As natural gas prices rise, the White House calls on OPEC to increase oil production

The White House will call on OPEC and its oil production allies to increase production in response to rising gasoline prices, because people worry that rising inflation may undermine economic recovery.

Officials from the Biden administration spoke this week with representatives of Saudi Arabia, the de facto leader of OPEC, as well as representatives of the United Arab Emirates and other OPEC+ member states.

The White House stated that the organization in July protocol At the “critical moment of global recovery”, starting in August and continuing through 2022, increasing production by 400,000 barrels per day per month is “not enough”.

National Security Adviser Jack Sullivan said in a statement obtained by CNBC: “We are in contact with relevant OPEC+ members on the importance of competitive markets in setting prices.” “A highly competitive energy market will ensure a reliable and stable energy supply. , OPEC+ must take more measures to support the recovery.”

Due to the recovery in demand for petroleum products, natural gas prices have risen this year. According to data from AAA, the national average price of gasoline per gallon on Tuesday was US$3.186, higher than the US$3.143 a month ago. In the past year, the price has risen by a little more than one dollar.

In May, the national average exceeded the $3 mark for the first time since 2014.

A senior White House official said: “The president recognizes that gasoline prices may limit household budgets.” “He hopes that his government will use any tools to help address natural gas costs and help lower these prices.”

The rise in natural gas prices followed the rebound in oil prices. April 2020, West Texas Intermediate Crude Oil Futures, The U.S. oil benchmark, fell into Negative territory As the pandemic has weakened the demand for petroleum products, this is the first time on record.

OPEC+ made an unprecedented decision in April 2020 to cancel Nearly 10 million barrels per day Efforts to support prices from the market, while US producers have also reduced production.

These reductions in supply, coupled with the recovery in demand, have pushed WTI to above US$70 per barrel, although the contract has fallen slightly from that level in recent trading days.

OPEC+ still detains about 6 million barrels of oil a day and plans to gradually return to the market.After the UAE raised objections to its benchmark quota, the organization’s latest meeting ended in chaos, briefly sending The oil market is in turmoilThe group finally reached an agreement in late July.

At the height of the pandemic, American manufacturers also turned off their taps, and they were slow to resume production. According to the latest data from the Energy Information Administration, the average daily output of the United States in May was 11.2 million barrels, lower than the 13 million barrels before the pandemic.

Consumers feel the pain of refueling, and it’s not just that gasoline prices are rising.

This July Consumer Price Index According to economists surveyed by Dow Jones, the report will be released on Wednesday, and economists expect it to show a 0.5% increase in prices last month.This report follows the 0.9% increase in June The largest monthly increase since August 2008.

The Biden administration also called on the Federal Trade Commission to “monitor the U.S. gasoline market” and “resolve any illegal behavior that may cause consumer prices at gas stations to rise.”

The letter from the National Economic Commission to the FTC urged regulators to investigate the factors that led to the increase in natural gas prices to ensure that consumers would not pay unfair fees.

“With its tool suite for monitoring industry prices, reviewing mergers and acquisitions, conducting market research, and investigating market manipulation and anti-competitive behavior, the FTC is fully capable of leading efforts to assess what is happening in the U.S. gasoline market and take any necessary measures to address illegal behavior. ,” said the letter.

NEC also called on the Federal Energy Regulatory Commission, the Commodity Futures Trading Commission and the State Attorney General to address this issue.

“Knowing that the FTC is reviewing this market may have an impact relatively quickly,” a senior White House official said. “It is worthwhile for participants in this market to realize that this institution with law enforcement powers is carefully studying what is happening.”