“as CNN pointed out not long ago, oil companies used to respond like other businesses to rising prices by increasing supply. Burying their industry in red tape and choking off access to capital has been a very effective signal to rethink their entire business strategy. Oil industry insiders may coast along and enjoy the profits from existing capacity, but they’re unlikely to invest in facilities to meet demand for gasoline, and offset soaring prices, until they’re certain their industry will be allowed a future.”
“Though Biden appears willing to overlook Khashoggi’s death in order to shore up America’s access to Saudi oil, he is at least on record as explicitly having condemned that murder. At a November 2019 primary debate, Biden said he would “make [Saudi Arabia] the pariah that they are” and stop arms sales to the Middle Eastern nation. A month after Biden took office, Director of National Intelligence Avril Haines released a government report confirming that the Crown Prince directed the assassination. The administration also delayed most weapons sales to Saudi Arabia, in light of its continued involvement in Yemen’s brutal civil war.”
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“For many Middle East analysts, Biden’s trip signals pragmatism. “A successful foreign policy for a global power such as the US cannot choose values over interests,” wrote Council of Foreign Relations president Richard Haass in a recent article. “What the Biden administration is contemplating in Saudi Arabia appears to be righting the balance.””
“Fuel taxes paid by motorists are collected in the federal Highway Trust Fund, which is then spent building and maintaining the roads and bridges those same drivers use. The federal gas taxes, excluding the tax on diesel, make up about 60 percent of tax revenue dedicated to the Highway Trust Fund.
Fairness demands charging drivers for the roads. The only alternative would be to require nonmotorists to subsidize driving infrastructure for them.
A user fee-like fuel tax also keeps road spending in line with demand for roads. It’s harder to fund bridges to nowhere if people’s fuel consumption, and the taxes they pay on it, aren’t generating enough revenue for new projects.
Suspending the gas tax, therefore, makes road spending less fair and less efficient. It would also be fiscally costly. Road construction and maintenance don’t become free just because gas prices are high. Suspending the gas tax only gives road users a break from paying for it.”
“Biden, who says he went to the Middle East to address “the needs of the free world,” has explained the strengthening of relationships with Arab states and Israel as a success.
But it’s worth taking a look at what concrete victories that closeness produced.
Saudi airspace will be opened to Israeli planes — an incremental step toward normalizing relations between the two countries, yes, but more of a victory for jetliner rights than human rights. A new peacekeeping arrangement was announced for the Red Sea Islands between Egypt and Saudi Arabia; the islands have been a regional geopolitical touchpoint, but the deal is hardly a major win beyond the region. There was talk of bringing Iraq closer to its neighbors, with a new electricity initiative to connect Iraq with the Middle East. Infrastructure projects totaling about $100 million were announced for Palestinians, including 4G networks for the occupied West Bank. The latter two, while worthwhile, are minor compared to other US development and foreign aid streams of funding — and minuscule compared to annual military aid to Israel.
A moderate success was Saudi Arabia’s ongoing commitment to maintaining a ceasefire in Yemen, a worthy goal considering the destruction wrought there, in part with the support of American weaponry, though hardly an issue that demanded a presidential visit.
As for oil, we haven’t seen any grand announcements. Ahead of the trip, a US official told reporters there wouldn’t be any big energy news, and instead pointed to an announcement a month prior from OPEC that the group of oil-producing nations would increase production.
It has left observers wondering exactly why Biden made the journey.”
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“A senior Biden administration official, on the last day of Biden’s Middle East trip, described human rights at the center of America’s goals — “I’d go so far, literally, to say right at the forefront of our foreign policy,” they said.
But human rights is not even at the forefront of the administration’s press releases, fact sheets, and meeting summaries.
The official touted a “Biden doctrine” for the region. In the document, values rank lowest — fifth — after bullet points about partnerships, deterrence, diplomacy, and integration. So partnerships (with unsavory leaders) and deterrence (through our security assistance) are the priorities here.”
