This week, the Biden Administration called on OPEC and its allied nations to produce more oil.  It should be noted that the public request came from Jake Sullivan, the National Security Advisor. 

Naturally and properly, critics of the President’s various proposals that have limited U.S. oil exploration, production, and distribution called out the hypocrisy of asking foreign governments to do what we’re refusing to allow here at home.  An Administration that is asking Congress to again appropriate new trillions of dollars ostensibly to create jobs and ensure the health of our domestic economy has specified they prefer our consumption and investment energy dollars instead benefit other countries.

Economic benefits will be shipped to OPEC countries rather than go to the oil producers of Texas, Oklahoma, and Louisiana or those who should be constructing a pipeline in Montana, South Dakota, and Nebraska.  Let’s first take a look at the beneficiaries of increased economic activity that the President would prefer get American dollars.

The largest OPEC producer is Saudi Arabia.  Candidate Biden called the nation a pariah with no redeeming social value.  He vowed to punish the Kingdom for the murder of journalist Jamal Khashoggi. 

Saudi Arabia is now being rewarded for their decision to collude with Russia to flood the world markets with oil just as the pandemic set hold.  It was this action that is most responsible for the drop in U.S. oil production, sending the price for oil into negative territory briefly last year.  U.S. oil production dropped 8% in 2020, which critics on the right should note was before President Biden was sworn in.

Then there’s Russia, the nation “allied” with OPEC that was Saudi Arabia’s co-conspirator to disrupt US oil production last year.  In March of this year, President Biden called Russian President Vladimir Putin a killer.  Putin, like Saudi Arabia, will be “punished” with additional American dollars.

The next largest OPEC producer is Iraq, followed by Iran.  Iran would likely be the bigger beneficiary as they have additional oil capacity that has not been utilized due to international sanctions.  Iran was designated a State Sponsor of Terrorism in 1984, and as recently as 2019 the US State Department was still funding Palestinian terrorist groups in Gaza, along with other groups in Syria, Iraq, and throughout the Middle East. 

Clearly, the Biden Administration is worried that increasing prices at the pump are reinforcing expectations of increasing and continuous inflation.  They’re worried enough that they’re willing to call on pariahs, killers, and sponsors of terrorism to help out, but not Americans that want a job.  

To do that would require standing up to the left flank of the Democratic party that seemingly wants to ban all carbon based fuels and plastics without a plan or technology to replace the energy and goods that are produced from them.  It would also require sending signals to the capital markets that there would be a long term shift in the Administration’s policy toward domestic drilling.  

Unlike the other countries mentioned, the U.S. does not control what is extracted here beyond setting regulations and permits.  When capital markets see increasing barriers and costs from an Administration determined to increase the costs of production, they move their investment dollars elsewhere.  

This is largely why U.S. supply is not returning to the world oil markets despite increasing demand and higher prices.  Investors must be willing to risk their capital expecting to get their money back plus a profit commensurate with their risk.  Those who invested in the Keystone Pipeline have served as a warning to others that a stroke of a presidential pen could render their investments worthless.  

Fixing this problem would require addressing the fundamental question that neither party addresses when trying to score short term political points with their base.  This is where we bring back in Mr. Sullivan, the National Security Advisor.

With American’s now understanding the risks and problems with an international supply chain like never before, now would be a great time to have a non-partisan, policy based discussion on what our country must produce domestically to not only promote our domestic economy, but ensure national security.   Oil and energy should be at the top of that list.

Instead of having this broad and necessary conversation, however, we have an Administration that seems to want a short-term, quick fix.  The cost, however, is to reward bad actors at the expense of American workers and consumers.