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White House to call on OPEC to boost oil production as gasoline prices rise

White House to call on OPEC to boost oil production as gasoline prices rise

August 12, 2021: -The White House will call on OPEC and its oil-producing allies to boost production to combat climbing gasoline prices, amid concerns that rising inflation could derail the economic recovery from Covid-19.

Officials from the Biden Administration spoke with OPEC’s de facto leader Saudi Arabia this week and with representatives from the United Arab Emirates and other OPEC+ members.

The White House said the group’s July agreement to boost production by 400,000 barrels per day every month beginning in August and stretching into 2022 is “simply not enough” during a “critical moment in the global recovery.”

“We are engaging with relevant OPEC+ members on the importance of competitive markets in setting prices,” National Security Advisor Jake Sullivan said in the statement obtained by CNBC. “Competitive energy markets will ensure reliable and stable energy supplies, and OPEC+ must do more to support the recovery.”

Gas prices have climbed this year as demand for petroleum products returns. According to AAA, the national average for a gallon of gas stood at $3.186 on Tuesday, up from $3.143 a month ago. Over the last year, prices are up by just over $1.

“The president recognizes that gas prices can put a pinch on the family budget,” a senior White House official said. “He’d like his administration to use whatever tools that it has to help address the cost of gas, to help bring those prices down.”

The jump in gas prices comes on the heels of a rebound in oil prices. In April 2020, West Texas Intermediate crude futures, the U.S. oil benchmark, dipped into negative territory for the first time on record as the pandemic sapped demand for petroleum products.

OPEC+ is still withholding about six million barrels per day, which it plans to return to the market gradually. The group’s latest meeting ended in disarray after the UAE took issue with its baseline quota, briefly sending the oil market into turmoil. The group eventually agreed later in July.

U.S. producers also turned off the taps during the depths of the pandemic, and they’ve been slow to bring production back online. According to the latest data from the Energy Information Administration, U.S. production averaged 11.2 million barrels per day in May, down from the pre-pandemic high above 13 million barrels per day.

Consumers are feeling the pain at the pump, and it’s not just gas prices that are on the rise.

On Wednesday, the consumer price index for July will be released, and economists are expecting it to show that prices jumped 0.5% last month, according to economists surveyed by Dow Jones. The reading follows a 0.9% jump in June, the most significant monthly increase since August 2008.

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