President Biden may visit Saudi Arabia, but it wouldn’t bring lasting solutions to energy prices, says Goldman Sachs’ energy research head. “And bringing extra barrels today, sure, it helps in the short run, but it’s not sustainable,” Damien Courvalin told CNBC Friday. The energy analyst added that markets all over the world are signaling downside risk to production. Loading Something is loading.
President Joe Biden reportedly plans to visit Saudi Arabia soon, but don’t expect a long-term fix to the energy crunch, according to Goldman Sachs’ head of energy research.
Biden has decided to travel to the oil-rich country sometime this month to improve relations as he looks for ways to lower energy prices, sources told the New York Times. The latest AAA data shows the average gallon of gas in the US hit $4.761 — a fresh record and up 56% from a year ago.
“It will perhaps prevent a spike in prices and shortages this summer, but you have to remember we are faced with structural shortages and deficits in oil. This is years in the making,” Damien Courvalin told CNBC Friday. “And bringing extra barrels today, sure, it helps in the short run, but it’s not sustainable. In particular it comes at the sacrifice of any remaining spare capacity.”
The energy analyst added that markets all over the world are signaling downside risk to production, pointing to the European Union’s ban on Russian oil and decreased production in Libya.
There is also little Biden could do to boost domestic supplies of energy. Even if the administration could incentivize US producers to ramp up output, they would still fall short of the high demand for summer driving and travel season.
“The headwind we face is on services,” Courvalin said. “You can drill a lot of holes to produce oil…you’re short on refining and that’s something we shouldn’t overlook. The challenges we face, especially this summer, I think go beyond what policy can help.”
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