OPEC+, led by Saudi Arabia and including Russia, has announced the cartel will lower the production of oil by 2 million barrels a day from November. The move was widely condemned in the US, as it will lead to higher gasoline prices in the US, Europe, and around the world. Economies around the world face recession risks, due to high inflation, surging US interest rates, a strong dollar, and high oil prices. The move is seen as a boost for Russia’s war efforts against Ukraine.
The cut in oil supplies decided in Vienna on Wednesday could spur a recovery in oil prices that have dropped to about $90 from $120 three months ago on fears of a global economic recession, rising U.S. interest rates and a stronger dollar.
Reuters
President Biden announced there would be consequences for the US-Saudi Arabia relationship. The timing of the cuts next to a heated election, the strain on budgets facing higher fuel prices, and the implicit support for Russia are too much.
There may be long term silver linings. It may accelerate the move to renewable and distributed energy around the world. Such a move would lead to less money flowing to petro-dictators, reduce energy prices at home, create new jobs, and insulate economies from the whims of mercantile governments.
According to Cleantechnica, Credit Suisse Predicts Renewable Energy That Is “Too Cheap To Meter” By 2025. Part of that is due to widespread impacts of the Inflation Reduction Act.
The Inflation Reduction Act, the bank argued, is even more important than has been recognized so far: The IRA will ‘will have a profound effect across industries in the next decade and beyond’ and could ultimately shape the direction of the American economy, the bank said.
Cleantechnica
Some highlights of the Cleantechnica piece.
- “First, the IRA might spend twice as much as Congress thinks. Many of the IRA’s most important provisions, such as its incentives for electric vehicles and zero-carbon electricity, are ‘uncapped’ tax credits.”
- “Second, the U.S. is ‘poised to become the world’s leading energy provider,’ according to the bank. America is already the world’s largest producer of oil and natural gas. The IRA could further enhance its advantage in all forms of energy production, giving it a ‘competitive advantage in low-cost clean electricity and hydrogen production, infrastructure, geologic storage, and human capital,’ the report states.”
The efforts of Saudi Arabia and OPEC+ to hold the world hostage, to maximize profits of a resource in decline, may accelerate the powerful trends of the US’ Inflation Reduction Act and Europe’s move away from Russian fossil fuels. That would be good news for freedom and democracy, and bad news for authoritarians and dictators.
Sincerely yours,
smilingdad
smilingdad 