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The current global energy crisis has brought the economies of developed countries to a breaking point as inflation the fears of a recession grow. At this crucial time for the stability of the global economy, Macron told an oblivious Biden that the Saudis can’t pump much more oil, a devastating blow to his energy plan. The informal conversation happened during the G7 meeting and was picked up by international media outlets.
The leaders of the G7 are meeting in Germany this week as the world is hit by rising energy prices, soaring inflation, and a potential food crisis due to the war in Ukraine. In a moment in-between official meetings, the French president was having an informal conversation with Biden while standing very near the international press, who were able to record what they talked about.
During the hot mic moment, the cameras show when Macron tells the American president that he had just talked with the leader of the UAE, who told him that the Gulf nation was at top production capacity already and that the Saudis are only able to raise oil production by 150,00 barrels per day.
Macron’s intel was later confirmed by the Energy Minister of the United Arab Emirates, who released a press statement saying that “the UAE is producing near to our maximum production capacity based on its current OPEC+ production baseline.”
Biden’s energy plan: more foreign oil, a war on domestic production
Biden has tried to tackle the rising energy prices by appealing to Middle Eastern oil-producing countries to pump more oil, as a response to the global need for energy as the economic ripple effects of COVID and the Russian invasion of Ukraine are bringing shockwaves to the world’s economy.
The rising oil prices and the galloping inflation in the United States, worsened by the Biden spending plan of 2021, have created a nightmare political scenario for the Biden White House and the Democratic Party. Gas prices across the country have risen to record levels, and the president’s unpopularity is threatening the razor-thin Democratic majorities in both the House and the Senate.
As energy demand remains higher than supply, the only way prices go down, without a significant slowdown of the economy, is a substantial increase in oil production. In theory, American oil industry could fill that gap, especially as it became the world’s top oil producer in the last decade. However, Am local oil companies are facing a series of economic and political challenges to ramp up production.
Politically, the global energy crisis puts the Biden White House between a rock and a hard place, as it needs to do whatever it can to reduce gas prices and improve its approval numbers with the American people. However, Biden cannot look to be friendly with oil companies at home, as his party has made a big commitment to supporting only renewable energies as part of an effort against climate change. As a result, Biden has waged an undeclared war against American oil companies, pausing drilling permits and canceling gas leases in Alaska.
On top of that, American companies are also facing financial challenges to reactivate production. Some companies went bankrupt in 2020 as the oil market was plunging, rising costs to reactivate the industry after 2020, and pressure from investors to retain capital in an unstable market.
Domestic alternatives to counter the energy crisis were dismissed for both political and economic reasons. The Biden strategy to improve the energy situation at home has been to pressure oil-producing countries to pump more oil and to authorize the release of part of America’s strategic oil reserves in order to reduce the price at the gas pumps.
On the global stage, Biden has decided to change his stance toward Saudi Arabia in order to convince them to pump more oil. He initially called the Kingdom a “pariah state” due to the killing of journalist Jamal Khashoggi in 2018, but the global energy crisis forced him to change track. The president maintained very distant relations with Riyadh, leading to crown prince Muhammad Bin Salaman ignoring Biden’s phone call pleas to increase oil production after the Russian invasion of Ukraine. As oil prices continued to rise, Biden’s initial shunning of Saudi transformed into a desperate attempt to court the Saudis to pump more oil, which ended with the President’s last month’s trip to the Saudi capital to plea for more oil.
Biden has also started direct negotiations with the Venezuelan regime (a major foreign policy reversal) reportedly with the objective of lifting sanctions on the socialist government and its state oil company, allowing the U.S. to use a different energy source.
However, Macron’s comments indicate that Biden’s attempts to square his political circle by ensuring that global oil prices got down while remaining in the good graces of his political base have failed. The gulf countries are almost at the peak of their oil production, and it is time for Biden to either continue pursuing this plan, ensuring a longer energy crisis, or work hard to reactivate the American oil industry and damage his standing with the progressive base further.
Daniel is a Political Science and Economics student from the University of South Florida. He worked as a congressional intern to Rep. Gus Bilirakis (FL-12) from January to May 2020. He also is the head of international analysis at Politiks // Daniel es un estudiante de Cs Políticas y Economía en la Universidad del Sur de la Florida. Trabajo como pasante legislativo para el Representate Gus Bilirakis (FL-12) desde enero hasta mayo del 2020. Daniel también es el jefe de análisis internacional de Politiks.