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“This Biden trip is a preview of US foreign policy in an era of great power competition with China and new fault lines of a world divided by Russian aggression. There are trade-offs. “You sanction Russian oil, and you give power to Middle Eastern autocrats,” Khalidi told me. “The only reason he’s sidling up to these human rights abusers is because of the knock-on effects of the Russian invasion of the Ukraine, and the energy impact of that invasion.”
Or, as Freeman put it, “The message to the people in the region is we only care about you in the context of our great power rivalry.”
Despite the emphasis on Russia, there was little movement on solidifying a Middle East coalition in support of Ukraine. The United Arab Emirates is a major hub for Russian businesspeople and dirty money, and that seems unlikely to change. Egypt is a hot spot for Russian tourists. Saudi Arabia and Israel are still fence-sitters in the Ukraine conflict, hesitant to definitively take a side. While Egypt, Israel, Saudi Arabia, and the UAE voted to condemn Russia’s invasion in the UN resolution, none has joined the US-led sanctions against Moscow.
Yet all of these regional powers are making demands of the US to take a harder line on Iran and enable them militarily. (Wait, wouldn’t realpolitik be crafting a deal with Iran, and getting more oil production online in the process?)”
“Rep. Peter DeFazio (D-Ore.), chair of the Transportation Committee, blasted the idea in a statement: “Suspending the federal gas tax will not provide meaningful relief at the pump for American families, but it will blow a multi-billion-dollar hole in the highway trust fund, putting funding for future infrastructure projects at risk.”
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Democrats argue any help for families dealing with high gas prices could be worth it, but suspending the federal gas tax may not make much of an impact. The Penn Wharton Budget Model estimated savings would be an average of between $16 to $47 total per capita under a ten-month suspension. Others argue there’s no guarantee the oil companies would pass along all the savings to consumers. And all that to potentially hamstring the fund responsible for funding infrastructure projects.”
“Tymon said there’s no guarantee that savings from cutting gas taxes would be passed on to consumers, whereas other relief mechanisms would have more control.
“If you do suspend the gas tax, you’re stopping a critical source of revenue that’s used to invest in transportation infrastructure,” he said. “It doesn’t seem like it’s a good precedent to set.”
Environmentalists are worried that a tax rebate could be a perverse incentive for gasoline-guzzling cars to hit the road more in an age of worsening climate change.”
“Biden has done nothing to halt oil leasing. In fact, the Biden administration has outpaced Trump in issuing drilling permits on public lands and water in its first year, according to federal data analyzed by the Center for Biological Diversity. His administration set a record for the largest offshore lease sale ever in the Gulf of Mexico last year, before a federal court blocked the lease sale for not considering climate impacts.
There was a temporary pause on new federal leases in the first few months of Biden’s administration when he placed a moratorium on them while the administration reviewed how to better integrate climate costs in lease sales. Meanwhile, the president has done nothing to prevent the vast amount of gas production that occurs on private lands or halt existing oil leases on federal lands. The moratorium is now irrelevant, anyway, because a Louisiana federal judge ruled against it last June. (There’s a second, temporary pause on new lease sales because another court invalidated the administration’s use of a social cost of carbon.) The US also became the world’s largest exporter of liquified natural gas (LNG) for the first time in 2021.
Clark Williams-Derry, an energy analyst with the Institute for Energy Economics and Financial Analysis, offered a reality check to those complaining that climate regulations have changed the fate of oil and gas. “The idea that the tiny marginal changes in US policy have anything to do with the big shifts we’ve seen in prices is just preposterous,” he told Vox. The marginal Biden measures — like reversing Trump-era environmental rollbacks — haven’t made any kind of dent in the global oil market.”
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“oil companies have made it clear in earnings calls with shareholders that they don’t plan to produce much more, anyway. Remember that just two years ago the industry was in a complete free fall when demand crashed because of the pandemic. Banks sought government bailouts for oil investments that went under, and oil prices actually hit negative levels as producers grew desperate for oil to be taken off their hands.”
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““If the president wants us to grow, I just don’t think the industry can grow anyway.’’ The largest US fracking companies reiterated in earnings calls in February that they intend to keep output roughly flat, according to reporting from the Wall Street Journal.
