Biden to lay out a plan for completing emergency oil sales. 15 million barrels of oil will be released from the Strategic Petroleum Reserve. The objective is to restock when U.S. crude prices are around $70 per barrel, which, according to the president, is still a good deal for taxpayers.
The U.S. sells oil reserves as Biden addresses pump prices ahead of the elections.
On Wednesday, U.S. President Joe Biden announced a plan to sell the rest of the oil from the nation’s emergency oil reserve by the year’s end and put more oil in reserve to lower gas prices before the midterm elections on November 8.
Biden is trying to add enough supply to stop oil prices from going up in the near future, which could hurt Americans, and to reassure U.S. drillers that the government will buy oil from the market if prices go too low.
He said that 15 million barrels of oil would be offered from the Strategic Petroleum Reserve (SPR) as part of a record 180 million-barrel release that began in May. The U.S. is ready to use its reserves again early next year to keep prices under control.
At a White House event, Biden said, “We call it a ready and release-plan.” “This enables us to act quickly to prevent oil price spikes and respond to international events.”
Biden: Prices not falling fast enough
Biden’s use of the federal government’s reserve to control oil price spikes and his attempts to increase U.S. production show how the Ukraine crisis and inflation had changed the policies of a president who promised to reduce the country’s dependence on the fossil fuel industry when he took office.
After the Organization of Petroleum Exporting Countries, led by Saudi Arabia, rankled President Biden by siding with Russia and agreeing to a production cut, the White House felt it was even more critical to move quickly. This was because the president had said that the US-Saudi relationship needed to be reevaluated.
“With today’s announcement, we’ll continue to stabilize markets and lower prices at a time when other countries’ actions have caused such volatility,” Biden said.
Biden said that Russian President Vladimir Putin’s invasion of Ukraine was to blame for higher gasoline and gas prices. He also said prices had fallen 30% since earlier this year’s peak.
He also urged U.S. energy companies, gasoline stations, and refiners to stop buying back stock with their record profits and put the money into production instead.
Prices “are not falling fast enough,” he said.
“Families are hurting,” he said, adding that rising gasoline prices strain their budget.
Republicans have said that the president uses the SPR for political purposes, not because of an emergency. In response, the president said that the country’s stockpiles would be refilled in the coming years.
He said that he plans to restock when U.S. crude prices are around $70 per barrel, which he thinks is reasonable for both companies and taxpayers. The U.S. benchmark price was around $85 on Wednesday.
Biden says that the SPR is more than half full with more than 400 million barrels of oil, which is “more than enough for any emergency drawdown.” The SPR is now at its lowest level since 1984.
The administration had planned to end selling the 180 million barrels in November. However, purchases by companies like Marathon Petroleum Corp, Exxon Mobil Corp, and Valero Energy Corp were slower than expected over the summer, and about 15 million barrels were still not sold.
A senior administration official noted that those would be put out to bid for delivery in December.
Energy Companies Urged To Scale Production Instead
Presidents in the United States don’t have much control over oil prices, but since Americans use the most gasoline in the world, high prices at the pump can hurt their political chances. Gas prices have gone down since June when they were at their highest point, but they are still higher than average and are a major cause of inflation.
The difference between wholesale and retail prices has also grown, which led the White House to warn against price gouging.
Biden says oil companies should feel more confident about investing in production and stop pushing stock buybacks because of the new SPR repurchase pledge.
The president tells all companies that they are making record profits and that his administration gives them more certainty. So, they can take action now to increase oil production.
Companies “should not use your profits to buy back stock or dividends. Not now, not while a war is raging,” He asked them to lower the prices at the gas pumps.
In recent weeks, the oil industry has become increasingly wary that the administration will severely restrict gasoline and diesel exports to help keep U.S. supplies from running out. Instead, they have urged the administration to take away the option, which they have refused to do.
The administration keeps all options open, including anything that could help ensure stable domestic supply.