How Oil Shapes Our Democracy
As the 2024 US Election looms into view, questions surrounding the influence oil and gas prices have over American democracy become louder.
On the 5th of September 2023, Saudi Arabia’s government announced plans to extend its oil production cuts until the end of the year, with plans to extend it further over 2024, subject to a monthly review. Russia, another OPEC member, also plans to extend its 300,000 bpd cut for the same duration. According to Jorge Leon, an analyst at Rystad Energy, “these bullish moves significantly tighten the global oil market and result in only one thing: higher oil prices worldwide.”
He was right.
News of these announcements helped elevate Brent crude oil prices above $90 per barrel, their highest since November 2022. Although U.S. gasoline prices are averaging a little over $3.80 per gallon, far below the 2022 peak of $5 per gallon, it's enough to create pain for consumers and a line of attack for Biden's GOP opponents, just as they did ahead of the 2022 midterm elections.
Many in the Biden camp worry that as the 2024 US election comes underway, foreign governments opposed to Biden’s domestic and foreign policies will use their monopoly over world oil supplies to artificially raise energy prices, weakening the incumbent president’s approval rating and paving the way forward for Trump’s return to the White House. This fear was echoed by Goldman Sachs who warned, in a recent memo to its employees, that Russia’s and Saudi’s cuts could send oil prices above $100 a barrel by the end of 2024, just in time for Election Day.
Gasoline prices are one of the most visible signs of inflation, which poses a risk to Biden who is campaigning on lowering costs for Americans and the benefits of his marquee climate law passed last summer. Americans typically blame the White House for prices at the pump — despite the president having little control — and it will be a key issue for the swing voters Biden will need on election day.
“There are fewer risks as serious to a president's reelection than rising pump prices,” said Bob McNally, president of consultant Rapidan Energy Group, in a recent interview. “The president is in a really tough position.”
It’s not difficult to see why so many foreign governments prefer a new Trump administration over a Biden one.
Since coming into office, Biden has pursued a very assertive foreign policy agenda, supplying Ukraine with weapons to fight against Russia’s invasion, defending Taiwan’s sovereignty in the face of Chinese encroachment, and supporting democratic efforts in the Middle East. Domestically, he has also pursued an ambitious plan to make the US energy independent, jeopardising the influence oil states have over Washington DC. New fracking sites have been opened in southern America, billions in subsidies have gone towards making renewable energy sources like solar panels cheaper and easier for consumers to obtain, and there has been a big emphasis on severing - or at least minimising - ties with Saudi Arabia and other oil-producing countries.
Trump, with his aversion towards becoming entangled in foreign conflicts and backed by the powerful oil and gas lobby, is seen as a more amicable partner compared to Biden. With Trump back in office, foreign governments like Russia and Saudi Arabia will be treated to a less hostile president, willing to restrain the State Department’s zealous desire to meddle in the affairs of other regions, happy to turn a blind eye to their geopolitical aspirations.
While Biden’s administration has made significant progress in reducing America’s reliance on foreign imports, it will still not be enough to deny his opponents from exploiting energy prices. Biden can only hope that fears surrounding domestic issues like abortion or Trump’s destructive return to office outweigh this new financial burden.