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OPEC price cuts could have major political repercussions

OPEC price cuts could have major political repercussions

President Biden had a lot to deal with in the first two years of his presidency.

Between the pandemic, inflation, and the war in Eastern Europe that shows no signs of abating anytime soon, the president had a lot to do.

Arguably the biggest part of the meal he needs to get his hands on are gas prices, however, this week he found out that OPEC+ won’t be giving him a helping hand anytime soon.

OPEC announced on Wednesday that it will impose production cuts of 2 million barrels per day starting in November, following the group’s first direct meeting since 2020, when the organization cut production at a record rate of 10 million barrels per day due to the epidemic.

The move comes as oil prices drop to the $80 range. On Wednesday, international benchmark Brent crude prices rose 1.4% to $93.06 a barrel, while US West Texas crude rose 1.09% to $87.46 on the NYMEX.

Natural gas prices also rose by 1.5%.

Oil prices in the United States

“The president is disappointed by the shortsighted decision by OPEC+ to cut production quotas as the global economy grapples with the continuing negative impact of (Russian President Vladimir) Putin’s invasion of Ukraine,” the White House said in a statement.

While Russia is not one of the 15 members of OPEC, the country’s war with Ukraine has had a direct impact on oil and gas production on a global scale.

Inland, Florida residents are still reeling from the devastating effects of Hurricane Ian, which knocked out power for two million residents in the state.

Disruptions to the refinery, including fires and routine maintenance, occurred within a short period of time, driving up wholesale gas prices and โ€œcontributing to onshore fluctuations as the West Coast, Pacific Northwest, Great Lakes and Plains regions experienced major oil refinery problems,โ€ he said. Patrick de Haan, head of petroleum analysis at GasBuddy, said supply challenges, causing prices to rise even as oil prices fell.

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Weekly gas prices rose seven cents last week to $3.79 a gallon, driven by tighter supply and increased demand as driver fuel increases, according to the AAA.

To combat soaring gas prices in California, which leads states by far with an average of $6.37 a gallon, it announced it would allow cheaper winter blend gasoline to be sold a month ahead of schedule, but Wednesday’s OPEC news could make those easing efforts difficult. hollow.

National gas demand rose from 8.32 million barrels per day to 8.83 million barrels per day, according to the Energy Information Administration.

Biden’s political fallout

And while gas prices are down from their highs earlier this year, they are still much higher than they were last year.

The national average of $3.79 is the same as it was 30 days ago, but 60 cents more than it was a year ago.

The biggest fallout may not be at the gas pump, however, and it may be at the ballot box.

The Democrats are already behind the ball eight when it comes to this year’s midterm elections as the current party often has a tough time in between presidential elections.

It is even more difficult when the incumbent, technically the head of the Democratic Party, struggles to gain his endorsement.

โ€œThe rise in gas prices has been closely associated with the increasing rejection rates of Biden,โ€ according to the University of Michigan Journal of Economics,

Joe Biden’s approval rebounded over the summer thanks in part to stabilizing oil prices, but a new Reuters and Ipsos poll shows his approval rating has plunged to 40% in just over four weeks starting on Election Day on November 8.

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That level is still ahead of the 36% that Biden did earlier this year.

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