WASHINGTON – President Joe Biden announced a record release from US strategic oil reserves to “ease the pain” of soaring domestic fuel prices, saying the “wartime” measure will defuse Russia’s leverage as an energy power.
Biden ordered the release of 1 million barrels of oil per day from the nation´s strategic petroleum reserve for six months, a bid to control energy prices that have spiked after the United States and allies imposed steep sanctions on Russia over its war in Ukraine.
The president said it was not known how much gasoline prices could decline as a result of his move, but he suggested it might be “anything from 10 cents to 35 cents a gallon.” Gas is averaging about $4.23 a gallon, compared with $2.87 a year ago, according to AAA.
“The bottom line is if we want lower gas prices we need to have more oil supply right now,” Biden said according to AP. “This is a moment of consequence and peril for the world, and pain at the pump for American families.”
The president also wants Congress to impose financial penalties on oil and gas companies that lease public lands but are not producing. He said he will invoke the Defense Production Act to encourage the mining of critical minerals for batteries in electric vehicles, part of a broader push to shift toward cleaner energy sources and reduce the use of fossil fuels.
The actions show that oil remains a vulnerability for the US Higher prices have hurt Biden´s approval domestically and added billions of oil-export dollars to the Russian government as it wages war on Ukraine.
Tapping the stockpile would create pressures that could reduce oil prices, though Biden has twice ordered releases from the reserves without causing a meaningful shift in oil markets. Biden said he expects gasoline prices could drop “fairly significantly.”
Stewart Glickman, an oil analyst for CFRA Research, said the release would bring short-term relief on prices and would be akin to “taking some Advil for a headache.” But markets would ultimately look to see whether, after the releases stop, the underlying problems that led to Biden’s decisions remain.
“The root cause of the headache is probably still going to be there after the medicine wears off,” Glickman said.
Biden has been in talks with allies and partners to join in additional releases of oil, such that the world market will get more than the 180 million barrels total being pledged by the US.
