according to Atlas Public Policy, an EV advisory group. "The size of these investments is enormous," writes Tom Taylor , Atlas policy analyst. Tesla announced 22,000 jobs, the largest domestic infusion. Ford followed closely with 18,275. And newcomer Rivian has announced 10,250 new jobs. Power Centers Petra Nova, a major carbon capture facility that was shuttered in 2020. | NRG A cautionary tale With billions of dollars appropriated from Congress and a favorable Supreme Court ruling, the future for carbon capture and storage has perhaps never been brighter, write Corbin Hiar and Carlos Anchondo. But a now-shuttered $1 billion carbon system, which was once the world's largest, offers insight into the economics and politics, as well as the limits, of carbon capture technology. Read the story here. Pie-crust promises The Biden administration could advance a version of a major Arctic oil and gas project, a move environmentalists slammed as betraying the president's climate agenda, writes Scott Streater. The Interior Department released a new environmental analysis that opens the door to a scaled-back version of the controversial project, cutting out two of five drill sites to avoid critical habitat for polar bears, migrating waterfowl and caribou herds. Read more here. Double take For years scientists have known the Arctic is warming faster than most regions of the planet, but now they say it may be heating up even faster than they thought, writes Chelsea Harvey. Several recent studies indicate the Arctic is now warming around four times as fast as the rest of the globe, which is almost double previous estimates. Here's the story. In Other News Leave it to beaver: Beavers are emerging as climate-solving heros by holding back essential water that otherwise would run off or dry up. Cryptastic: A crypto miner intends to use batteries to ease the strain on the Texas grid, which is struggling to handle increased demand. Today in the POLITICO Energy podcast: Catherine Morehouse explains how critics of a Federal Energy Regulatory Commission pipeline rule, including one of the agency's own commissioners, are now arguing that the Supreme Court's recent EPA ruling could place limits on FERC. Question Corner The science, policy and politics driving the energy transition can feel miles away. But we're all affected on an individual and communal level — from hotter days and higher gas prices to home insurance rates and food supply. Want to know more? Send me your questions and I'll get you answers.   A message from ExxonMobil:   Subscriber Zone A showcase of some of our best subscriber content. The European Central Bank. | Thomas Lohnes/Getty Images Major European banks face more than $70 billion in losses if global leaders wait too long to curb planet-warming emissions. The Midwest's largest utility plans to spend $300 million over three years to help electrify cars and homes, spurred by a sweeping climate and energy law adopted in Illinois last year. The House has released a multibill spending package focused largely on domestic issues, including energy and environment. That's it for today, folks! Thanks for reading.   A message from ExxonMobil: Investing in energy and the world. At ExxonMobil, we're working to supply the reliable energy the world needs. We're investing and producing, more than any other American company, to increase supplies of oil and gas today. In fact, we are adding capacity to refine U.S. crude oil by 250,000 barrels per day—the equivalent of adding a new, medium-sized refinery. And we are investing more than $15 billion in lower greenhouse gas emissions initiatives through 2027. Increasing supplies of reliable energy and decreasing greenhouse gas emissions is not an "either/or" proposition. We can strengthen energy security and help advance the energy transition. Producing for today. Investing in tomorrow. We're doing both. Learn more about what we are doing to strengthen energy security at ExxonMobil.com/supply     Follow us on Twitter Arianna Skibell @ariannaskibell   Follow us

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