U.S. President Joe Biden stuck it to Canada’s long-term plans to export more oil to the U.S. – but courted more Saudi production in the short term.EVELYN HOCKSTEIN/Reuters
Which of these things is not like the others?
U.S. President Joe Biden wants half of all new vehicles sold in the United States by 2030 to be zero emission. He wants a US$7.5-billion network of charging stations across the country. And he wants OPEC to pump more oil, ASAP, to lower the price of gasoline for American drivers.
The first is a plan to transform the U.S. auto market within a decade, set out in an executive order earlier this month. The second is one of many clean-energy initiatives in Mr. Biden’s infrastructure bill, which won Senate approval last week.
And the third? Gasoline prices have been rising as the global economy recovers, so last week the White House called on the OPEC+ group of countries, whose most important members are Saudi Arabia and Russia, to open the taps, to ensure that Americans “have access to affordable and reliable energy, including at the pump.”
Politics is about managing contradictions. And there sure are a lot of them in Mr. Biden’s desire to make climate policy a central focus of his administration, while keeping oil cheap and plentiful. The timing of his call for the world to pump more oil came just two days after the latest bleak climate report from the United Nations, laying out the need for urgent action to stem the use of fossil fuels.
And Canadians hardly need reminding that the U.S. President who is today begging a group of illiberal petro-states to pump more oil is the same guy who, on his first day in office, vetoed the Keystone XL pipeline.
It’s because he had lots of voters hoisting “Say No To Keystone Tar Sands” signs, and nobody marching under banners reading “Say No to Saudi Oil and Yes to Higher Gas Prices.”
Mr. Biden’s failed plea for more oil – OPEC and its allies have not been stirred into action – distills the tension between the hope for a fossil fuel-free future and present political realities. Oil may no longer be an essential fuel tomorrow, but today it remains at the centre of the world economy. Its price affects inflation, and democratic popularity.
Canada has long been the No. 1 supplier of oil to the U.S., and in 2015 surpassed all of OPEC combined. Yet Mr. Biden in January spurned a new oil pipeline from his best friend, only to turn around in August and ask a group of frenemies and enemies to produce more oil, please.
It comes down to U.S. domestic politics, and the physical reality that Saudi Arabia, not Canada, has always had the spare capacity to instantly pump more barrels. As for Keystone XL, it wouldn’t have opened until 2023 at least. Its capacity would have been 830,000 barrels a day, a big number, but it wasn’t going to be all new barrels. The Canada Energy Regulator forecasts only small increases in Canadian oil output in the coming years.
So after hanging up on Canada, Mr. Biden is now making the hotline bling in Riyadh and Moscow.
American politics yields many such contradictions. Mr. Biden stuck it to Canada’s long-term plans to export more oil to the U.S. – but courts more Saudi production in the short term. And Mr. Biden has won Senate approval for an electric-vehicle charging network to reduce the need for oil in the future, while here in the present, when gasoline crested US$3 a gallon – about $1 a litre – he issued an urgent call for OPEC to lower prices by producing more oil.
The Biden administration has also declared climate action paramount, but refuses to broach the idea of a carbon tax, even though the policy is supported by most economists, including Janet Yellen, Mr. Biden’s Treasury Secretary. A carbon tax would increase the price of gasoline – that’s the point – so it’s a political no-go.
Instead, Mr. Biden is working to drive up demand for EVs, even as keeping gas cheap will do the opposite, by discouraging drivers from going electric.
Do these contradictory policies make environmental and economic sense? Not exactly.
Do they make pragmatic political sense? For the Biden White House, yes.
Does it look terrible, saying no to a Canadian pipeline, with climate change as a pretext, and then begging for more tankers full of Saudi oil? Without a doubt.
And is the tension between a short-term desire for cheap fuels, and the long-term need for an energy transition, going to be a defining element of political debate in the years to come? Absolutely.
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