Biden announces ‘largest release of oil reserves’ in effort to curb gasoline prices
Joe Biden has announced plans to release up to 1m barrels of oil a day from the strategic reserve, in an attempt to contain high gasoline prices and curb inflation exacerbated by the war in Ukraine.
The president spoke from the White House to announce the move, which he said would represent the largest-ever draw ever on the country’s emergency supplies.
“Look, I know gas prices are painful. I get it. My plan is going to help ease that pain today and safeguard against tomorrow,” Biden said.
“I’m open to ideas and to strengthen the plan, but I will not be put off and put it on hold. I will do everything at my disposal to protect you from [Russian president Vladimir'] Putin’s price hike. It’s not time for politics. Americans can’t afford that right now.”
Global oil prices dropped sharply when news broke earlier of Biden’s expected announcement.
The administration is reportedly considering extending the release for as long as six months, with a potential limit of 180m barrels drawn from the current national reserve of 568m barrels.
The possible injection into the market of oil reserves, first reported by Bloomberg, comes as the Biden administration is wrestling with the political fallout of high petrol prices and rising inflation. According to the American Automobile Association, the US average now stands at $4.23 a gallon, up from $2.87 a year ago.
Extraordinary measures including gas rebates are being considered by California, the worst-hit state, where an average gallon of petrol now costs close to $6.
Any US release of national reserves is likely to be coordinated with other countries under the auspices of the International Energy Agency. Opec oil producers have so far resisted increasing output in the wake of Russia’s invasion of Ukraine, insisting there is no global shortage.
Biden confirmed that he decided on the measure in consultation with western partners, who have joined the US in imposing economic sanctions on Russia for the Ukraine invasion. Earlier this month, the US imposed a ban on Russian oil imports. Russia is the second-largest exporter of crude oil in the world.
“Thus far these actions are crippling Russia’s economy, isolating Putin from the world and helping Ukrainians fight for their country,” Biden said.
Biden’s plan called not just for immediately increasing supply, but also for increasing domestic production. In a statement, the White House said the oil and gas industry is sitting on more than 12m acres of non-producing federal land with 9,000 unused but already-approved permits for production. It said Biden would call on Congress to make oil companies pay fees on unused wells and land.
Biden also said he was including a directive “to strengthen our clean energy economy”.
“We need to embrace all the tools and technologies that can help us free us from our dependence on fossil fuels [and] move toward more homegrown clean energy technologies made by American companies and American workers,” he said.
He said he would use the Defense Production Act to secure America’s supply chains for the critical materials that go into batteries for electric vehicles and the storage of renewable energy, such as lithium, graphite and nickel.
The Congressional Progressive Caucus had recently called on Biden to do just that: use the Act to bolster the clean energy sector.
“We need to end our long-term reliance on China and other countries for inputs that will power the future,” Biden said.
High oil prices are causing a mounting headache for Biden ahead of November’s midterm elections. Inflation rose to a 40-year high in January, with prices rising by 7.5% on the previous year.
Republican leaders have orchestrated a relentless campaign of partisan attacks against Biden over oil prices. Kevin McCarthy, minority leader of the House, has said: “These aren’t Putin prices. They’re President Biden’s prices.”
Analysts have tied high gasoline prices, caused largely by the conflict in Ukraine, and the inflation crisis to Biden’s slumping popularity and the Democratic party’s prospects in the midterms.
It is clear Biden wanted to act sooner than later, with an NBC poll this week reflecting an approval rating of only 40%, the lowest of his presidency to date.
Biden claimed that as well as new oil production, investing in green energy would also bring down energy prices. “Yes, building a base in America clean energy future will help safeguard our national security. Yes, it will help us tackle climate change. Yes, it’s going to help us ensure that Americans create millions of good paying jobs for generations to come. But the most important thing my plan will do right away is save your family money.”
He said: “We can take advantage of the next generation of electric vehicles. The typical driver will save about $80 a month from not having to pay gas at the pump. If your home is powered by safer, cheaper, cleaner electricity like solar, or heat pumps, you can save about $500 a month on average.
“Don’t take my word for it. The CEOs and 11 of America’s largest utility companies came to see me at the White House. They told me if we pass my plans before the Congress now typical families will see savings in utility bills immediately.”
The Strategic Petroleum Reserve, which is intended to protect the country’s access to oil in cases of natural disasters or national security issues, sits in salt dome caverns along the Gulf coasts of Texas and Louisiana.
The new round of releases from the oil stockpile would be the third in recent months: in November he ordered the release of 50m barrels, alongside other countries, and a further release of 30m barrels was made after the Ukraine war began.