In an attempt to cool surging fuel prices, a US ban on oil exports will have the opposite effect, energy expert Daniel Yergin told Al Arabiya.
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Democrats in the US House of Representatives are pressuring President Joe Biden to ban oil exports to lower prices, which have soared since the end of 2020.
Yergin believes that the US does not have significant leverage in this regard, and that an export ban would actually raise prices overall.
“If suddenly you took 3 million barrels a day out of the market, that is a shock to the market, it will make people scramble for new supplies and it will send the prices up.
“US gasoline prices are set by what happens in the global market, and you can do that, but you would end up with higher gasoline prices rather than lower gasoline prices, just the opposite of what you want.”
If the US releases oil reserves from its Strategic Petroleum Reserve (SPR) to counter rising prices, it will have more of a psychological effect on other oil producers, rather than a material effect on the market, he added.
President Joe Biden plans to tap into the country’s SPR, the world’s largest known emergency stockpile of oil, on Tuesday, as reported by Bloomberg citing unnamed sources.
“If they do it will have a modest effect; it will be more about psychology than really physically changing the market,” said Yergin, who is Vice Chairman of data service IHS Markit.
Fuel prices have soared since the end of 2020.
The Organization of the Petroleum Exporting Countries (OPEC) including Saudi Arabia and the UAE is sticking to a plan of gradually increasing production after introducing record curbs when demand plummeted at the height of the COVID-19 pandemic.
Washington, however, is pressing OPEC to increase supply faster in order to curb high fuel prices, which are seen as a stain on Biden’s political record.
“[Biden] knows if you are an incumbent and you have high gasoline prices, that is a political problem for you,” Yergin explained.
“So, climate is an existential question, he says, but gas prices are a politically existential question in the US.
“And so they are going to continue to pound away on that, because they are getting pounded because of the high gasoline prices.”
With Reuters
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