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Biden to announce he will extract more oil from strategic reserve

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President Biden will announce Wednesday that he will release 15 million barrels of more fuel from the Strategic Petroleum Reserve, a move aimed at easing gas prices three weeks before voters, worried about rising costs as Democrats have been beaten by the GOP attacks. Economy.

Biden and the Democrats face headwinds in the upcoming midterm elections, and Republicans have focused on inflation and rising costs as they try to convince voters that Biden’s economic policies are hurting their pocketbooks. Polls regularly show that the economy and the cost of living are by far the top concerns of voters.

Biden has tried to attribute these cost increases in large part to Russia’s unprovoked invasion of Ukraine and the ensuing fuel shortages and supply cuts. The president is constantly calling the cost increases “Putin’s price hike” while working on other measures to lower prices at the pump.

Prominent among these was the release of oil piles from the strategic reserve created to protect the United States from oil shortages affecting its national security. The White House has removed nearly 165 million barrels of oil from the reserve since announcing a spring drop of 180 million barrels, the largest ever release from the reserve.

This month, OPEC Plus, a coalition of oil-producing countries led by Russia and Saudi Arabia, announced it would cut oil production by 2 million barrels per day, threatening further price hikes in countries already grappling with high costs. The move was particularly frustrating for the White House, as Biden made a controversial visit to Saudi Arabia in July to strengthen relations.

Biden also lashed out at energy companies, which he said did not lower pump prices because oil prices fell. Speaking to reporters before Biden’s announcement, an administration official said these companies’ actions “added 60 cents to the average gas and kept pump prices higher than usual.”

Industry officials are responding to management cherry picking off their balance sheets, ignoring the long periods when firms lost money early in the pandemic. At one point oil was trading at zero dollars per gallon. Oil executives also warn, as many Democrats argue, that imposing unexpected taxes on profits now earned will deter investment in infrastructure and drilling and increase scarcity.

Critics, including many Republicans, argued that Biden misused the reserve for his own political purposes, rather than limiting the reserve to an actual national crisis as intended. But the management official, who spoke on condition of anonymity to discuss the move before the official announcement, said there were 400 million barrels left in SPR.

“This is still a large amount of barrels,” the official said. “This is a bridge. This is a longer bridge. This is trying to use this vehicle in an incredibly responsible way.”

The reserve is now at a 40-year low, but is far from empty. It can hold about 714 million barrels in capacity.

Despite this, the administration has been heavily criticized for its moves, in part because gas prices have largely stabilized. Releases continued throughout the summer as prices at the pump dropped 99 days in a row to just under $4 per gallon and remained there.

Critics argued that the management should start replenishing the reserve at this point rather than continuing to withdraw from the reserve. However, there was reluctance to make any moves that would put upward pressure on gas prices.

After OPEC recently announced production cuts, the administration has promised to act to stabilize prices. But before taking any action, prices were already stabilizing on their own. The cost of gas fell this week amid concerns about the impending recession.

The latest move comes against the backdrop of a tough midterm campaign just three weeks before Election Day.

While Biden and the Democratic Democrats tried to convince voters that they were running the economy the best they could, Republicans made progress, citing immigration and crime, as well as inflation – especially gas prices – as the country plunged into chaos under Biden.

The president sought to shift the focus to abortion rights, voting integrity, and the whirlwind of investigations surrounding former president Donald Trump, hoping that a critical mass of voters would see these as issues open enough to overcome his economic concerns.

On the subject of economics, Biden highlighted the move to forgive student loan debt alongside legislation passed by Democrats to combat prescription drug prices.

But senior White House advisers have long believed that their political fortunes in the November 8 congressional election would depend largely on the ups and downs in gas prices.

Biden plans to announce a few additional moves beyond the oil release on Wednesday.

In order to replenish the reserve and create more certainty about future oil demand, management is expected to say it will purchase crude for the strategic reserve when prices are at or below $70 a barrel.

Biden will also urge oil companies to pass on lower energy prices to consumers. The White House argues that energy treatment companies currently earn much more than their normal profits per gallon of gasoline.

Energy Secretary Jennifer Granholm has previously informed oil companies that the administration is considering temporarily banning exports of refined fuels, especially diesel, which will become scarce in the US in the coming months. However, the administration has so far given up on enforcing such a ban.

In a briefing Tuesday, White House press secretary Karine Jean-Pierre tried to emphasize the overall trend is good, with prices dropping $1.15 from the peak, although the recent bearish streak has been broken.

“The typical two-driver family saves about $120 per month on the pump compared to where we were in mid-June,” said Jean-Pierre. “Americans save about $420 million every day at the pump compared to mid-June.”

He also noted that gasoline prices started to fall again, dropping five cents last week, with more sharp falls in states such as California, Wisconsin and Oregon.

But even as gas prices have stabilized in parts of the country, they remain quite high in some key battlefields, adding to the difficulties Democrats will face in the upcoming elections.

In California, where there are at least eight controversial Assembly seats, gas prices remain above $6 per gallon despite the recent drop.

In Nevada, where Democrats are at risk of losing a Senate seat and polls show a tight governor’s race, a gallon of gas costs $5.23.

Even if gas prices don’t rise any further between now and Election Day, drivers may suffer more as winter approaches. Europe plans to implement a complete ban on Russian oil by early December, a move that administration officials have long lamented. The concern will create a worldwide price shock.

American and European leaders hope to mitigate the impact of this ban with a price cap that would allow some of the Russian oil to continue to enter the world market. But there is no guarantee that it will work.