President Biden will release a record 1 million barrels of oil per day from the Strategic Petroleum Reserve in a bid to contain soaring energy prices that are rapidly becoming a political headache for Democrats ahead of this year’s midterm elections.
“This action will increase our immediate supply and meet our immediate energy needs and address our lack of supply as a result of [Russian President Vladimir] Putin’s actions,” a senior administration official told reporters.
The official called the scale of the release “unprecedented,” noting that the U.S. has never released more than 1 million barrels per day. The release will continue every day for six months, accounting for a total of 180 million barrels of oil.
About 550 million barrels are in the reserve, which has a capacity of 714 million, according to data from the Energy Department.
Mr. Biden made the move a few weeks ahead of the busy summer driving season, traditionally the period of the highest gasoline consumption and higher prices.
It’s not clear if releasing 1 million barrels a day will make a major dent in rising oil prices. The U.S. consumes about 20 million barrels of oil a day, so the amount released by Mr. Biden will account for roughly 5% of the oil consumed per day.
Other efforts by the Biden administration have failed to contain rising pump prices at world oil prices have shot up.
In November, Mr. Biden released 50 million barrels of oil from the strategic reserve, which at the time was the largest such release in U.S. history. Earlier this month, the Biden administration, in coordination with its allies, released another 60 million barrels, with about half of that total coming from the U.S. strategic reserve.
So far, tapping the reserve has done little to bring down prices at the pump, which have spiked since the U.S. and its allies placed limits on Russian energy exports as punishment for Moscow’s invasion of Ukraine.
On average, U.S. drivers are paying roughly $4.23 for a gallon of regular gasoline, according to the AAA auto club. While that’s below a record high of $4.33 a gallon earlier this month, it is still ahead of the previous record, which was set nearly 14 years ago.
The previous average high for a gallon of gas was $4.11 in July 2008, according to AAA.
On Wednesday, crude oil traded at about $105 a barrel, up from about $60 a year ago. Oil prices closed above $100 a barrel in February for the first time since 2014 and have remained in that neighborhood as Russia continues its war against Ukraine.
The Strategic Petroleum Reserve was created in 1975 after the oil embargo as an emergency, stopgap measure in the face of severe disruptions to the global oil supply. When the U.S. decides to pull barrels from the reserve, officials select the amount of crude oil to sell, then auction it off to the highest bidder, which is usually an oil company.
Barrels also can be released under an exchange arrangement with oil companies. The barrels would be viewed as “a loan” from the government to an oil company to be repaid in kind within a certain date and with additional barrels that are viewed as interest.
Several recent presidents have tapped the strategic reserve, including George W. Bush, Bill Clinton and Barack Obama.
However, research suggests that the move has had little long-term impact on gas prices. A 2019 study by the Federal Reserve Bank of Dallas concluded that releases from the strategic reserves between 2001 and 2005 resulted in only moderate decreases in oil prices.
Republicans said Mr. Biden is trying to solve a crisis he created when he froze new drilling leases and proposed clean energy initiatives that have limited oil production.
“President Biden has once again resorted to tapping into the nation’s oil reserve to try and cover up the ramifications of his disastrous anti-American energy policies. These desperate moves are not the solution—investing in American energy production is, and that includes oil and gas,” said Sen. Steve Daines, Montana Republican. “Biden needs to stop appeasing the woke green activists and get oil and gas leases going again.”
Mr. Biden also will call on Congress to make oil companies pay fees on wells they haven’t used for years on public lands. The official accused the oil companies of “hoarding without producing,” saying they are trying to take advantage of the lack of supply to boost prices and profits.
“Companies that are producing from their leased acres and existing wells will not face higher fees,” according to a fact sheet released, “but companies that continue to sit on non-producing acres will have to choose whether to start producing or pay a fee for each idled well and unused acre.”
Mr. Biden also plans to invoke the 1950 Defense Production Act to ramp up domestic production of minerals needed to manufacture batteries for electric vehicles, including lithium, nickel, graphite and cobalt. The law empowers a president to use emergency authority to expand the production of a necessary product.
High oil prices have created a political nightmare for Mr. Biden and the Democrats. The president’s popularity has plummeted as inflation reached a 40-year high and voters’ heating and gas bills have swelled. Mr. Biden’s approval rating remains in the high 30s or low 40s, depending on the poll.
Several recent polls show voters blame Mr. Biden and the Democrats for the high gasoline prices. An ABC News/Ipsos survey this month found that 70% of voters disapproved of Mr. Biden’s handling of gas prices.
Republicans have hammered Mr. Biden for months over rising pump prices, making it clear that it will be a key line of attack against Democrats in November’s midterm elections.
Mr. Biden has pushed back, blaming Republicans, domestic oil companies and Russian President Vladimir Putin for the soaring prices.
The White House contends that Republicans have blocked Mr. Biden’s roughly $1 trillion spending bill, which would have promoted green energy alternatives to fossil fuels. Officials also have argued that the bill would have lowered inflation by reducing the cost of child care, health care and education.
The White House has also accused oil companies of failing to expand production, saying they are trying to profiteer by taking advantage of the lack of supply to boost their bottom lines.
“The oil and gas industry right now is receiving profit — windfall profits. We’ve seen that,” White House press secretary Jen Psaki said this month. “Instead of keeping up with current demand, too many of these companies, in our view, are making the calculated decision of returning money to investors and shareholders through buybacks and dividends, instead of expanding production enough in the short term, which is what we need.”
Mr. Biden also blamed Mr. Putin, while acknowledging this month that his executive order banning Russian energy imports will bring more pain at the pump for Americans.
Reporting by The Washington Times.