President Joe Biden announced the drawdown of an additional 15 million barrels of oil from US emergency reserves, as well as what he called a “ready and release plan” aimed at driving down gasoline prices.
“I told my team behind me to be prepared to look for further releases in the months ahead if needed,” Biden said Wednesday at the White House. “We’re gonna continue the responsible use of that national asset.”
The release marks the final tranche of oil from a program the administration began in the spring to issue a total of 180 million barrels of crude from the Strategic Petroleum Reserve, a bid to address high prices at the pump stemming from Russia’s invasion of Ukraine and other factors and after OPEC+ agreed earlier this month to cut production.
Oil rose as traders shrugged Biden’s remarks about taming energy prices. West Texas Intermediate, the US benchmark, futures climbed 3.3% to close above $85 a barrel in New York trading.
The president said that while gas prices had fallen from summer highs his administration would consider additional actions to lower them further, including possible additional SPR releases.
“We’re calling it a ready and release plan,” he said.
Biden’s announcement comes less than three weeks before midterm elections that will decide whether Democrats maintain control of the House and Senate. Inflation, driven in part by gasoline prices, is at a four-decade high, posing a political challenge for Biden and his party.
“Families are hurting,” said Biden. “Gas prices hit almost every family in this country and they squeeze their family budgets — when the price of gas goes up, other expenses get cut. That’s why I’ve been doing everything I can.”
The administration will replenish its emergency stockpile and plans to initiate purchases when West Texas Intermediate crude prices are at or below $67 to $72 per barrel, according to a senior administration official.
“Refilling the reserve at $70 a barrel is a good price for companies and it’s a good price for taxpayers,” Biden said.
The president also urged Congress to quickly pass legislation to revamp federal permitting rules to help speed up energy infrastructure projects.
“We need to get this moving now, quickly,” he said.
The White House has also left open the door to an export ban on some petroleum products, citing concerns about low inventories of diesel fuels. A ban on exports of gasoline, diesel and other refined petroleum products would mark the most radical step yet by the Biden administration to tackle gasoline prices.
“At this moment, when we have uncertainty and uncertainty for American consumers, we have to keep all options on the table,” National Economic Council Director Brian Deese said in an interview with Bloomberg TV earlier Wednesday when asked if an export ban was still under consideration.
Deese said the White House is “very concerned” about inventory levels, especially across the US East Coast. “We are operating right now at unacceptably low inventory levels for diesel that, for example, are 50-to-60% lower than their five-year historical average,” he said.
Although no timeline has been set for a decision on an export ban, it isn’t expected to happen before the Nov. 8 midterms, according to a person familiar with the matter.
The move, considered unlikely only weeks ago, has been gaining traction in some corners of the White House, even as oil producers and analysts warn it could backfire by ultimately raising costs even more for US consumers, while disrupting markets and cutting off European allies at a difficult time with winter approaching.
Amos Hochstein, Biden’s top energy adviser, also expressed concerns about low inventory but downplayed the ban as an imminent step.
“That’s not what we’re discussing at the moment,” Hochstein said in a separate interview on Bloomberg TV. “That’s a hypothetical conversation that — I never take anything off the table but it’s not what we are announcing today or anytime in the very near future.”
Top Biden administration officials, frustrated by what they see as a lack of action by the industry in response to repeated warnings about low fuel inventories, have raised the prospect of curbing exports in meetings with executives from some of the nation’s largest oil companies including ExxonMobil and Marathon Petroleum.
Biden on Wednesday again criticised oil producers who he said were enjoying “record profits” during Russia’s war in Ukraine.
“My message to the American energy companies is this, you should not be using your profits to buy back stock or for dividends, not, not, not while a war is raging.” said Biden.