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The White House is calling the Organization of the Petroleum Exporting Countries and its allies (called OPEC+) to increase the output of crude oil. The request comes just days after the report by the Intergovernmental Panel on Climate Change (IPCC) asking world leaders to take bold steps in reducing greenhouse gas emissions and mitigate the catastrophic consequences of the climate crisis.
The administration's request is a way to reduce rising gasoline prices which might affect global recovery, still fragile due to the pandemic. Oil production slumped during the pandemic, with oil prices turning negative, leading to OPEC+ cutting production by 10 million barrels per day – about 10 percent of world demand.
Thanks to the promise of vaccines, the richest countries have started opening up again and oil demand has increased – so by July, the cut was only 5.8 million barrels per day less than pre-pandemic. Last month, OPEC+ decided to increase production, adding 400,000 more barrels daily every month until production goes back to the 2019 values. For the Biden administration, that is not enough.
“We are engaging with relevant OPEC+ members on the importance of competitive markets in setting prices,” National Security Advisor Jake Sullivan said in the statement seen by CNBC. “Competitive energy markets will ensure reliable and stable energy supplies, and OPEC+ must do more to support the recovery.”
The statement was directed to Saudi Arabia, and OPEC+ has currently declined to comment either publicly or privately. Asked about it, Jen Psaki, the White House spokesperson, said: “this is not meant to be for immediate response, necessarily. It’s meant to be a long-term engagement.” The OPEC+ will next meet on September 1, and they might discuss the US request.
The Environment Protection Agency (EPA) reports that 29 percent of greenhouse gas emissions in the US come from transportation. This is the largest sector in terms of emissions, followed by electricity production and industry, which are 25 and 23 percent respectively.
However, oil is not only used for gasoline and diesel. Petroleum is also responsible for one-third of the carbon dioxide emissions from energy production. Per capita emission from oil in the US was 7.1 tonnes per year in 2019.
This is much higher than the global average that has the emission from oil per capita at 1.6 tonnes. Yearly, oil consumption is responsible for over 12 billion tons of carbon dioxide released into the atmosphere as of 2019.
The IPCC reports that greenhouse gases from human activities have already created 1.1°C (1.98°F) of warming since the industrial revolution. Without quick large-scale reduction of emissions, global temperatures are expected to surpass the threshold of 1.5°C (2.7°F) of warming within the next 20 years.
[h/t: CNBC, Financial Times ]
