Joe Biden's Attempt to Increase Oil Production: A Foolish Strategy or a Strategic Shift?
When former US President Joe Biden traveled to OPEC countries to beg for increased oil production during the fuel price debacle, it raised eyebrows across the globe. The situation was markedly different compared to when his predecessor, President Trump, pressured OPEC to reduce production during the pandemic.
Trump's Stance and Its Consequences
President Trump consistently sought to boost oil production from OPEC to increase pump prices and protect the interests of US oil giants. However, the pendulum swung the other way as demand surged post-pandemic. OPEC's concerns about oversupply led them to agree to additional production cuts, a move that was met with a lackluster market response. This complex dance in the global oil market demonstrates the subtleties that cannot be ignored.
Did Biden's Strategy Miss the Mark?
Biden's approach, on the surface, appeared to be a continuation of Trump's flawed strategy. Yet, unlike Trump, Biden's attempts were met with silence from OPEC. The reason for this is straightforward: OPEC had already benefited from increased production under Trump, driven their prices down to $50 per barrel, leading to bankruptcies and reduced drilling activities.
Furthermore, the economic recovery coupled with the availability of vaccines and a spike in consumer demand accelerated the market well beyond what even the crude oil producers anticipated. Under this scenario, why would OPEC agree to renegotiate a deal that had proven to be financially beneficial? The answer is simple: they wouldn't.
Domestic Production and US Oil Industry Resilience
Interestingly, despite Biden's efforts, the US domestic oil production has seen an uptick. Today, the country is producing almost 2.5 million more barrels of crude oil daily compared to when Biden assumed office. In fact, 2023 set a new record for US crude production, with projections indicating that 2024 may surpass these marks.
These figures suggest a resilience in the US oil industry, deterring any notion that Biden's strategy was a complete failure. However, the question remains: is this a one-time success or the beginning of a strategic shift?
A Strategic Shift Towards Renewable Energy?
Perhaps the response to OPEC's intransigence was not as foolish as it seemed. Biden's energy policy has been a significant shift towards renewable energy. The US has now become the world's largest producer of battery-electric vehicles (BEVs), with more domestic manufacturers entering the market.
Major manufacturers like Allison and Cummins have started developing hybrid and hydrogen drive train systems, while Toyota has not only proven the viability of hydrogen production and utilization but also brought the Mirai to the US market. Japan, too, is heavily investing in ammonia fuel systems.
These moves indicate a long-term strategy by the US to reduce its dependence on OPEC products. With advanced battery technologies, hybrid systems, and hydrogen fuel infrastructure, the US is positioning itself to become a leading global producer and user of renewable energy sources.
Conclusion: A Strategic Shift, Not a Foolish Move
While Joe Biden's attempt to increase oil production from OPEC may have seemed like a futile effort, it may have been a strategic move towards renewable energy. The US is now not only leading in BEV production but also moving towards more sustainable energy sources like hydrogen. This strategic shift may well lead to the eventual loss of OPEC as a major consumer of their products, making this a strategic move rather than a foolish one.
As the global energy market continues to evolve, the US is setting a new precedent. Whether this is seen as a strategic shift or a wasted effort remains to be seen, but the evidence points towards a more sustainable and resilient future for the US energy industry.