Tangle - OPEC+ announces oil cuts.

Episode Date: October 11, 2022

We're covering the decision by OPEC+ nations to cut oil production — and what it means for gas prices and Biden's global diplomacy. Plus, a question about the likelihood of World War III.You can read today's podcast here, today’s “Under the Radar” story here, and today’s “Have a nice day” story here.Today’s clickables: Quick hits (00:57), Today’s story (1:57), Right’s take (11:00), Left’s take (5:54), Isaac’s take (15:52), Listener question (20:28), Under the Radar (22:18), Numbers (22:57), Have a nice day (23:48)You can subscribe to Tangle by clicking here or drop something in our tip jar by clicking here.Our podcast is written by Isaac Saul and produced by Trevor Eichhorn. Music for the podcast was produced by Diet 75.Our newsletter is edited by Bailey Saul, Sean Brady, Ari Weitzman, and produced in conjunction with Tangle’s social media manager Magdalena Bokowa, who also created our logo.--- Send in a voice message: https://podcasters.spotify.com/pod/show/tanglenews/message Hosted on Acast. See acast.com/privacy for more information.

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The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is nearly double the historic average of 52,000 cases. What can you do this flu season? Talk to your pharmacist or doctor about getting a flu shot. Consider FluCellVax Quad and help protect yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages 6 months and older, and it may be available for free in your province. Side effects and allergic reactions can occur, and 100% protection is not guaranteed. Learn more at flucellvax.ca. From executive producer Isaac Saul, this is Tangle.

Good morning, good afternoon, and good evening, and welcome to the Tangle Podcast, the place where you get views from across the political spectrum, some independent thinking without all that hysterical nonsense you find everywhere else. I'm your host, Isaac Saul, and on today's episode, we are going to be talking about the OPEC cuts, the OPEC plus cuts to be more specific, what it means for you, what it means for the US, what's happening on the global political scene right now. As always, though, before we kick off, we'll jump in with some quick hits. First up, the websites of several U.S. airports temporarily went offline after a denial of service or DNS attack where servers are overwhelmed by fake traffic. Officials believe the cyber attack was committed by a Russia-affiliated hacker group.

Meanwhile, 11 people were killed and more than 60 were wounded after Russia shelled several major Ukrainian cities. Number three, jury selection began yesterday in the sexual assault trial of Harvey Weinstein, who was already serving over two decades in prison after being convicted of rape. Number four, Iranian oil workers went on strike in support of ongoing demonstrations over the death of Masa Amini, another sign the protests continued to spread across the country. Number five, Israel says it reached a historic deal with Lebanon over a maritime border following months of negotiations being led by the U.S. Because today, OPEC and Russia announced they are cutting oil production by two million barrels a day to raise energy prices, a move that would likely raise gas prices in the U.S. right before

the midterm election. The move is being seen as a big setback to the Biden administration just over 30 days before the midterms and as a salve to Russia, helping it raise its oil revenues and support its invasion of Ukraine. There are people in Washington and in the White House who right now are looking at the cuts that OPEC plus is making, and they are saying that this is an aggressive move by OPEC. Last week, OPEC Plus announced that it would cut oil production in November, hoping to curb supply in a market where prices of crude oil have been falling. A quick reminder, in 1960, the Organization of the Petroleum Exporting Countries, aka 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, and we still produce 75% of our own supply domestically. Saudi Arabia produced 12%, and Russia produced 11% of the world's oil and we still produce 75% of our own supply domestically. Saudi Arabia produced 12% and Russia produced 11% of the world's oil supply in 2020. 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 other non-permanent OPEC countries like Azerbaijan or Kazakhstan and Malaysia,

Mexico, Oman, Russia, South Sudan, Sudan, Bahrain, and Brunei. Saudi Arabia is considered the de facto leader of OPEC+, which is also the driving force behind the group's tenuous diplomatic relationship with the United States. Saudi officials justified the cut in production of 2 million barrels per day, or 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 short-sighted decision by OPEC Plus to cut

production quotas while 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 Plus production fell about 3.6 million barrels short of its output target in August, the real cuts are estimated to be much 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 the right, and then my take. First up, we'll start with 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 prices 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 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 of the gas pump and on inflation in the United States on the eve of midterm 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 Cole, 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 all 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. 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 said. 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. All right, that is it for what the left is saying, which brings us to 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 on appeasing Ben Salman when he could turn around domestic production. 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 Plus decided Wednesday to cut oil production by 2 million barrels a day, ignoring the White House's frantic appeals. It's clear that OPEC Plus 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 getting while the getting is good, the board wrote.

Too bad your boss, President Joe Biden, refuses to serve America's interests by unleashing U.S. energy producers. Instead, Biden is releasing another 10 million barrels from the U.S. Strategic Petroleum Reserve, which was already at a decades-long low from his prior action. And never mind that this will only make up for five days of the OPEC Plus cuts. The pres needs to do something basically symbolic, because his ideology stands in the way of doing anything meaningful. He put the entire U.S. fossil fuel industry on unmistakable notice that he wanted out of the business as soon as possible, they said. His administration and its allies are also doing their best

to discourage lending to the fossil fuel industry. As a result, investment in future U.S. 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 Real Clear Energy 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's 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 policymaking 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 said. 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. Based on Charles Yu's award-winning book, Interior Chinatown follows the story of Willis Wu, a background character trapped in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight.

