Biden Hopes to Cut Gas Prices by Releasing Oil Reserves

By Associated Press

Published 2 years ago on

October 19, 2022

WASHINGTON — President Joe Biden will announce the release of 15 million barrels of oil from the U.S. strategic reserve Wednesday as part of a response to recent production cuts announced by OPEC+ nations, and he will say more drawdowns are possible this winter, as his administration rushes to be seen as pulling out all the stops ahead of next month’s midterm elections.

Biden will deliver remarks Wednesday to announce the drawdown from the strategic reserve, senior administration officials said Tuesday on the condition of anonymity to outline Biden’s plans. It completes the release of 180 million barrels authorized by Biden in March that was initially supposed to occur over six months. That has sent the strategic reserve to its lowest level since 1984 in what the administration called a “bridge” until domestic production could be increased. The reserve now contains roughly 400 million barrels of oil.

Biden will also open the door to additional releases this winter in an effort to keep prices down. But administration officials would not detail how much the president would be willing to tap, nor by how much they want domestic production to increase to end the withdrawals.

Gas Prices Could Decide Senate Control

The president faces political headwinds because of gas prices. AAA reports that gas is averaging $3.87 a gallon. That’s down slightly over the past week, but it’s up from a month ago. The recent increase in prices stalled the momentum that the president and his fellow Democrats had been seeing in the polls ahead of the November elections.

In California, fuel prices are even higher: an average of $5.941 for regular gas and $6.59 for diesel.

An analysis Monday by ClearView Energy Partners, an independent energy research firm based in Washington, suggested that two states that could decide control of the evenly split Senate — Nevada and Pennsylvania — are sensitive to energy prices. The analysis noted that gas prices over the past month rose above the national average in 18 states, which are home to 29 potentially “at risk” House seats.

Biden will also say that the U.S. government will restock the strategic reserve when oil prices are at or lower than $67 to $72 a barrel, an offer that administration officials argue will support domestic production by guaranteeing a baseline level of demand. Yet the president is also expected to renew his criticism of the profits reaped by oil companies — repeating a bet made this summer that public condemnation would matter more to these companies than shareholders’ focus on returns.

Biden’s About-Face on Fossil Fuels

It marks the continuation of an about-face by Biden, who has tried to move the U.S. past fossil fuels to identify additional sources of energy to satisfy U.S. and global supply as a result of disruptions from Russia’s invasion of Ukraine and production cuts announced by the Saudi Arabia-led oil cartel.

The prospective loss of 2 million barrels a day — 2% of global supply — has had the White House saying Saudi Arabia sided with Russian President Vladimir Putin and pledging there will be consequences for supply cuts that could prop up energy prices. The 15 million-barrel release would not cover even one full day’s use of oil in the U.S., according to the Energy Information Administration.

The administration could make a decision on future releases a month from now, as it requires a month and a half for the government to notify would-be buyers.