- President Biden is willing to drop sanctions on Venezuela’s oil exports in return for pledging a “free and fair” election.
- As the Mideast heats up on the heels of the Hamas invasion of Israel, Biden seems concerned about increasing oil supplies to the world to keep gas prices down.
- These actions, combined with unenforced sanctions on Iran which have allowed their oil exports to soar, give sustenance to totalitarian regimes around the world.
- Domestically, Biden is closing vast areas of the United States to oil exploration, reducing imports from Canada, and increasing costs for domestic energy production.
The Biden administration and the Venezuelan government of President Nicolás Maduro have agreed to a deal in which the United States would ease sanctions on Venezuela’s oil industry and the authoritarian state would supposedly allow a competitive, internationally monitored presidential election next year. Venezuela and U.S. envoys have met several times since last year in a renewed effort to work with Venezuela regarding a “free” and ”fair” presidential election in his country with recent progress indicating fresh oil sanction exemptions.
The Biden administration is making the deal as oil prices are again rising due to OPEC+ cut backs in oil production and possible ramifications from the Hamas/Israeli war. President Biden prefers to work with authoritarian governments in Venezuela and Iran rather than allowing U.S. producers to drill for oil in this country as he is holding back acreage for leases and limiting lease sales, reducing oil permit approvals, and placing oil production areas off-limits due supposedly to conservation efforts. IER has listed 175 ways that the Biden Administration and Democrats have made it harder to produce oil and gas domestically while allowing sanctions on Iran oil exports to go unenforced.
The Deal
Venezuela’s government and opposition signed an agreement on new electoral conditions that triggers relief from U.S. energy sanctions on President Nicolás Maduro’s administration. Venezuela’s government agreed to open up the electoral process, including allowing European Union observers and creating a process for lifting bans that have blocked his top opponents from running for president, to level what has been seen as an unfair playing field. If Maduro does not live up to his end of the bargain, the sanctions are to be imposed again. The sanctions relief could include a general license for Venezuela’s state-owned oil agency to resume business with the United States and other countries.
The deal supposedly does not include plans to unfreeze Venezuelan assets currently held in the United States. The deal being signed in Barbados is only a partial agreement since many details will need to be resolved in the coming weeks and months to ensure that next year’s elections are in fact, free and fair. Maduro has a history of rigging elections and using the system to block opposition candidates.
The agreement comes days before Venezuela’s opposition parties plan to hold a primary vote to choose a single candidate to back against Maduro. The front-runner in the unofficial primary, María Corina Machado, is one of several opposition leaders the Maduro government has barred from running for office.
The talks with Venezuelan officials are part of a major shift in U.S. foreign policy undertaken by the Biden administration. The United States imposed sanctions against the Venezuelan government for more than 15 years but tightened them in early 2019 after declaring Maduro’s 2018 victory illegitimate. The Trump administration sanctioned Venezuela’s state oil company, the central bank, and key government officials and imposed a wider economic embargo. It also froze the property and interests of the Maduro government in the United States and prohibited Americans from doing business with the government.
The Biden/Maduro deal emerged from direct talks between Biden administration officials and Maduro government representatives that began last year during the start of Russia’s invasion of Ukraine when oil prices soared and U.S. gasoline prices were over $5 a gallon. The Biden administration sought to drive a wedge between Venezuela and Russia and ease the rising gas prices by potentially removing the sanctions. Last year, the Biden administration began easing restrictions on Chevron, the main U.S. oil company with assets in Venezuela, as a gesture toward supporting talks between the Maduro government and the opposition.
U.S. sanctions have cost Venezuela billions of dollars in oil revenue each year. In 2016, the last year before financial sanctions, oil accounted for 95 percent of all its exports. China has stepped in to rescue Venezuela with loans of over $60 billion, and China is Venezuela’s largest lender by far.
Biden’s Actions Against Domestic Oil Production
Since Biden’s first day in office, he has taken action against North American oil and gas development and production. He stopped the Keystone XL Pipeline and barred drilling on millions of acres in Alaska. He used his first two years in office to slow federal oil and gas leases to the lowest level of any administration since World War II. Biden and his Democrat partners “have made it harder to produce oil and gas.” The results have been considerable, including massive job losses in the energy sector – as many as 59,000 forgone jobs from killing the Keystone XL Pipeline alone, according to the Department of Energy – and big spikes in energy prices across the board, including gasoline per-gallon prices rising from $2.39 to $5.00 a gallon during Biden’s term. The Interior Department’s Bureau of Land Management has proposed increasing royalty rates for oil and natural gas drilling on federal lands from 12.5 percent to 16.67 percent—about a third higher–and raising the minimum bond paid upon purchasing an individual drilling lease from $10,000 to $150,000 that will also increase energy prices for Americans.
President Biden removed 11 million acres of rich oil resources from the Gulf of Mexico and has essentially killed new oil and gas pipelines as permits are being held hostage. The Energy Information Administration (EIA) reported that interstate natural gas pipeline capacity additions reached a record low in 2022 based on data collected over 27 years. In 2022, 897 million cubic feet per day of interstate natural gas pipeline capacity was added from five projects, with only one project adding a relatively small amount of new pipe. The 2022 gas pipeline capacity additions were just 3 percent of the record amount added (28,040 million cubic feet per day) in 2017. Regulatory hurdles are clearly stymying growth in pipeline capacity, which points to much-needed permitting reform for interstate pipelines and other energy infrastructure.
Biden has also depleted the U.S. Strategic Petroleum Reserve (SPR) of 260 million barrels of oil, placing it at a 40-year low. The SPR is an emergency reserve that other Presidents have used for actual emergencies, not for political purposes as Biden did to lower gasoline prices before the mid-term election last year. His Energy Department has yet to refill the oil it sold, citing prices too high or oil bids of the wrong quality. The SPR oil purchases this year do not even cover the additional sale of oil from the SPR that was mandated by Congress for fiscal year 2023.
Conclusion
Biden is making a deal with an authoritarian government to ease energy sanctions in return for supposedly “fair” elections. He is undertaking this action due to fears of higher oil prices and gasoline prices as the geopolitical situation is worsening. Not only has OPEC+ cut oil production through the end of this year, but Russia’s invasion of Ukraine and now the Hamas/Israeli war are providing further impetus to possibly escalating oil prices occurring a year before the next Presidential election. Rather than promote domestic oil and gas production, Biden is turning to the likes of Venezuela and Iran, who are allies of Russia, China, and the Hamas.
