Baydenflyation, in the dry rest | Latest news The Moscow Post
05 December 2023

Baydenflyation, in the "dry" rest

Joe Biden is going to fill up the list of "disposable" presidents.

The USA and Europe knew that sanctions against Russia concerning Ukraine couldn't but influence the energy markets, the president Joe Biden recognized during the special address to the nation. "Russia — one of the world's largest producers of oil. We blocked supply of oil to the USA, and our partners in Europe made the same, knowing that we will face increase in prices for gasoline" — he explained.

What the formula which suddenly united everything at once, connected with Russia is? And for what it the U.S. President should have disclosed it?

According to Biden, in Washington could "close eyes" to actions of Russia and by that to avoid record rise in price of fuel, the correspondent of The Moscow Post reports.

Moreover, the chief deputy head of State Department Wendy Sherman on negotiations with Russia suddenly said that "the USA understands lawful fears of Russia in the sphere of safety", but isn't ready to return infrastructure of NATO to borders of 1997. In other words are afraid.

One more news came from Canada. The countries of the G7 will have to discuss how sanctions of the country of this group (Canada) harm the interests of other participant (Germany) in communication by repair by the gas turbine of Siemens for the Nord Stream gas pipeline.

Here it is necessary to deal with such "intra western" problems at the level of heads of state and government. Maybe "a transit fate" of Lithuania will find a way to facilitate, while the getting is good?

Vladimir Putin said earlier that containment policy and weakening of Russia — the long-term strategy of the western countries, and sanctions struck a serious blow to all world economy. During the performance on PIEF-2022 the Russian leader noted that prices of oil and gas lift actions of the USA and their European allies.

Increase in prices - the main enemy of Biden

There passed 500 days as Biden lodged in the White House. His work on the president's post if to trust the FiveThirtyEight website, is approved by less than 40% of Americans, don't approve nearly 54%. A difference almost in 14% – the worst among all U.S. Presidents since World War II. In May the growth rates of the prices accelerated up to 8.6%.

These are the highest annual rates of inflation since 1981, but inflation didn't reach peak values yet, The Economist reports. Increase in prices is called the main enemy of Biden. In May the consumer prices grew by 1% in comparison with the corresponding period of last year. Since the beginning of April S&P 500 Wall Street market index decreased by 16%. About 5% were the share of decrease after the publication of data on inflation. Stocks of the technological companies, since Amazon and graduating from Tesla, fell even more.

Retail prices for gasoline of all brands in the USA by data for May, 2022 on average grew from 3.076 to 4.545 dollars for gallon. The price of diesel fuel grew during this time from 3.2 to 5.6 dollars for gallon. On the Western coast, including California which supported Biden's election, petrol price grew to 5.9 dollars for gallon, on diesel fuel up to 6.9 dollars for gallon. These are data of the US Energy Information Administration (EIA).

It is known that presidential parties usually lose seats in the Congress on elections in two years after accession of the leader. But this time Democrats are threatened by something worse. Republicans can receive the majority both in the senate, and in the House of Representatives. Joe Biden can fill up the list of "disposable presidents" if of course is in senses and strong memory.

You want you don't want, but for administration of democrats I came it is time to sum up the results and to change that else can be corrected the remained 20-25 weeks prior to intermediate elections. Here also try to answer the collected questions on all range, from Brussels eurocrats, to Houston - the capital of the American oil industry.

The main task is to bring down inflation, the main problem – fuel prices. Moods of Americans concerning increase in prices for gasoline are known. But increase in prices for diesel fuel touches farmers, especially small farms which there is a lot of. Now the average price of diesel fuel in Pennsylvania is 6.19 dollars for gallon that is about 75% higher, than a year ago.

By estimates, one farmer who works approximately at 3500 acres burns about 2000 gallons of diesel fuel a month, spending more than 12000 dollars. It leads to increase in prices for food. In May of this year they grew by 10% in comparison with May of last year. "If farmers can't reap a crop, so on shelves there are no products", - the representative of Farmer bureau of Pennsylvania said.

Biden doesn't favor Houston

Oil production and oil and gas infrastructure, to put it mildly, were not among the priorities of the Biden administration. For example, as of June 3, 2022, only two projects for crude oil pipelines were completed in the United States. In the first five months of 2022, no company announced new pipeline projects at all.

Democrats put the green transition first. But it so happened that California had a drought and hydropower capacity that fell by half, and a cold winter led to overspending of natural gas. And here also the Russian president "raised" gas prices in America. Biden in these conditions did not find anything better than to accuse oil companies in the pursuit of super profits and demanded to explain the reasons for the rise in prices and the reduction in fuel supplies.

Biden also called on American companies to increase oil refining volumes, announced the release of oil production by a record 600 million tons this year and asked Congress to abolish the federal fuel tax for three months. The White House even sent a letter to the oil giants demanding that they explain why prices are rising, and they, companies, are doing nothing. In general, the administration urged oil workers to submit "concrete ideas."

