Biden administration says oil supply hasn’t kept up with demand as economy recovers from pandemic, with gas prices double what they were in 2020.
The White House on Tuesday said it had ordered 50m barrels of oil released from the strategic reserve to bring down energy costs, in coordination with countries including the UK, China and Japan.
In a tweet, Joe Biden said: “I have been working with countries across the world to address the lack of supply. As a result of our diplomatic efforts, this step will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom.”
The move is an effort to bring down rising gas prices. US gasoline prices are averaging about $3.40 a gallon, more than double their price a year ago, according to the American Automobile Association.
In a speech, Biden acknowledged many Americans are struggling with the rising price of gas. “The fact is, we always get through those spikes. We’re going to get through this one and hopefully faster,” Biden said. “But it doesn’t mean we should just stand by idly and wait for prices to drop on their own. Instead, we’re taking action.”
“It will take time, but before long, you should see the price of gas fall where you fill up your tank,” Biden said.
The president has scrambled to reshape much of his economic agenda around the issue of inflation, saying his recently passed $1.2tn infrastructure package will reduce price pressures by making it more efficient and cheaper to transport goods.
Republicans have hammered the administration for inflation hitting a 31-year high in October. The consumer price index soared 6.2% from a year ago, the biggest 12-month jump since 1990, and gas prices rose to their highest levels since 2014.
The Senate Republican leader, Mitch McConnell, tore into the White House in a floor speech last week, saying the victims of higher prices were middle-class Americans.
“The three biggest drivers of the staggering 6.2% inflation rate we logged last month were housing, transportation and food,” the Kentucky senator said. “Those aren’t luxuries, they’re essentials, and they take up a much bigger share of families’ budgets from the middle class on down.”
The Strategic Petroleum Reserve is an emergency stockpile to preserve access to oil in case of natural disasters, national security issues and other events. The global release would be the first coordinated effort to increase supply since 2011, when the US and 27 other countries moved to ease supply lost in the conflict that would become Libya’s civil war.
Maintained by the US energy department, the reserves are stored in caverns in salt domes along the Texas and Louisiana Gulf coasts. There are roughly 605m barrels of sweet and sour petroleum in the reserve.
In a statement on Tuesday the energy secretary, Jennifer Granholm, said: “As we come out of an unprecedented global economic shutdown [because of the coronavirus pandemic], oil supply has not kept up with demand, forcing working families and businesses to pay the price.
“This action underscores the president’s commitment to using the tools available to bring down costs for working families and to continue our economic recovery.”
Biden was due to speak on the subject before leaving Washington for Nantucket on Monday afternoon, remarks the White House said would focus on “the economy and lowering prices for the American people”.
In a statement, former president Donald Trump claimed credit for filling the reserve and opposed Biden’s move.
“Those reserves are meant to be used for serious emergencies, like war, and nothing else,” he said.
The US Department of Energy will make the oil available in two ways: 32m barrels will be released in the next few months and will return to the reserve in the years ahead, the White House said. Another 18m barrels will be part of a sale of oil that Congress had previously authorized.
The White House press secretary, Jen Psaki, said on Monday evening the White House would keep tabs on oil companies too.
“We will continue to press oil companies who have made record profits and are overseeing what we consider to be price gouging out there when there’s a supply of oil or the price of oil is coming down and the price of gas is not coming down,” Psaki said.
“It does not take an economic expert to know that’s a problem.”
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