December 1, 2022

OPEC+ decision reignites top American concern ahead of November midterms

(Reuters) A production cut by the OPEC+ oil cartel is rekindling the No. 1 fear of U.S. voters – high inflation – and giving Republican candidates a potential boost less than five weeks before the U.S. midterm elections. November 8.

President Joe Biden’s White House has condemned the Saudi-led cartel’s announced reduction in production targets, which has pushed up energy prices after falling from summer highs.

The move at the end of the campaign season disrupted a growing consensus that Biden’s Democrats could stem their losses in the US House of Representatives – even if they are still expected to lose their narrow majority. Democrats are still favored to retain their majority in the Senate.

But political strategists from both parties say Democrats’ hopes in either chamber could take a hit as voters across the country find themselves shelling out more money at the pumps.

“No Democrat wants an environment where people have to spend more money,” said Joel Payne, a Democratic strategist who worked on Hillary Clinton’s 2016 presidential campaign.

Republicans pounced on the issue.

“Under Biden – OPEC controls our destiny rather than American energy independence,” North Carolina Republican House candidate Pat Harrigan said in a tweet.

Republicans have hammered Democrats all year on inflation, which hit four-decade highs as gasoline prices surged with Russia’s invasion of Ukraine in March. Moscow is also a member of OPEC+ and played a role in the cartel’s decision this week to cut production.

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Inflation is a key reason why Biden’s public approval rating has remained below 50% for more than a year, weighing on his party’s congressional candidates. Control of either house of Congress could allow Republicans to halt Biden’s legislative agenda and launch potentially damaging investigations.

Republicans are advocating for an easing of government restrictions on energy production in the United States as a way to cut costs. Biden’s Democrats responded to high inflation with a $430 billion package signed in August that cuts health care costs and encourages clean energy.

Payne, the Democratic consultant, said the party should try to mitigate the negative impact of the energy shock by showing voters they are trying to fix the problem.

Biden said he would continue to release oil “as needed” from the government’s stockpile to combat high prices, and called on Congress to find ways to reduce OPEC+’s pricing power.

“OPEC must be held accountable for this action,” said U.S. Representative Mike Thompson, a moderate Democrat from California who voted for proposals that would open OPEC to antitrust lawsuits but has yet to win approval. full congressional approval.

Voters, including Biden’s Democrats, overwhelmingly cite inflation as their top concern, an echo of the 1970s energy crisis that helped Republican Ronald Reagan unseat Democratic President Jimmy Carter in the presidential election of 1980.

A Reuters/Ipsos poll conducted Oct. 3 showed inflation was the No. 1 concern for 30% of registered voters, including one-fifth of Democrats and two-fifths of Republicans. Much smaller shares said their main concern was unemployment, crime or immigration.

Respondents cited inflation as their biggest personal concern eight times more often than they cited worries that someone in their household would lose their job.

Additionally, 41% of registered voters said Republicans had the best approach to handling inflation, compared to 30% who chose Democrats.

In the weeks leading up to OPEC+’s decision to cut production, U.S. gasoline prices had trended lower as oil traders worried about the prospects of a global recession.

But the U.S. national average for gasoline prices on Thursday was $3.87 a gallon, about six cents higher than two days earlier before the OPEC+ announcement, according to data from American Automobile. Association.

Forecasters do not expect gasoline prices to return to summer highs. Some parts of the country — primarily California and parts of the Midwest that have recently seen a spike due to refinery outages — could see prices drop in the coming weeks.

The price of U.S. crude has risen more than a dollar since Tuesday to around $88 a barrel, the highest since mid-September.

“This is bad news for Democrats,” said Douglas Heye, a Republican strategist. “The Democratic argument three weeks ago was, basically, things are less bad, which is not a good argument. They can’t even use that one now.”