Plus, is there a risk of World War 3?
I’m Isaac Saul, and this is Tangle: an independent, nonpartisan, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum on the news of the day — then “my take.”
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Today's read: 12 minutes.
Quick hits.
- The websites of several U.S. airports temporarily went offline after a denial-of-service (DoS) attack, where servers are overwhelmed by fake traffic. Officials believe the cyber attack was committed by a Russia-affiliated hacker group. (The hack)
- Meanwhile, 11 people were killed and more than 60 were wounded after Russia shelled several major Ukrainian cities. (The strikes)
- Jury selection began yesterday in the sexual assault trial of Harvey Weinstein, who is already serving over two decades in prison after being convicted of rape. (The trial)
- Iranian oil workers went on strike in support of ongoing demonstrations over the death of Mahsa Amini, another sign the protests continue to spread across the country. (The protests)
- Israel says it has reached a historic deal with Lebanon over a maritime border following months of negotiations led by the U.S. (The deal)
Our 'Quick Hits' section is created in partnership with Ground News, a website and app that rates the bias of news coverage and news outlets.
Today's topic.
OPEC+ production cuts. Last week, OPEC+ announced it would cut oil production in November, hoping to curb supply in a market where prices of crude oil have been falling.
Reminder: In 1960, the Organization of the Petroleum Exporting Countries (OPEC) was created to balance the power of oil pricing. At the time, the U.S. dominated and fixed the global oil market, and OPEC was a way for crude oil exporters in the Middle East to consolidate their power. Even now, the U.S. is still the top producer of oil worldwide. In 2020, we produced 20% of the world’s oil, including 75% of our own supply. Saudi Arabia produced 12% of the world’s supply and Russia produced 11%.
Today, the members of OPEC are Algeria, Angola, Congo, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. But there is also OPEC+, which includes non-permanent OPEC countries that also export crude oil. On that list is Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
Saudi Arabia is considered the de facto leader of OPEC+, which is one element of the group’s tenuous diplomatic relationship with the United States. Saudi officials justified the cut in production of 2 million barrels per day (bpd) — about 2% of global supply — by citing rising interest rates in the West and a weak global economy.
Biden, who visited Saudi Arabia earlier this year, had called on the Kingdom to help lower gas prices and bring relief to nations in the West. In part, U.S. officials want to see lower gas prices to deprive Moscow of oil revenue.
"The President is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of (Russian President Vladimir) Putin’s invasion of Ukraine," the White House said.
Production cut estimates are based on existing baseline figures. Because OPEC+ production fell about 3.6 million barrels short of its output target in August, the real cuts are estimated to be lower — with analysts estimating anywhere from 0.4 million bpd to 1.1 million bpd.
Today, we're going to take a look at some reactions from the left and right, then my take.
What the left is saying.
- The left is critical of Saudi Arabia, and wants to see Congress punish OPEC.
- Some call out the failed diplomacy between Biden and the Crown Prince.
- Others worry about what this means for the future of U.S.-Saudi relations.
In CNN, David Andelman said Biden's fist bump turned into a slap in the face.
"This week’s OPEC+ announcement that it would be slashing oil production by 2 million barrels per day – engineered, by most accounts, by Saudi Arabia and Russia – is already provoking a cascade of toxic geopolitical shifts. A host of issues all converge here at this epiphanal moment," Andelman said. "There’s the European Union, which is suddenly having to work out how it might still implement its price cap on Russian crude. There’s oil producer Venezuela, which with OPEC’s one stroke is looking to the US more like an attractive trading partner than a hemispheric pariah. There’s the prospect of a resurgence of coal as a fuel and its impact on our entire planet. And then there’s the jump in oil prices, a source of new revenues Russia so desperately needs to continue its war in Ukraine, where a lightning counteroffensive is hurting President Vladimir Putin on the battlefield and at home.
"For now, the most immediate fallout will be on oil prices and revenues," he said. "Designed to spur a reversal of the trend that has sent oil prices plummeting to $80 a barrel from just over $130 a barrel in March, the impact on prices at the gas pump and on inflation in the United States on the eve of mid-term elections is already being felt... At the same time, supply shortages could make the oil Russia has been selling at its own bargain basement prices to sympathetic nations like China and India, among others, all the more attractive. If the EU succeeds in curtailing the sale of Russian oil to its members, there will be that much more output available for sale elsewhere."
In The New Republic, Timothy Noah said we only want to punish OPEC when we can't.
"The Saudi slap inspired calls in Congress to pass the No Oil Producing and Exporting Cartels Act, or NOPEC, a bill first introduced by then-Senator Herbert Kohl, a Wisconsin Democrat, in 2000, and reintroduced in just about every Congress since," he said. "The bill would clarify that neither the doctrine of sovereign immunity, which bars lawsuits against foreign nations, nor the “act of state” doctrine, which bars lawsuits against expropriation by foreign nations, prevents the Justice Department from busting OPEC, just as it routinely busts other international cartels... NOPEC makes good sense. The trouble is that Congress and the president are willing to consider its passage only during maximally inopportune moments like the present.
