Janet Yellen and the Treasury Department are championing the plan to use shipping insurance to put a cap on Russian oil prices but it's turning into a disaster.
Now, there's talk of dissent in the administration.
"Some Biden administration officials are growing concerned that their plan to cap the price of oil purchased from Russia may backfire, according to people familiar with the matter," the report says.
First of all, it's questionable if it would work. Russia has simply said they won't sell oil to anyone who participates. The administration wants to call their bluff but that's a bold move. Russia just cut off its own gas to Europe, what makes Biden so confident they wouldn't do the same with oil?
Second, OPEC hates it. Saudi Arabia put out a long note explaining OPEC's rationale for cutting oil output put few are taking it totally at face value (though I'm sympathetic to the idea that higher prices are needed for investment). For OPEC countries, this is potentially an existential problem. If an oil price cap works against Russia, they feel it's only a matter of time until it's used against others in the cartel.
Meanwhile, Biden is getting killed on the energy portfolio. His decision to kill the Keystone XL pipeline on Day 1 of the administration may turn out to be a presidency-defining move. It's particularly humiliating with word that the administration is considering ending sanctions on Venezuela, which produces the same type of heavy oil as Canada.
The US unemployment rate is 3.5% and the Democrats are in danger of losing the mid-terms. It's because voters have gotten addicted to cheap energy. Now I certainly don't think Biden's administration bares even 1% of the blame for rising oil but he painted himself as an anti-energy president and now he's wearing it.
Of course, I predicted all of this two years ago.