In other words, now that companies are making handsome profits, they’re using that extra cash to reward investors and pay down debts, not invest in new production.”
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“LNG exports don’t solve Europe’s or America’s energy challenges. In some ways, they exacerbate them.
To export gas to Europe, a facility first needs to convert it to liquified natural gas, which cools and pressurizes the methane so it can be shipped across continents. On the other end of the ocean, another facility must turn it back into gas for shipment via pipeline.
That’s a lot of infrastructure, which is impossible to scale up in enough time to make an impact on current prices. There’s one new LNG terminal that opened this year in Louisiana. On the European side, the LNG terminals are already at capacity. This isn’t going to help make up Russia’s supply of 40 percent of Europe’s gas either.
So it’s not particularly helpful or possible to boost exports to Europe, but it also wouldn’t help prices in the US.
Williams-Derry says that US exports of liquified natural gas have been the primary reason for climbing prices. In 2016, the US completed its first LNG export terminal in decades, which the gas industry hoped would alleviate a glut of natural gas that was keeping US gas prices too low for the industry’s liking.
“The reason we’re experiencing higher natural gas prices right now is we’re exporting more,” Williams-Derry said last week. “It’s not that we’re consuming more. It’s not that we’re producing less. It’s that we’re exporting.””
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“LNG will always be the more expensive option because of its processing and transport. “By locking yourself into a gas-powered future, you’re locking in higher costs for the long haul,” Williams-Derry said. “There’s not a good alternative to Russian gas if you want to have inexpensive gas in Europe.”
“If you’re going to double down on gas, essentially, you’re doubling down on Russia,” Williams-Derry added.”
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“The biggest risk is if the US and Europe respond to this crisis by over-investing in the future of fossil fuels. Actions like building LNG terminals and approving new leasing don’t help in the short term when people are struggling to pay high bills. It doesn’t achieve energy independence. But it would lock the world onto a dangerous path for climate change.”
“The US is not a major consumer of Russian crude oil, which makes up less than 4 percent of US consumption, so banning imports shouldn’t have a huge effect; the US doesn’t import any Russian gas. The US can make up the oil gap with imports from other countries, and the Biden administration already is pursuing that path by opening talks with Venezuela. Nor is Russia all that reliant on the US, because US purchases account for about 9 percent of its exports.
The bigger impact on the price of oil comes from what Biden’s announcement portends. Global oil prices have been fluctuating wildly in recent days, reflecting that there is a wide range of uncertainty over what could happen next. One of the uncertainties is whether more countries will follow the US’s move to ban imports, taking Russian oil off the table for a number of foreign markets. Cutting out Russia makes oil more expensive, because it upends the existing network of pipelines and makes countries’ paths to getting oil longer and more expensive.”
“Behind the rude awakening on energy security lies an even more unsettling realization for many German elites: That a decades-long goal of bringing Berlin and Moscow closer together through mutually beneficial trade seems to have failed.”
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“The idea that growing trade links with other nations would help to gradually embed Western democratic standards in those countries has already taken a hit when it comes to China, which has only become more and more repressive despite growing economic links. Still, leading German politicians have long held out hope that “Wandel durch Handel” might still work with Russia, and defended Nord Stream 2 as a tool to also influence Russia for the better.
“Obviously, this policy has totally failed when it comes to Russia,” said Marcel Dirsus, a non-resident fellow at the Institute for Security Policy at Kiel University. He argued that instead of influencing Moscow by making Russia more dependent on Germany, the policy had the opposite effect.
“Right now, when push comes to shove, Berlin is dependent on Moscow when it comes to energy, and that influences the way it positions itself,” he said, referring to Berlin’s initial reluctance to include Nord Stream 2 in potential sanctions against Russia in the case of further aggression against Ukraine.
It took weeks of internal bickering and harsh international criticism before Scholz’s Social Democrats agreed to put the pipeline on the sanctions table.
“Now, they are coming to this realization [that they are too reliant on Russia] and now they are also admitting it in public, but now it’s too late,” Dirsus said.”