"When oil is scarce, as it is now, people get mad at OPEC, and NOPEC is resurrected to appease them," Noah wrote. "But a time of oil scarcity is the absolute worst moment to get tough with OPEC, because OPEC can be counted on to retaliate by cutting production further, crippling Western economies. In such times, some way is always found by Congress or the president not to enact NOPEC. The time to pass NOPEC is when oil is plentiful. But when oil is plentiful, Congress and voters are no longer mad at OPEC, and they forget all about it," he wrote. "The time to kick OPEC, I wrote back in 2001, and reaffirmed in June, is not when it’s up but when it’s down: When gas prices are low and the American Petroleum Institute is begging Congress for tax breaks. We’ve experienced this multiple times since NOPEC was first proposed in 2000. But we’ve always missed our chance."
The Washington Post editorial board called it Biden's Saudi Arabia failure.
"There could be no more troubling evidence of how badly Mr. Biden’s efforts earlier this year to mend fences with the de facto Saudi ruler, Crown Prince Mohammed bin Salman, have failed," they wrote. "Not only has MBS, as he is known, refused to raise oil production, as Mr. Biden wanted. He appears to be doubling down on hostility toward the president, in retaliation for the latter’s — accurate — depiction of him as the author of Post contributor Jamal Khashoggi’s murder and other human rights violations that make Saudi Arabia worthy of ‘pariah’ status. Announced just a month before a crucial midterm election in which Republicans are blaming Mr. Biden for high U.S. gas prices, the crown prince is effectively joining hands with Russian President Vladimir Putin to drive those prices, which had been falling, back up.
"It looks for all the world like an attempt by MBS to influence internal U.S. politics, to the advantage of the party of former president Donald Trump, who dealt warmly with him," the board added. "Dictatorial and impetuous, MBS is also young — only 37 years old — and likely to dominate the kingdom for many years. Democratic members of Congress are calling for a reassessment of the long-standing strategic relationship between the United States and Saudi Arabia in light of that reality, and they should be. The United States cannot yield to this kind of pressure. It should press ahead with the plan for a price cap on Russian oil, appropriately adjusted to account for the OPEC Plus production cut."
What the right is saying.
- The right criticizes Biden for not doing more to ramp up U.S. oil production at home.
- Some call out Biden for focusing instead on appeasing bin Salman.
- Others say this is the latest reminder that the West cannot rely on OPEC for oil.
Rather than whining about OPEC, The New York Post editorial board said, Biden should focus on domestic energy production.
"Prices at the pump had already started edging up before OPEC+ decided Wednesday to cut oil production by 2 million barrels a day, ignoring the White House’s frantic appeals. 'It’s clear that OPEC+ is aligning with Russia with today’s announcement,' flamed White House Press Secretary Karine Jean-Pierre. Wrong again, Karine: The Saudis and the rest are simply serving their own interests by limiting supply to keep prices high; they’re gettin’ while the gettin’ is good," the board wrote. "Too bad your boss, President Joe Biden, refuses to serve America’s interests by unleashing US energy producers. Instead, Biden is releasing another 10 million barrels from the US Strategic Petroleum Reserve, which was already at a decades-long low from his prior actions.
"And never mind that this will only make up for five days of the OPEC+ cuts: The prez needs to do something basically symbolic — because his ideology stands in the way of doing anything meaningful... he put the entire US fossil-fuel industry on unmistakable notice that he wanted it out of business as soon as possible," they wrote. "His administration and its allies are also doing their best to discourage lending to the fossil-fuel industry. As a result, investment in future US production has barely ticked up even as energy prices soared this past year. That goes beyond limiting new drilling to not rebuilding America’s refineries — which, Joseph Toomey notes in a new RealClearEnergy paper, have seen their largest drop in capacity ever these last few years."
In National Review, the editors said the only surprising thing about the cuts is that they didn't happen earlier.
"There has been talk that the U.S. should respond to the production cut with political or legal reprisals, including passing legislation that would designate OPEC a cartel for the purposes of U.S. antitrust law," the editors said. "However emotionally satisfying, this is a move that would, in all probability, both be ineffective and damaging to U.S. strategic interests in the region, which are, as OPEC’s move shows, clearly in need of repair. Running from Kabul and flirting with Tehran has had consequences. Suggestions that the U.S. should 'hit back' with increased investment in renewables would, almost certainly, be greeted with laughter and expressions of gratitude.
