In the last two years, President Joe Biden grabbed the oil markets by the throat and shook them. He’s not just lowered the price that Americans are paying for gas as they head out on summer vacation, he has sent a shockwave of fear through OPEC leaders like Crown Prince of Saudi Arabia Mohammed bin Salman and Russian President Vladimir Putin.
It’s something that everyone thought was impossible. Biden lifted a threat that loomed over the nation for over 50 years, severely weakened America’s enemies, revealed a new realm in which the U.S. holds unprecedented strength, benefited the average consumer, and turned a profit all at the same time.
And that achievement is getting next to no attention.
The final year of Trump’s term in the White House was an almost immeasurable disaster. His mishandling of the COVID-19 pandemic created an economic crash, bringing on a recession and the highest unemployment rate since the Great Depression. In this uncertain environment, oil prices plummeted. To shore up profits for U.S. oil producers, Trump went to Saudi Arabia and demanded they cut production in an effort to keep oil prices up.
Bin Salman, facing a falling global market, was happy to give Trump what he wanted. In the last full year of Trump, oil production fell by 8%. Prices remained low in the following months because demand was low, but the capacity of the system—both to produce oil and refine it into products like gasoline—were severely constrained.
The world was set up for a shortage when the economy recovered from Trump’s abuse. And that’s exactly what happened. The recovery that began after Biden took office saw oil prices rise sharply as renewed demand outpaced supply.
In 2022, Biden went to Saudi Arabia and asked Trump’s friend bin Salman to delay planned production cuts to help lower oil prices. Bin Salman refused. Prices had doubled in a year, and as long as supply could be held below demand, they would only keep going up. The need to sanction Russia after their invasion of Ukraine only made the situation worse. For bin Salman, it must have seemed like a great time to snub U.S. requests.
But Biden didn’t come home and sulk. Instead, he started on a plan to end the threat that OPEC has represented since it nearly destroyed the U.S. economy in the 1970s. By the end of 2023, the results of that plan were becoming clear, as this Wall Street Journal article headlined “Meet America’s Newest Oil-Trader Extraordinaire: Joe Biden” reported.
President Biden’s unprecedented release of oil from America’s petroleum reserves in 2022 turned the White House into an unusually active player in the volatile crude market. The flood of emergency supplies helped arrest surging oil prices after Russia invaded Ukraine, and pulled billions of dollars into the Energy Department’s coffers in the process.
What Biden seems to understand better than anyone before him—in or out of the White House—is that the U.S. is both the world’s largest oil producer and has the largest readily available reserves. That combination means that Biden can move the market by pushing out a significant mass of oil from the reserves, and have enough control over the market to actually refill those reserves at a profit.
In a May 2024 article titled “Joe Biden, Master Oil Trader,” The Economist took up the theme:
Joe Biden also seems to have a knack for the oil trade. Two years ago his administration initiated the largest ever sell-off from America’s Strategic Petroleum Reserve (spr), an emergency store of crude oil, to counteract price surges caused by Russia’s war in Ukraine. Back then, dwindling stocks left observers twitchy. What if there was another shock to the system? So far, however, Mr Biden has got away with the gamble.
Biden has more than gotten away with it. He’s turned the strategic reserve into a source of revenue, a tool for giving the economy a boost, and a diplomatic lever that can be used to bludgeon enemies without even waking up the military. Even right-wing outlets have been forced to admit Biden’s mastery of this issue.
This is a master class in recognizing potential and finding a new approach. It has largely defanged a threat that’s hung over the nation for decades and signals that nations that have long gotten away with hideous records on everything from human rights violations to grotesque murders need no longer be indulged just because they have oil.
All of this would have been worth a considerable investment of U.S. dollars. Instead, Biden’s shrewd handling of the market is set to add half a billion dollars to the treasury.
Biden’s moves have also been good for U.S. oil companies, who have enjoyed record production and record profits. Trump wants oil execs to give him a billion-dollar bribe. Biden gave them a 160% increase in profits.
But they’re sure to support Trump. Because not everyone is as smart and adaptable as Joe Biden.
Republished with permission from Daily Kos.
