President Biden on Thursday will announce a massive release of the nation’s strategic oil reserves as the White House tries to combat high prices at the pump.
“The scale of this release is unprecedented: the world has never had a release of oil reserves at this 1 million per day rate for this length of time,” the White House said in a statement. “This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up.”
The White House also announced that Biden will use the Defense Production Act to authorize support for the production of minerals and other materials critical for batteries necessary for Electric Vehicles. These will include lithium, nickel, cobalt, graphite, and manganese, the White House said. They said Biden will consider further use of the DPA as well.
The White House has scrambled in recent days to respond to elevated gas prices, which rose markedly after the Russian invasion of Ukraine. Russia is the world’s third-largest oil producer, and fears of a disruption of its supply to global markets have sent energy prices skyward. As of Wednesday, the average price of a gallon of gasoline in the United States was $4.24, according to AAA, up dramatically from $3.60 per gallon last month and $2.90 per gallon last year.
The United States is coordinating the release with the International Energy Agency and has told allies and partners about the measure, the White House said.
The Biden administration also on Thursday blamed some companies that it alleged was holding back domestic energy production. It said it would begin imposing fees for firms that “sit on non-producing acres” on federal lands with “idled wells.”
“Right now, the oil and gas industry is sitting on more than 12 million acres of non-producing federal land with 9,000 unused but already-approved permits for production,” the White House said.
It said Biden would ask Congress to impose fees on these firms if they don’t use the wells on federal land for production.
The price of one crude oil benchmark fell dramatically after news of the White House plans surfaced.
The Biden administration also on Thursday blamed some companies that it alleged was holding back domestic energy production. It said it would begin imposing fees for firms that “sit on non-producing acres” on federal lands with “idled wells.”
“Right now, the oil and gas industry is sitting on more than 12 million acres of non-producing federal land with 9,000 unused but already-approved permits for production,” the White House said.
It said Biden would ask Congress to impose fees on these firms if they don’t use the wells on federal land for production.
The price of one crude oil benchmark fell dramatically after news of the White House plans surfaced.
It was not immediately clear how the release of oil reserves would affect future prices. The United States previously imported roughly 800,000 barrels of oil a day from Russia. After the invasion of Ukraine, Biden banned all imports of Russian gas and oil.
But oil is a globally traded commodity, and other countries such as China and India appear to be making up for the decline in American purchases of Russian oil. Patrick De Haan, a policy analyst at GasBuddy, said the Biden administration may be running the risk of drawing down emergency reserves too quickly — leaving the United States in the lurch should, say, a natural disaster force a decline in domestic production.
“On the surface, it’s eye-popping. … It’s an unexpected announcement and a big number for a decent period of time,” De Haan said. But, he cautioned, it could take upward of seven years or more to replace the reserves, particularly given the challenge posed to doing so by globally high demand. “How quickly can we replace it? And how much is on the line? That’s what an analyst looks at, and I don’t like where that leaves us, and I don’t like how the replacement time would likely be measured in a half-decade or a decade.”
De Haan added: “A lot of Americans on both sides of the aisle are complaining very fiercely about high prices, but there are going to be hurricanes, there are going to be events.”
The White House has considered other measures to lower gas prices, such as a gas tax holiday and a tax on oil and gas companies’ profits, but has so far not gotten behind either option. The administration in November announced the release of 50 million barrels of oil from the Strategic Petroleum Reserve, but the measure to be announced Thursday could dwarf that plan.
