President Joe Biden on Thursday said he’s again tapping the U.S. Strategic Petroleum Reserve, as his administration touted the latest release as the biggest ever.
Biden said he’s authorizing the release of 1 million barrels of oil per day for the next six months from the reserve, or more than 180 million barrels in total.
The president and administration officials are making an effort to address rises for gasoline prices
and pin those increases on Russian President Vladimir Putin’s invasion of Ukraine.
Biden said there are two root causes for current gas prices, with the first one related to the COVID-19 pandemic having caused a drop in demand for oil and then lower production.
“Because of the strength and the speed of our recovery, demand for oil shot back up much faster than the supply. That’s why the cost of gas began to rise last year. The second root is Vladimir Putin,” the president said during a brief speech.
“Putin’s price hike is hitting Americans at the pump,” he added.
Biden told reporters that the latest release’s immediate impact at the pump is hard to tell, but it could make gasoline come down by between 10 cents and 35 cents per gallon.
The White House said in a statement that Biden’s move counts as “the largest release of oil reserves in history,” adding that the “scale of this release is unprecedented.” Reports late Tuesday had said the president was preparing to order the release of up to 1 million barrels of oil per day from the strategic reserve.
Separately, the president and officials in his administration on Thursday continued their push for companies to step up their domestic production of oil and gas.
“I’m calling for a ‘use it or lose it’ policy. Congress should make companies pay fees on wells on federal leases they haven’t used in years and acres of public land they’re hoarding without production,” the president said during his speech.
In addition, Biden said he will be using the Defense Production Act to boost domestic production of minerals used in batteries for electric vehicles. Reports on Wednesday had said the president was considering invoking the Korean War–era law for that purpose.
“I’m going to use the Defense Production Act to secure America’s supply chains for the critical materials that go into batteries for electric vehicles and the storage of renewable energy — lithium, graphite, nickel and so much more,” Biden said.
The president had tapped the country’s petroleum reserve twice already in recent months, with a November release of 50 million barrels and a release of 30 million barrels in early March after Russia’s war on Ukraine began, both in coordination with other countries.
Biden said Thursday that he’s waiting to see how much U.S. allies release from their reserves, noting it could be between 30 million and 50 million barrels of oil.
Futures for West Texas Intermediate crude
fell sharply Thursday to settle around $100 a barrel, as traders absorbed reports about the upcoming U.S. release of reserves, along with news that the Organization of the Petroleum Exporting Countries and its allies have stuck with a plan to raise output in May. The U.S. oil benchmark was down again Friday, trading under the $100 level and facing its biggest weekly loss since the early days of the pandemic.
West Texas Intermediate crude had been rallying before Russia launched its full-scale invasion of Ukraine on Feb. 24, with prices in mid-February topping $95 a barrel and hitting levels last seen in 2014. WTI then spiked in the wake of the invasion, briefly trading above $130 a barrel on March 7, but it has since pulled back.
Analysts believe the latest release will only be a temporary fix for tight global supplies.
“The SPR release is like putting duct tape on a leaking ship — it will hold for a bit but will not sustain,” Manish Raj, chief financial officer at Velandera Energy Partners, told MarketWatch.
Inflation ranks as the most urgent issue facing the country today, with 30% of Americans saying it’s their No. 1 concern, ahead of Russia’s invasion of Ukraine at 14%. That’s according to a Quinnipiac University poll released Wednesday.
When Americans were asked what they think is most responsible for the recent rise in gasoline prices, the poll found that 41% cited Biden’s economic policies, 24% blamed the war in Ukraine and sanctions against Russia, 24% pinned it on oil companies charging more, and 5% cited a rise in demand as the COVID-19 pandemic eases.
MarketWatch’s Myra P. Saefong contributed to this report.
This is an updated version of a report first published on March 31, 2022.