Biden to release 180M oil barrels to lower gas prices

WASHINGTON (CN) — President Joe Biden announced the largest-ever release of oil from the nation’s strategic reserves Thursday as part of the administration’s strategy to lower gas prices, which have faced escalatory pressure since Russia's invasion of Ukraine last month.

Over the course of the next six months, the U.S. will release one million barrels of oil into the market every day from the Strategic Petroleum Reserve, an emergency stash of oil used to increase the national oil supply during conflict, war and natural disasters.

The 180 million barrel release aims to temporarily fill a gap in the market left by a reduced international reliance on Russian oil until U.S. companies can ramp up their own oil production. The U.S. levied sanctions banning the import of Russian oil, coal and natural gas earlier this month and European nations are working to reduce their dependence on the Kremlin’s energy resources.

Biden said the release is being made in coordination with U.S. allies who have pledged to also release oil from their strategic reserves. The U.S. will use revenue from selling reserve oil to restock its emergency supply when prices eventually decline.

“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.

In response to the news, crude oil prices dropped Thursday, but the cost of a barrel is still up around $60 from one year ago.

The president acknowledged that how much and when gas prices will drop is not known, with allies yet to announce how much they will release from their own reserves.

Earlier this month, Biden released 30 million barrels from the reserves, with European and Asian nations also taking part, and 50 million barrels of oil were released into the market back in November. At the time, Biden touted that November release as the largest tapping of the reserve in U.S. history, but these releases have done little to ameliorate high gas prices.

Since Russia’s invasion of Ukraine, oil prices have jumped, raising the price at the pump and pressure on Americans’ pocketbooks as a result. The average gallon of gas costs $4.23, according to AAA.

But lofty prices are not a new problem for Biden. High prices on consumer goods and gasoline have long plagued his administration, with inflation hiking up prices at the grocery store and the oil industry struggling to keep up with post-lockdown demand. All this has since been compounded by the war in Ukraine and sanctions levied against the Russian economy.

While the president’s approval rating has suffered in recent months and Republicans have attacked Biden’s strategy for addressing high consumer and gas prices, Biden framed the recent rise in gas prices as “Putin’s price hike.”

“Our prices are rising because of Putin’s actions. There isn’t enough supply. And the bottom line is if we want lower gas prices, we need to have more oil supply right now,” Biden said during a speech announcing the new plan Thursday.

The White House is also pressuring Congress to pass legislation that would levy fees against companies who haven’t used oil wells in years and have contracts to produce oil on public land but are not doing so. It’s uncertain whether such a measure will gain any congressional backing in a tightly divided legislature.

More than half of U.S. oil usage comes from domestic production, but American oil companies are not producing at pre-Covid levels despite the high price they can rake in per barrel. Current U.S. production averages 11.7 million barrels a day compared to 13 million barrels a day at the start of 2020.

By not ramping up production, supply for oil remains restricted and prices stay high.

“Some companies have been pretty blunt. They don’t want to increase supply because Putin’s price hike means higher profits,” Biden said. “This is not the time to sit on record profits, it’s time to step up for the good of your country, the good of the world, to invest in immediate production that we need to respond to Vladimir Putin [and] provide some relief for your customers, not investors and executives.”

Biden also authorized the use of the Defense Production Act to ramp up production of materials for electric vehicle and clean energy batteries.

The 1950 law allows the president to order mass production of certain products for the sake of national security.

Biden said he will use the act to support the processing of minerals such as cobalt, manganese, lithium, nickel and graphite used in electric batteries and bolster the production of batteries themselves as a means of reducing U.S. reliance on oil.

“Ultimately, we in the whole world need to reduce our dependence on fossil fuels all together. We need to choose long-term security over energy and climate vulnerability,” Biden said.

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