Interior Chinatown is streaming November 19th, only on Disney+. The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is nearly double the historic average of 52,000 cases. What can you do this flu season? Talk to your pharmacist or doctor about getting a flu shot. Consider FluCellVax Quad and help protect yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages 6 months and older, and it may be available for free in your province. Side effects and allergic reactions

can occur, and 100% protection is not guaranteed. Learn more at flucellvax.ca. In the Globe and Mail, Conrad Jakubuski 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, Jakobuski 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, that's 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% by mid-century from around 37% right now, Jakobuski 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's plenty of reason to believe that the world will need more oil in 2050 than the optimists are telling us. Alright, that is it for the left and the right are saying, which brings us to my take. All right, that is it for the left and the right are saying, which brings us to my take. So 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 I don't mean that in a good way. Russia's invasion of Ukraine has divided the world, but also splintered already tenuous cooperation that

existed before it. The murder of Jamal Khashoggi gave the West ample evidence that Mohammed bin Salman is not who U.S. politicians want him to be. But Biden tried to walk the line of our deeply complicated Saudi politics anyway. Now he's getting this in return. On the global chessboard, if there is one, I think we are seeing a real-time acceleration of our divisions, with black and white pieces reorganizing among themselves. China, Russia, Iran, and Saudi Arabia are moving to one corner. The US and our NATO allies are moving into another.

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 US 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, say, six months ahead. The underlying problem is that that 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 US 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 12.6 million next year. The US record for production is 12.3 million BPD set in 2019 under Trump, meaning analysts think we'll be producing a record amount of oil again by next year. Of course, this is part of why OPEC Plus is pumping their brakes. We still have a global oil surplus, prices are still 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 the less deleterious fossil fuels like natural gas. I'm not naive enough to think that 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 gas emissions, that isn't really an option. This is the buy-in 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 out. But that promise is running into the reality that today, in the immediate future, the U.S. citizenry still relies on gas to drive their cars, and gas requires oil. And OPEC Plus has a lot of control over the 25% of our oil needs we can't meet on our own.

For now, the best thing Biden can do is probably 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 convince 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. And he needs to do all of this without abandoning a future where we still the top oil producer in the world, but we lack the refining capacity to best leverage that oil to our needs. 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 doing so is obvious. Gas prices will go back up, inflation will remain steady, and Biden's political standing will remain in jeopardy, all while Saudi Arabia and Russia coalesce around increasing control over their portion of the planet's energy production. All right, that is it for my take, which brings us to your questions answered. This one's from Jessica in Phoenix, Arizona. She said, how likely do you think it is that we're headed to World War III? I've been reading too much about it since the attack on the Nord Stream pipeline. Okay, awesome. A very light reader question today. Jessica, look,

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, the United States. That criticism typically surprises me, to be honest. I think I'm pretty cynical about the U.S. and politicians especially, but it is something I do hear. That being said, I think it's pretty unlikely. The most important reason why is because there is absolutely no appetite for the war domestically in the United States, and politicians and especially presidents usually don't do things that would completely tank their support for 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 in 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 US would almost certainly levy a 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. 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 six 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. All right, next up is our Under the Radar section. 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 being run by Republican operatives were prolific. All right, that is it for our Under the Radar section. Next up is our numbers section. The average daily US oil production in 2021 was 11.25 million barrels per day. The average daily US oil production in 2022 was 11.79 million barrels per day. The estimated daily production of oil in the US in 2023 is 12.63 million barrels per day. The amount of refining capacity in barrels per day expected to close by 2023 compared to what

existed in 2019 is 1.69 million barrels per day. The number of Republicans who say they'll blame election fraud if their party doesn't win control of Congress is 4 in 10. The number of Democrats who say they'll blame election fraud if their party doesn't win control of Congress is 1 in 4. Alright, last but not least, our have a nice day section. 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 those lithium-ion batteries, they have been unsuitable for powering large electronics. But researchers say they have solved the problem by using new materials in the battery as well as incorporating a novel vertical stack design. The possibilities are pretty incredible, Rocco Vigiano, a principal investigator for Sabres 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, and there's a link to it in today's newsletter. All right, everybody, that is it for today's podcast.

As always, if you want to support our work, please go to readtangle.com slash membership and become a member. Also, it is midterm season, and we are trying to get the word out about Tangle. So if you are someone who loves the podcast and knows other people who listen to podcasts, which most of you probably are, please do send them Tangle. Tell them to give us a listen, to follow us, to subscribe. If you haven't yet, give us a five-star rating.

That really helps us get in front of other people. We'll be right back here same time tomorrow. Have a good one. Peace. Our podcast is written by me, Isaac Saul, Peace. Media Manager Magdalena Pikova, who designed our logo. Music for the podcast was produced by Diet75. For more from Tangle, subscribe to our newsletter or check out our website at www.readtangle.com. Thanks for watching! character trapped in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+.

The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is nearly double the historic average of 52,000 cases. What can you do this flu season? Talk to your pharmacist or doctor about getting a flu shot. Consider FluCellVax Quad and help protect yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages six months and older, and it may be available for free in your province.

Side effects and allergic reactions can occur, and 100% protection is not guaranteed. Learn more at FluCellVax.ca.