"Grown-up policy-making recognizes the need for trade-offs and a setting of rational priorities. It makes no sense to seek to 'save the planet' with costly measures that will, even based on optimistic assumptions, have very little effect on global temperatures decades from now while benefiting regimes that are, at best, frenemies, and often something far more sinister," they wrote. "The U.S. should have zero hesitation to make use of its energy resources in ways that will not only benefit our economy, but also cut OPEC down to size. As someone once said, 'Drill, baby, drill!'"
In The Globe and Mail, Konrad Yakabuski said OPEC's snub underscores the need for more Western oil.
"The Paris-based International Energy Agency last year said that the world needed to halt new investments in fossil fuel projects to reach net-zero emissions by 2050," Yakabuski wrote. "Saudi Arabia, whose state-owned oil giant plans to increase its production capacity to 13 million barrels a day from 12 million by 2027, did not get the memo. And it stands to be the biggest beneficiary of campaigns to shame multinational oil companies and banks into exiting Canada’s oil sands and the U.S. shale oil sector. Climate activists and ESG (environmental, social, governance) enthusiasts insist any new fossil fuel projects in the West are doomed to become stranded assets as global demand dries up in the coming decades. But less production in the West only further strengthens OPEC, leaving consumers in democratic countries at the mercy of dictatorships abroad.
"Under the IEA’s net-zero roadmap, which is based on a plummeting demand for oil to 24 million barrels a day from about 100 million now, OPEC’s share of global oil supply would increase to 52 per cent by mid-century from around 37 per cent," Yakabuski said. "That, the IEA conceded, would be 'a level higher than at any point in the history of oil markets.' But what if oil demand does not fall by nearly as much as that? Given the history of Western countries failing to meet even their least ambitious climate targets in the past, there is plenty of reason to believe that the world will need more oil in 2050 than the optimists are telling us."
My take.
Reminder: "My take" is a section where I give myself space to share my own personal opinion. It is meant to be one perspective amid many others. If you have feedback, criticism, or compliments, you can reply to this email and write in. If you're a paying subscriber, you can also leave a comment.
- Our relationship with Saudi Arabia is on very uneven ground.
- We have high levels of oil production — what we need is to ramp up our refining capacity.
- Biden has put himself in an incredibly difficult political position.
All of this makes me very nervous.
In the last few months, the contours of our planet's geopolitics have become more and more obvious — and not in a good way. Russia's invasion of Ukraine has divided the world, but also splintered tenuous cooperation that existed before it. Our relationship with Saudi Arabia is long and complicated, but one crude way to think about it is that we’ve spent years helping fund their most important domestic priority — the war in Yemen — and turned a blind eye to many of Saudi Arabia’s human rights violations, and even its role in 9/11. In return, the Kingdom picks up the phone when the U.S. wants to bend the ear of one of the world’s largest oil producers, and it often cooperates with our requests.
The murder of Jamal Khashoggi tested this relationship, and gave the West ample evidence that Mohammed bin Salman is not who U.S. politicians want him to be. Biden attempted to thaw diplomatic relations with Saudi Arabia anyway. For a squeeze on oil production to be the outcome of that attempt does not bode well for the future of those relations.
On the global chess board, if there is one, I think we are seeing a real-time acceleration of our divisions — with black and white pieces re-organizing and taking position. The U.S. and our NATO allies are moving into one corner, while China, Russia, and Iran have been moving into another — and now it doesn’t take a lot of imagination to see Saudi Arabia there with them. Fingers are pointed, weapons are raised, and the energy wars are really just beginning — with a harsh winter ahead. It all just feels so tense.
It's hard to argue with the logic that U.S. energy independence is the way out, at least in the short term, and I think the right’s reaction to all of this is far more pragmatic and realistic. If we don't want to be leveraged by Saudi Arabia or Russia on oil, we should ramp up production of our own. I have no problem with that when you’re looking six months ahead. The underlying problem with that strategy is that it isn’t how energy production really works — it’s the prospect of profitable long-term investment that will bring back investors. Which introduces other concerns, too.
For starters: We are ramping up production. Oil production has risen 700,000 bpd in the U.S. since the war in Ukraine started six months ago, all while Biden has tapped into our strategic oil reserves. Right now, we're producing 11.8 million bpd, and are projected to produce an average of 12.6 million bpd next year. The U.S. record for production is 12.3 million bpd, set in 2019 under Trump (meaning analysts think we’ll produce a record amount of oil again next year). Of course, this is part of why OPEC+ is pumping their brakes: We still have a global oil surplus, prices are falling, and they want the prices to go back up.
