Biden plans to tap oil reserves to control gas prices
WASHINGTON — President Joe Biden is preparing to order the release of up to 1 million barrels of oil a day from the country’s Strategic Petroleum Reserve, according to two people familiar with the decision, in an effort to control oil prices. energy that have soared in the United States. and the allies imposed severe sanctions on Russia for its invasion of Ukraine.
The announcement could come as early as Thursday, when the White House said Biden plans to comment on his administration’s plans to tackle rising gasoline prices. The duration of the release has not been finalized but could last several months. People spoke on condition of anonymity to preview the decision.
High oil prices haven’t prompted more production, creating a challenge for Biden. The Democratic president saw his popularity plummet as inflation hit a 40-year high in February and the cost of oil and gasoline soared after Russia invaded Ukraine.
Markets reacted quickly to the likely release of the strategic reserve, with crude oil prices falling 6% on Thursday morning to around $101 a barrel. Still, oil rose from around $60 a year ago as supplies failed to keep up with demand as the global economy began to rebound from the coronavirus pandemic.
Americans use an average of about 21 million barrels of oil a day, with about 40% of consumption devoted to gasoline, according to the US Energy Information Administration.
Domestic oil production accounts for more than half of the country’s consumption, but high prices have not led companies to return to their pre-pandemic production levels. The United States produces an average of 11.7 million barrels per day, up from 13 million barrels at the start of 2020.
Oil producers have been more focused on meeting the needs of investors than consumers, according to a survey released last week by the Dallas Federal Reserve. About 59% of executives surveyed said pressure from investors to preserve “capital discipline” amid high prices was the reason they weren’t pumping more, while less than 10% blamed government regulation.
The steady release of reserves would represent a significant sum and come close to closing the national output gap from February 2020, before the coronavirus caused a sharp drop in oil production.
The Biden administration announced in November the release of 50 million barrels from the strategic reserve in coordination with other countries. And after the start of the Russian-Ukrainian war, the United States and 30 other countries agreed to release an additional 60 million barrels of reserves, half of the total coming from the United States.
According to the Department of Energy, which manages it, more than 568 million barrels of oil were held in the reserve as of March 25.
News of the administration’s planning was first reported by Bloomberg.