Biden vs. OPEC Plus: Trump vs. Harris Energy Showdown

(feat. Oil prices, Inflation, Shale Gas, Saudi Arabia, Russia, China, Iran and the 2024 U.S. President Election)

In our last episode, we uncovered how Donald Trump’s oil policies collided with OPEC Plus, Russia, and Saudi Arabia, as the U.S. tried to dominate the global energy market. With shale gas booming and oil prices swinging wildly, we saw how these tensions shaped the global energy landscape and hit our wallets hard.

Now, with the Biden-Harris administration, things have taken a different turn. While President Joe Biden pushes for renewable energy, Saudi Arabia and Russia continue to pull the strings on oil prices, creating new challenges for the U.S. And with Vice President Kamala Harris now a key contender in the 2024 presidential race, how will these energy battles play out? As the election approaches, with energy and inflation taking center stage, the stakes have never been higher.

Let’s dive into Biden vs. OPEC Plus, and see how this showdown could shape the future of U.S. energy policy and the global economy.

1. U.S. shale companies fund their operations with borrowed money instead of their own capital.

2. When oil prices dropped sharply, investors who lent money to these shale companies started pulling out, demanding repayment.

3. As a result, many shale companies went bankrupt, especially in 2020 when the industry saw over 100 bankruptcies due to the collapse in oil prices during the pandemic​(Wolf Street) (NS Energy).

4. This is exactly why I posted ‘Why Pennsylvania Holds the Key to Election 2024‘. And It’s the last puzzle for Donald Trump to “win back to White House” : only winning scenario.

5. Some shale companies had hedged against price fluctuations and managed to survive, but most could not, leading to a significant reduction in shale gas supply​(Reuters).

6. Putin and bin Salman’s strategy to bankrupt shale companies by driving down prices and reducing supply succeeded.

7. Saudi Arabia and Russia adjusted production levels to raise prices again.

8. Oil prices, which had fallen drastically (even going negative in 2020), began to rise once more​ (Reuters).

9. Typically, when energy prices rise, U.S. shale companies restart production and invest in new fields to increase supply.

10. However, the Biden administration shifted focus toward renewable energy instead.

11. Even with rising oil prices, government support was directed toward renewable energy, and stricter environmental regulations made it difficult to attract investment for new oil fields​ (Wolf Street).

12. In California, Biden signed a law banning the development of new shale gas fields ​(NS Energy).

13. Trump’s plan to make the U.S. a leading oil and natural gas exporter slowed down as Biden prioritized renewable energy.

14. At the end of 2021, the Federal Reserve began reducing its quantitative easing policies (known as “tapering”) to combat inflation​ (NS Energy).

15. When the U.S. raises interest rates, dollars flow back to the U.S., which strengthens the dollar and weakens energy prices.

16. However, just as energy prices were set to drop, Russia’s invasion of Ukraine caused them to spike instead.

17. To stabilize energy prices—one of the main drivers of inflation—the U.S. needed to increase oil supply​ (Reuters).

18. This is why the Biden administration pushed for a nuclear deal with Iran to lift oil sanctions and asked Saudi Arabia to increase oil production.

19. Even if supply cannot be increased, prices can still drop if demand decreases.

20. Biden administration believed that a potential economic recession could reduce demand and bring prices down.

21. Bin Salman, however, needed high oil prices to fund his ambitious NEOM city project, which required a massive influx of capital ​(NS Energy).

22. Putin also needed high oil prices to fund his war efforts in Ukraine.

23. Saudi Arabia and Russia, the two main players in OPEC+, joined forces to agree on a 2 million barrel per day production cut in November 2022​ (Reuters).

24. This decision came at a time when the Federal Reserve was raising interest rates to fight inflation, frustrating the U.S. government.

25. Prior to the OPEC+ meeting, the U.S. had pressured member countries (excluding Russia) not to cut production, warning that such a move would be seen as a “hostile act.”

26. The White House even threatened that production cuts could be viewed as a disaster for global energy markets.

27. U.S. Congress supported this stance by proposing legislation to punish OPEC+ for collusion, increasing pressure on oil producers.

28. As a result of U.S. pressure, OPEC+’s collusion wavered, and they eventually agreed to cut production by 2 million barrels.

29. But by December 2022. the outcome was different: instead of cuts, OPEC+ ended up increasing production by 120,000 barrels.

30. Oil prices, which had surged to $122 per barrel in June 2022, continued to fall.

31. This resulted in a failure to maintain the high levels that Saudi Arabia and Russia had hoped for (NS Energy).

31. However, Bin Salman wasn’t one to sit idle in the face of these challenges.

32. He restored diplomatic relations with Iran, with China acting as a mediator, thereby sidelining the U.S. from negotiations and increasing China’s influence.

33. For NEOM’s communication infrastructure, bin Salman chose Huawei, a Chinese telecom company heavily regulated by the U.S.​ (Reuters).

34. He also expanded the use of the Chinese yuan in oil transactions, challenging the dominance of the U.S. dollar in global oil sales.

AlphaZen Insights

Energy prices don’t just move based on supply and demand—there’s a whole political game going on behind the scenes. Saudi Arabia, under bin Salman, isn’t just focused on oil; royal family dynamics and internal politics play a big role. Then there’s China, trying to secure energy as part of its power struggle with the U.S. And, of course, the U.S. is in a unique position, shifting from an energy importer to an exporter, which changes the game altogether.

So, when it comes to predicting energy prices, it’s not just about barrels and pipelines—it’s about understanding the larger political and economic chessboard.

In Episode 1, we explored how Donald Trump handled these challenges, and now in Episode 2, we’ve looked at Biden’s approach. But the story isn’t over yet. With Kamala Harris now running for president in 2024, it’s time to ask: How do Trump and Harris compare on energy policy? Who’s going to have the right strategy to navigate this complex landscape? Only time will tell, but it’s clear that energy will be a defining issue in this election. Buckle up—2024 is going to be interesting!