The other obvious problem is climate change. I've begun subscribing to the all-of-the-above energy approach — one that includes traditional "green" energies like solar, wind, and electric cars but also leans into more controversial sources like nuclear energy and still relies on less deleterious fossil fuels like natural gas. I'm not naive enough to think oil is going anywhere overnight, and of course any complete plan for slowing climate change requires buy-in from India, China, and other nations in the developing world who rely on cheaper and dirtier fuels. But that doesn't mean we should just barrel ahead on our own all-oil future without attempting a transition to a cleaner energy future. Given what we know about the planet’s health and greenhouse emissions, delay isn’t really an option.
This is the bind the Biden administration is in. And it's not one I envy. He ran on helping lead the U.S. to reduce its emissions. It's a promise I'm supportive of, and it's a promise any American should support if you want a habitable southwest with water in 100 years, or coastal cities that aren't regularly being flooded. But that promise is running into the reality that today, and in the immediate future, the U.S. citizenry still relies on gas to drive their cars — and gas requires oil. And OPEC+ has a lot of control over the oil.
For now, I think the best thing Biden can do is emphasize his desire to continue to invest in wind, solar, nuclear and electric vehicles, while also pointing to the record oil production on the horizon and his hope that America can function independently of the oil cartels. He needs to show investors there is a near-term future in U.S. production and, perhaps most importantly, find a way to turn around our anemic refining capacities. We are still the top oil producer in the world, but we lack the refining capacity to best leverage that oil to our needs, largely because we haven’t adapted our refineries to the kind of oil we’re producing at home.
And he needs to do all of this without abandoning a future where we are still aiming to reduce our own emissions dramatically. Frankly, I'm not even sure how one walks that line, but the near-term result of not succeeding is obvious: Gas prices will go back up, inflation will remain steady, and Biden's political standing stays in jeopardy. All while Saudi Arabia and Russia coalesce control over the planet’s energy production.
Your questions, answered.
Q: How likely do you think it is that we’re headed to WW3? I’ve been reading too much about it since the attack on the Nord Stream pipeline.
— Jessica, Phoenix, Arizona
Tangle: I'll preface this by saying a frequent criticism I get of my writing is that I'm often too optimistic — about people, politicians, leaders, and the United States. That criticism usually surprises me (I think I'm pretty cynical about the U.S., and politicians especially) but it's something I do hear.
That being said, I think it's pretty unlikely. Primarily because there is absolutely no appetite for war domestically in the U.S., and politicians (and especially presidents) usually don't do things that would completely tank support for their re-election. There is, perhaps, even less appetite for conflict in most of Europe. And the last thing Russia wants, given that they appear to be losing their war with Ukraine, is for any NATO allies to enter the fray with more than just funding.
Does this mean it certainly won't happen? That, I'm not willing to say. There are plenty of red lines one can imagine that would drag us into a major, global conflict. If Putin were to use nuclear weapons in Ukraine, for instance, the U.S. would almost certainly strike against Russia. What happens then? How does Russia respond? What do China, Iran or Saudi Arabia do? I really don't know. But it wouldn't be pretty.
Still, I don't think we're there yet. After 6 months, the conflict in Ukraine is still contained within its borders, and the U.S. has not wavered in its determination to keep its troops out of the fighting. I don't suspect that will change anytime soon.
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Under the radar.
Writers for a D.C.-based media operation run by Democratic operatives are posing online as legitimate local news organizations. The network of outlets is churning out Democrat-aligned content that is made to look like independent local news, with branded news sites like "Milwaukee Metro Times" or "Bucks County Standard." At least 51 locally branded sites have popped up since last year, and they appear to have ties to Democratic operative David Brock, Axios reports. In 2020, similar sites run by Republican operatives were prolific.
Numbers.
- 11.25 million bpd. The average daily U.S. oil production in 2021.
- 11.79 million bpd. The average daily U.S. oil production in 2022.
- 12.63 million bpd. The estimated average daily production of U.S. oil in 2023.
- 1.69 million. The amount of refining capacity, in barrels per day, expected to close by 2023 compared to what existed in 2019.
- 4 in 10. The number of Republicans who say they'll blame election fraud if their party doesn't win control of Congress.
- 1 in 4. The number of Democrats who say they'll blame election fraud if their party doesn't win control of Congress.
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Oil prices might be going up — but Tangle prices aren't.
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Have a nice day.
NASA says it has invented a high-performance battery it believes can be used on fully electric planes. The space agency made the breakthrough while investigating solid state batteries, which hold more energy and are lighter than industry standard lithium-ion batteries. Since they typically cannot discharge energy at the same rate as lithium-ion batteries, they have been unsuitable for powering large electronics. But researchers say they have solved this problem by using new materials in the battery, as well as incorporating a novel vertical stack design. “The possibilities are pretty incredible,” Rocco Viggiano, principal investigator for SABERS at Nasa’s Glenn Research Center in Cleveland, said. "We’re starting to approach this new frontier of battery research that could do so much more than lithium-ion batteries can." MSN has the story.
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