The global energy crisis is an American creation. Perhaps this is the most appropriate description of what the oil market is witnessing, according to market data that American policy has begun to intrude on.
Therefore, it was not surprising that the media and political attack practiced by the United States and its media arms against the “OPEC +” alliance led by the Kingdom of Saudi Arabia, after the decision to reduce production by two million barrels, starting next November.
Given the attack that the United States of America has not stopped until today, it can be summarized that Washington wants to transfer its crises to the “OPEC +” alliance, for fear of a popular confrontation ahead of the midterm elections.
Next, there are three factors that Washington is trying to evade its responsibility for in the failure of the balance between supply and demand in the domestic energy market, which is a major reason for the recent rise in fuel prices within all states.
This failure was evident to all crude oil producers, who realized that Washington wanted to solve its crises at the expense of major oil producers around the world, led by Saudi Arabia.
And Saudi Arabia was the cornerstone in extricating Washington from one of the largest American energy crises, when the price of a barrel of oil fell to (minus 40 dollars) in April 2020.
No investment in American oil
After US production of crude oil reached the level of 12.3 million barrels per day before the Corona pandemic, it has fallen today to an average of 11.7 million barrels per day, which is the current maximum capacity of US crude oil production.
This decline is due to a sharp drop in local investments in exploration, exploration, production and refining, due to the high cost of shale oil production, which reaches $45 in some American regions.
It is true that the price of US oil is sold today at about $90, but investors are looking for long-term returns in the oil sector, which makes them not enthusiastic about investing in American conventional energy.
These investors believe that the demand for oil in the United States will one day decline in favor of renewable energy, and therefore see that injecting a dollar into conventional energy, it will carry a high risk.
In a report by the US Energy Information Administration, energy producers curbed spending on new wells, following two boom and bust cycles in US shale, the most recent of which caused nearly $55 billion in defaults.
In response to shareholders’ demands for strong investment returns, producers have shifted from focusing on production growth, to maintaining current incomes without the need to increase production.
The average daily consumption of US crude oil is 17 million barrels per day, while the US Energy Information Administration estimates that demand will grow by 6% annually until 2030, which calls for a greater oil supply.
Downturn in refining investment
Likewise, investment in the refining sector has declined. Even if the United States is able to provide crude oil, refining is considered the main crisis in this market within the United States.
And the refining crisis is not only in the United States, but in most countries of the world, especially in Europe, as it is expected that fuel derivatives will be exempted from European oil sanctions against Russia by the end of this year.
According to figures from the Energy Information Administration in the United States, the average daily consumption of various states of fuel derivatives is about 19.72 million barrels, of which the United States produces about 95%.
However, the crisis is represented in peak months, such as the driving season, which begins in July of each year, when the daily demand rises to more than 21.5 million barrels per day of derivatives.
Also, the repeated attack by the US administration against the energy companies in the country, not far from the war going on there between the producers and the US administration.
The White House accuses energy companies of being greedy and making profits from consumers’ need for traditional energy sources, which is an internal matter, but its repercussions affect the “OPEC +” agreement, as if it is a major reason for the price crisis.
weaken Russia
Another important issue is that the United States is today one of the main exporters of crude oil to Europe and the United Kingdom, with more than one million barrels per day.
Washington could have diverted oil exports to meet the needs of the local market, thus reducing the prices of derivatives for American consumers, but the political factors make American oil a political card against Russia.
In the event that Washington cuts off crude oil from Europe, the bloc countries will see that the United States has withdrawn from the energy crisis that it caused by persuading the Europeans to impose sanctions on Russian energy sources.
In fact, today Washington is winning for Europe at the expense of the American consumer, who in a few weeks will be a voter at the presidential polls in the midterm elections.
Numbers don’t lie
Official figures for the traditional energy mix around the world show that crude oil was the least rising type of fossil energy this year, compared to the rest of the other types of energy around the world.
Data from the Organization of the Petroleum Exporting Countries (OPEC) show that Brent crude prices rose by only 6% since last January, until the end of last September.
The price of a Brent barrel at the beginning of this year reached $86, but it stabilized at the end of last September at 6%, according to OPEC and Bloomberg data, while US crude grew by only 1% between January and September.
While the price of a gallon of gasoline in the US market has increased by 11% this year, from $3.4 to $3.8, even reaching more than $4.6 by trading on Tuesday.
As for the prices of liquefied gas in France, the price jumped to 48 dollars per million thermal units, up from 27 dollars, an increase of 76%.
While the price of US gas jumped to $48, up from $29, an increase of 65%, while natural gas in the United Kingdom rose by 69% to $346, compared to $206 in early 2022.
Coal prices in China rose to $206 by the end of September, compared to $155 in early 2022, an increase of 33%, according to Bloomberg data and reported by OPEC.
The price of coal in Europe also rose to 326 dollars, up from 155 dollars, an increase of 109 percent, while coal prices in the United States increased by 125 percent to 342 dollars from 152 dollars, according to official data.
OPEC decisions
And last week, the “OPEC +” alliance decided to reduce oil production by two million barrels per day, starting from next November, in an attempt to restore stability to the global oil market.
This decision prompted the United States to launch a media attack on Saudi Arabia, in an attempt to pressure Riyadh to reconsider the decision, which the White House said disappointed President Joe Biden.
How did Saudi Arabia respond?
Adel al-Jubeir, the Saudi minister of state for foreign affairs, responded to allegations that the kingdom was responsible for rising US fuel prices, instead saying that insufficient US refining capacity was behind the rising costs.
Al-Jubeir said in an interview with Fox News: “Oil is not a weapon. We look at oil as a commodity and we look at all of this. It is important for the global economy in which we have a large share. Saudi Arabia does not politicize oil or oil decisions.”
Al-Jubeir added, “With due respect, the reason for the price hike in the United States is that you have had a shortage of refining for more than 20 years, and you haven’t built refineries in decades.”