MOSCOW, August 18. /TASS/. US President Joe Biden’s call to OPEC states to abandon oil production cuts to lower fuel prices in the U.S. showed controversy of the American policy regarding the oil industry, the experts interviewed by TASS say.

Within the country the US administration is actively restricting the oil industry in favor of decarbonization goals. This may turn out to be a political maneuver to distribute financial flows of the global fuel and energy complex in favor of the US financial regulators.

President’s address

Last week, Biden said that "the United States had made clear to OPEC that the production cuts made during the pandemic should be reversed as the global economy recovers in order to lower prices for consumers."

The White House later explained, that it meant in particular the insufficiency of the OPEC+ decision to increase production by 400,000 barrels per day every month from August until the cuts are completely curtailed. The US administration explained its appeal by the attempts to reduce domestic gasoline prices, which have grown by 46% over the past year, to $3.18 per gallon on average throughout the country.

However, this argument has been criticized in the United States as well. Earlier this week, a group of senators led by Jim Inhofe addressed Biden with a letter in which they criticized the actions of the White House.

"Since your first day in office, your Administration has pursued policies that have restricted and threatened American oil and gas development, which has had devastating consequences for American workers and consumers," according to the letter. "It is astonishing that your Administration is now seeking assistance from an international oil cartel when America has sufficient domestic supply and reserves to increase output which would reduce gasoline prices."

The senators pointed out at the fact that America has sufficient reserves to increase production, while Biden administration’s domestic oil and gas development policies "are hurting American consumers and workers, are contrary to an "America First" energy agenda, and reinforce a reliance on foreign oil."

In particular, Biden cancelled the Keystone XL pipeline, imposed an apparently indefinite pause on oil and gas drilling leases on federal lands and waters and proposed increasing taxes on those engaged in oil and gas development, the senators say.

According to the senators, these policies are increasing the price of gasoline and do not serve American interests. They ask Biden to change it.

Threat to the world

Economist Nikita Krichevsky agrees with the senators.

"President Biden's appeal to OPEC with a request to increase oil production to lower gasoline prices amid discriminatory policies against its own oil and gas sector is nonsense," he told TASS.

In his opinion, the senators actually admit that the principles of decarbonization, Biden administration has declared as sacred, are absurd, not only from an environmental but also from an economic point of view.

"The era of hydrocarbons is far from over, and the policy of the new American President poses a threat to both the US economy and the global market," he said.

According to head of the Center for Political Information Alexei Mukhin, the senators' demand to "make America great again" means abandoning the "green" myths lobbied by the financial elite, which supported Biden's coming to the presidency, as opposed to opponents from the real sector.

"The letter implies one simple idea that a premature and artificial rejection of oil will bring down the position of the American economy in the world and lead to severe turbulence in the United States itself," he adds.

Means of control

In recent years, the United States has been the main regulator of the oil market, Mukhin recalls. For this purpose, Washington has various tools at its disposal. The US shale industry made it possible to quickly increase and decrease production volumes, by using the policy of arbitrary sanctions the US could throw out entire countries producing hydrocarbons from the game. By issuing the dollar it could regulate the financial pumping of the market oil.

"Traditional market mechanisms did not work in the case of oil trading. As a result, the market degraded, and now it turns out that both the price environment and the formation of the consumer market depend on the change of presidents in the United States," the expert notes.

According to Mukhin, if, despite the powerful opposition, Biden decides to go on with decarbonization policy, it may be that the United States does not abandon this role at all, but, on the contrary, will act according to the usual non-market pattern.

"Washington will prepare carbon restrictions for other countries. At the same time, it will try not to observe them itself and will get all the competitive advantages," he explains.

According to Leonid Krutakov, Associate Professor of the Financial University under the Russian government, "green energy" is rather a promoted media phenomenon without firm scientific grounds. Moreover the "green" transition project is being implemented using administrative-command methods.

"When we talk about "decarbonization", we mean changes in the principles of distribution of world natural rent in favor of the regulator of financial flows. We see this process as the creation of new market niches and political patterns, including power patterns," the expert points out.

In his opinion, the "green" project is aimed at preserving the rights of Western economies that do not possess huge oil and gas reserves, to manage world savings and regulate global investment flows. "Without a new global tax, a green project is economically untenable," he stresses.

Opposition within U.S.

Krutakov recalls that according to the forecast of the International Energy Agency, by 2040 hydrocarbons will account for 73% of the world energy balance (now it is 80%).

The industry requires a high-quality investment leap, otherwise it simply will not be able to provide its share in the global energy balance.

"Without hydrocarbons, the world energy balance does not develop, and the growth of the world economy is impossible," Leonid Krutakov stresses.

However, instead of this, there is a chronic underinvestment in the real sector of the economy, both raw materials and manufacturing.

"Over the past 20 years, the disproportion between the money invested in the oil industry and the increase in real reserves has been growing. The investments are getting less efficient. There are two reasons: sanctions or political regulation of global financial flows and the taboo on investments in the oil and gas industry," Krutakov notes.

However, in the Unites States the entire states are already opposing this new policy. For example, in oil-producing Texas, a governor's decree will come into effect on September 1, which prohibits state pension funds from investing in companies that restrict investment in the oil and gas industry, seek to harm it or "punish" for investing in it.