President Joe Biden will announce the release of 15 million barrels of oil from the U.S. strategic reserve on Wednesday as a response to recent production cuts announced by OPEC+ nations. He will also say that additional oil sales are possible this winter as his administration tries to appear to be pulling out all the stops ahead of the midterm elections next month.
On Wednesday, Vice President Joe Biden will deliver remarks announcing the reduction of the strategic reserve, according to anonymous senior administration officials who detailed Biden’s plans on Tuesday under the condition of anonymity. It concludes the 180 million barrels of oil that Biden ordered in March to be released over a six-month period. This has reduced the strategic reserve to its lowest level since 1984 as a “bridge” until domestic production could be enhanced, as described by the administration. Currently, the reserve contains approximately 400 million barrels of oil.
Biden will also allow additional releases this winter in an effort to reduce prices. However, administration officials declined to specify how much the president would be ready to borrow or how much domestic and global production must increase to end the drawdown.
Biden will also announce that the U.S. government will replenish the strategic reserve when oil prices are at or below $67 to $72 per barrel, a proposal that administration officials claim will boost domestic production by ensuring a minimum level of demand. However, the president is also anticipated to resume his criticism of oil corporations’ profits, reiterating a wager he made this summer that public disapproval would mean more to oil companies than shareholders’ concentration on earnings.
It is the continuation of Biden’s efforts to move the U.S. away from fossil fuels and discover alternative sources of energy to satisfy the U.S. and worldwide demand in the wake of Russia’s invasion of Ukraine and production limits imposed by the Saudi-led oil cartel.
The potential loss of 2 million barrels per day, or 2% of the world supply, has prompted the White House to assert that Saudi Arabia has sided with Russian President Vladimir Putin and to pledge that there will be repercussions for supply cuts that might increase oil prices. According to the Energy Information Administration, the 15 million-barrel release would not cover a single day’s worth of U.S. oil consumption.
The administration may decide on future releases in a month and a half, as it takes that long for the government to notify potential buyers.
Gas prices continue to provide Biden with electoral headwinds. AAA reports that the average gallon of gasoline costs $3.87. This is slightly lower than the previous week but higher than a month earlier. Recent price increases halted the momentum the president and his fellow Democrats were experiencing in the polls leading up to the November elections.
Monday’s report by ClearView Energy Partners, an independent energy research group in Washington, revealed that Nevada and Pennsylvania, two states that might decide control of the evenly divided Senate, are sensitive to energy prices. The data revealed that gas prices in 18 states with 29 possibly “at risk” House seats rose above the national average over the preceding month.
Even if voters desire cheaper gasoline, anticipated increases in supply are not materializing due to the weakening global economy. The U.S. government amended its predictions last week, estimating that domestic firms will produce 270,000 fewer barrels per day in 2023 compared to the September projection. The global production would be 600,000 barrels per day below the September prediction.
In Biden’s estimation, oil output has not yet returned to its pre-pandemic level of approximately 13 million barrels per day. It is approximately one million barrels per day below that threshold. The oil sector would prefer the administration to make more federal areas available for drilling, allow pipeline building, and reverse its recent decisions to increase corporate taxes. The administration argues that the oil industry is sitting on hundreds of empty federal leases and that it would take years to extract oil with no effect on gas prices if fresh licenses were issued. Meanwhile, environmental organizations have asked Biden to uphold a campaign pledge to prevent additional drilling on public lands.
Biden has opposed the oil industry’s preferred policies. Instead, he has sought to reduce prices by releasing oil from the U.S. reserve, shaming oil companies for their profits, and calling for greater production from countries in OPEC+ with different geopolitical interests, according to the American Petroleum Institute’s senior vice president of policy, economics, and regulatory affairs, Frank Macchiarola.
“If they continue to provide the same so-called answers, they will continue to receive the same consequences,” Macchiarola added.
Because the use of fossil fuels results in carbon emissions, Biden has pledged to achieve zero emissions by 2050. When revisiting this commitment about a year ago following the G-20 meeting in Rome, the president stated that he still wanted to cut gas costs because “$3.35 per gallon has a significant impact on working-class families’ ability to get to work.”
Since Vice President Biden spoke about the agony of $3.35 per gallon of gasoline and his desire to lower prices, the price has increased by an additional 15.5%.