Biden taps into oil reserve for 6 months to control gas prices – Daily Local

By ZEKE MILLER and JOSH BOAK

WASHINGTON (AP) — President Joe Biden is ordering the release of 1 million barrels of oil a day from the nation’s Strategic Petroleum Reserve for six months, the White House announced Thursday, in an effort to control oil prices. energy that soared after the United States and allies imposed harsh sanctions on Russia for its invasion of Ukraine.

The White House said Biden is also calling on Congress to impose financial sanctions on oil and gas companies that lease public land but do not produce. And he intends to invoke the Defense Production Act to encourage the mining of vital minerals for electric vehicle batteries, as part of a broader push to switch to more energy sources. clean and reduce the use of fossil fuels.

The stocks powerfully demonstrate that oil remains a key vulnerability for the United States at home and abroad. Rising prices have hurt Biden’s domestic approval, while adding billions of oil export dollars to Russia’s war chest as he wages war on Ukraine.

The release of reserves in the United States would create pressures that could reduce oil prices, although Biden has already ordered releases of strategic reserves twice without causing a significant change in oil markets.

Part of Biden’s concern is that high prices have not – so far – led to a significant jump in oil production. The planned release is a way to boost supplies as a bridge until oil companies increase their own production, with administration officials estimating that domestic production will increase by 1 million barrels per day this year and 700,000 additional barrels per day in 2023.

Markets reacted quickly, with crude oil prices falling around 4% on Thursday to below $104 a barrel. Still, oil is up from around $60 a year ago as supplies fail to keep up with demand as the global economy began to rebound from the coronavirus pandemic. This inflationary problem was compounded by Russian President Vladimir Putin’s invasion of Ukraine, which created further uncertainty over oil and natural gas supplies and led to retaliatory sanctions by the United States and its allies.

Biden is in talks with allies and partners to join in additional oil releases, so the global market will get more than the 180 million total barrels promised by the United States.

Americans use an average of about 21 million barrels of oil a day, about 40% of which is spent on gasoline, according to the US Energy Information Administration. This total represents about one-fifth of total world oil consumption.

Domestic oil production accounts for more than half of US consumption, but high prices have not led companies to return to their pre-pandemic production levels. The United States produces an average of 11.7 million barrels per day, up from 13 million barrels at the start of 2020.

Republican lawmakers have said the problem is that the Biden administration is hostile to oil permits and the construction of new pipelines such as the Keystone XL. Democrats have countered that the country needs to switch to renewable energy such as wind and solar, which could reduce reliance on fossil fuels and Putin’s influence.

Sen. Steve Daines, R-Mt., lambasted Biden’s action to exploit the reserve without first taking steps to increase U.S. energy production, calling it his “band-aid on a gunshot wound.”

Daines called Biden’s actions “desperate moves” that avoid what he called the real solution: “investing in American energy production,” especially oil and gas.

“Biden needs to stop appeasing woke environmental activists and restart oil and gas leases,” Daines said.

The Biden administration countered that increasing oil production is a gradual process and that the release would buy time to ramp up production. He also wants to encourage greater production by imposing fees on unused leases on government land, which would require congressional approval.

Oil producers have been more focused on meeting the needs of investors than consumers, according to a survey released last week by the Dallas Federal Reserve. About 59% of executives surveyed said pressure from investors to preserve “capital discipline” amid high prices was the reason they weren’t pumping more, while less than 10% blamed government regulation.

The steady release of reserves would represent a significant sum and come close to closing the national output gap from February 2020, before the coronavirus caused a sharp drop in oil production.

Still, oil politics are complicated, with industry advocates and environmentalists both critical of the planned release. Industry advocates want to make drilling easier, while environmental groups say energy companies should instead be forced to pay a special windfall tax.

The American Petroleum Institute, the oil and gas industry’s top lobby group, said Biden needed to stop focusing on middle ground such as the strategic reserve.

“Instead of managing from crisis to crisis, we should focus on promoting policies that avoid them altogether through increased production of our nation’s domestic energy resources,” said Frank Macchiarola, senior vice president of policy, economics and regulatory affairs.

Jamie Henn, spokesperson for STOP (Stop the Oil Profiteering), said releasing more oil from the strategic reserve “will not solve the root cause of these high gas prices: Big Oil’s coordinated campaign to rip off Americans at the pump. A better solution would be to pass the windfall tax proposed to Congress, which guarantees immediate relief to Americans without jeopardizing the administration’s climate goals. The big oil companies should pay for the problem they created.

The Biden administration announced in November the release of 50 million barrels from the strategic reserve in coordination with other countries. And after the start of the Russian-Ukrainian war, the United States and 30 other countries agreed to release an additional 60 million barrels of reserves, half of the total coming from the United States.

According to the Department of Energy, which manages it, more than 568 million barrels of oil were held in the reserve as of March 25. After release, the government would begin to replenish the reserve once prices had fallen sufficiently.

News of the administration’s planning was first reported by Bloomberg.

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Associated Press writers Matthew Daly and Michael Balsamo contributed to this report.

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