It turned out to be mutual

That's what it means to prepare for the midterm elections! The letter was sent to Exxon Mobil, Valero Energy, Chevron, Marathon Petroleum, and US-based Shell and BP. It would be better not to do this because the White House put Biden under attack with this letter. Looking ahead, it should be said that this dialogue came out conflicted, a kind of test of nerves for both sides.

Chevron, in particular, said that from January 2021, White House policy "creates obstacles for the industry." The company said it plans to increase production in the Permian basin by more than 15%, which in 2021 its capital investments in US production increased by 35%. In the long term, the government should encourage rather than restrict investment in the industry by pursuing consistent policies, supporting resource development and pipeline infrastructure development, simplifying lease and sale regulations for licensed areas.

Exxon Mobil Corporation responded too, saying the White House is looking for a scapegoat! She cited data on multibillion-dollar investments in the United States and abroad, reported on an increase in oil production in the United States, and reported an increase in oil refining volumes.

The results were summed up by the American Petroleum Institute. The API proposed a plan of ten "specific ideas" for the Biden administration, including a proposal to restore leases on federal lands and offshore, identify critical energy infrastructure projects, simplify the permitting process to one year, revise the National Environmental Policy (NEPA) law, promote LNG exports, simplify approval of project applications and unlock access to capital.

The API Institute proposed to revise onerous "climate restrictions," reduce the tax on carbon dioxide emissions, eliminate bottlenecks in the supply chain, remove obstacles to natural gas production projects, and promote training for the construction and operation of oil, gas and other energy infrastructure.

"Poverty Index" and how to live beyond the means

If we combine the indicators of consumer price inflation with the situation on the labor market, then you can get the "poverty index." Economist Arthur Okun, an adviser to President Lyndon Johnson, proposed this indicator. It is assumed that both an increase in inflation and an increase in the number of unemployed indicates a deterioration in the economic situation.

Experts note that today, according to the US poverty index, they are closer to the situation of the crisis of the times of President Carter.

Under these conditions, the United States has embarked on a path of confrontation with Russia and China and may lose, "said Joseph Stiglitz, former chief economist at the World Bank, formerly head of the White House group of economic consultants, Nobel laureate in economics.

Washington portrays its relations with Moscow and Beijing as hypocritical, as a confrontation between "democracies and autocracies," which does not stand up to criticism. "With the United States seemingly serious about standing up to China in a long contest for world domination, they better start to clean up their own home," Stiglitz advises, pointing to the country's questioning "economic, social and political foundations."

The situation in the US economy is also deteriorating due to interruptions in supply chains, which were provoked by the COVID-19 pandemic, as well as anti-Russian sanctions imposed by Washington. Illegal restrictions are a way for the United States and the West, including the OECD economies of the Pacific region, to destabilize Russia, to impose their principles and requirements on Moscow. In the case of Iran, Syria, DPRK, Myanmar, Venezuela, Belarus, the task is to harm as much as possible, if not strangle economically or solve all problems at once, using force.

The global list of restrictions imposed by the Office of Foreign Assets Control of the US Treasury Department has accumulated more than ten thousand sanctioned individuals and organizations. But only in relation to Russia there were 7845 restrictions imposed by the West after February 22. "No country in the world has felt the kind of pressure of economic and other constraints that Russia has faced. By the strength of its impact, it can be called a financial nuclear bomb, "said Deputy Finance Minister Alexei Moiseev.

The United States can apply secondary sanctions, as previously used in the case of Iran. But interested partners will look for alternative payment options, moving away from the dollar and other currencies of the "golden billion" countries. France and Germany, in relations with Iran, have already tried to create a special mechanism that would allow them to trade bypassing secondary sanctions.

Russia and China, India and Russia have already embarked on the path of using national currencies in mutual settlements. In addition, states can trade on a barter basis. All this can continue to undermine the position of the dollar. Its reliability as a global reserve currency is already in doubt. The US national debt exceeds $30 trillion.

American hedge stock manager and multi-billionaire Ray Dalio believes that America is two-thirds past the cycle of a dominant economic power, consumes more than it earns, and has accumulated debts. Printing even more money means continuing to accelerate inflation.

The financial and political problems of the United States are obvious, civil confrontation has grown sharply. Ray Dalio believes that in the 2024 presidential election, neither Democrats nor Republicans recognize their defeat. The decision will have to be made by the Supreme Court, and it can be appealed by the states. There is a struggle of ideologies in American politics. Control over Twitter, in particular, is power over society, and it is more than that of the Supreme Court, the billionaire believes.

And he makes a diagnosis: "Either the state must increase the revenues of the treasury and service its debts, or it must reduce its expenses. The country cannot continue to live beyond its means. From a political point of view, the various camps should speak to each other again instead of continuing to fight. "

Stiglitz and Dalio are professionals in their field, educated and simply reasonable people who know the living conditions of other countries and peoples. Such as they, perhaps, do not meet at the political Olympus of Western democracies and their alliances, including the European Union, or NATO. This, becoming flagrant, shortage of professionalism, unfortunately, seriously increases the risks of conflict for everyone who is not even involved in the current confrontation.

Photo: AP

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