The White House announced Tuesday morning President Joe Biden has ordered the release of 50 million barrels of oil from the Strategic Petroleum Reserve. The move comes as “American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills,” according to the White House.
“American businesses are, too, because oil supply has not kept up with demand as the global economy emerges from the pandemic,” the White House said in a news release. “That’s why President Biden is using every tool available to him to work to lower prices and address the lack of supply.”
According to the latest American Automobile Association numbers, the national average for gas is $3.40 per gallon. That’s 50% higher than at this time last year.
The U.S. Department of Energy will make the oil available from the Strategic Petroleum Reserve in two ways:
- 32 million barrels will be released in the next few months and will return to the reserve in the years ahead.
- 18 million barrels will be part of a sale of oil that Congress had previously authorized.
There was no discernable impact on the price for a benchmark barrel of U.S. crude right after the announcement of the Biden oil release. Prices were up less than 1% so far in this holiday-shortened week. However, the White House said oil prices have gone down since news of the efforts to release oil came out.
“Over the last several weeks as reports of this work became public, oil prices are down nearly 10 percent,” the White House said. On Monday, AAA reported oil prices have dropped into the mid-$70s per barrel this week after staying above $80 since Labor Day. Despite this, the U.S. Chamber of Commerce criticized the Biden oil release as an “ineffectual Band-Aid.”
“The Department of Energy’s reserve should only be used for supply disruptions,” Chamber of Commerce Senior Vice President Christopher Guith said in a statement. “The White House should focus on policies that will encourage domestic production of oil and natural gas.”
In its news release, the White House said the Biden oil release was ordered in collaboration with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom.” It comes after the Organization of the Petroleum Exporting Countries, which includes Saudi Arabia and other U.S. allies in the Gulf, repeatedly denied requests from Biden to pump more oil.
According to Bloomberg, OPEC+ delegates said the release of millions of barrels from the inventories of their biggest customers is unjustified by current market conditions. Delegates also say they may have to reconsider plans to add more oil production when they meet next week.