These steps are an attempt to lower gas prices while placing the burden on oil companies to increase supply. The dramatic move, announced by Biden from the White House, faces what has become a looming political problem months before the midterm elections.
“Our prices are going up because of the actions of (Russian President Vladimir) Putin. There is not enough supply. The bottom line is that if we want lower gas prices, we need more oil supplies right now,” Biden said.
“Your family budgets to fill a tank – none of which should depend on whether the dictator declares war,” the president added.
The volume of discharge will reach 180 million barrels of oil. The president said it would act as a “wartime bridge” as US and global oil production soared after the coronavirus pandemic. The decision was made in coordination with US allies abroad, including in Europe, although officials declined to say whether other countries would also release barrels from their reserves.
“Together, our combined efforts will provide more than 1 million barrels per day. (Collection) countries to deny Putin the ability to weaponize his energy resources against American families, families, and democracies around the world,” Biden said.
The president said the United States will restock barrels in reserve when oil prices fall, which could help stimulate production further in the future.
However, officials declined to say how quickly or how much gas prices would drop as a result of the release. They said they did not address the focus on “short-term spot price movements” in the oil market. Instead, they said their goal is to address the supply shortage due to Russian oil being taken out of the market, adding that it would translate into providing relief to American consumers.
The president warned the oil companies not to exploit the situation to increase profits.
“No American company should take advantage of the pandemic or Vladimir Putin’s actions to enrich themselves at the expense of American families,” Biden said. “Invest those profits in production and innovation, that’s what they should do. Invest in your customers.”
The president said the second part of his plan to address rising prices is to create America’s long-term energy independence.
“Ultimately, we and the world at large need to completely reduce our dependence on fossil fuels,” Biden said. “We need to choose long-term security over energy and climate vulnerability.”
Neither of the two moves had a significant impact on gas prices, which continued to rise as global restrictions on Russia’s energy exports caused prices to rise.
The United States consumes about 20 million barrels of oil per day, with global consumption hovering around 100 million barrels. Biden’s planned releases will put more oil on the global market, potentially lowering costs.
The president is also calling on Congress to “make companies pay fees on wells from leases they haven’t used in years and on acres of public land they store without production,” one official said. For months, the Biden administration publicly opposed the idea that regulations were preventing oil producers from more domestic production, citing millions of acres of land with approved permits for oil and gas production.
“Companies that produce from leased acres and from existing wells will not face higher fees,” a White House fact sheet said, but companies that continue to sit on nonproductive acres will have to choose whether to start production or pay a per-acre fee. disabled and unused.
Biden will also issue a directive to invoke the Defense Production Act to stimulate domestic production of critical minerals needed to make batteries for electric vehicles and long-term energy storage.
Moving from the White House adds important minerals such as lithium, nickel, graphite, cobalt, and manganese to the list of items covered by the 1950 Defense Production Act, a Korean War-era law that allows the president to use emergency power to make large orders for a certain type of product or expand production capacity and supply. It would allow the administration to support the production and processing of these critical minerals needed for the clean energy transition.
The Department of Defense will implement this authority, according to the White House, and will do so in consultation with tribal communities and using strong environmental, labor, and societal standards.
Biden addresses a major political problem
However, the current cost increases began months ago, as demand for oil increased while the coronavirus pandemic waned. The White House has expressed frustration that oil companies are not bringing production back to pre-pandemic levels, focusing instead on paying dividends to investors.
There was an internal debate among administration officials about how harshly they would pursue oil and gas companies for not ramping up production. Biden has rebuked them in previous statements, but some officials believe a violent crackdown on businesses may backfire.
The Russian invasion of Ukraine presented Biden with another card. In comments earlier this month, Biden sought to blame the price hike on the Russian president: “Make no mistake: the current rise in gas prices is very much Vladimir Putin’s fault.” He has repeated the phrase “Putin’s price hike” since then.
This story has been updated with background information.
Correction: An earlier version of this story incorrectly reported the release of the Strategic Petroleum Reserve last year. It was 50 million barrels.
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