(Trends Wide) — US President Joe Biden on Thursday announced an unprecedented release of oil from US reserves and several measures to punish oil companies for failing to increase production from unused leases on federal land, the White House said.
The steps are an attempt to lower gasoline prices while at the same time forcing oil companies to increase supply. The dramatic step, which Biden announced from the White House, addresses what has become a looming political issue months before the midterm elections.
“Our prices are increasing due to the actions of [el presidente ruso, Vladimir] Putin. There is not enough supply. And the bottom line is if we want lower gas prices, we need to have more oil supply right now,” Biden said.
The president added: “Your family budgets to fill a tank, none of that should depend on whether a dictator declares war.”
The release would amount to 180 million barrels of oil. The president said he would act as a “wartime bridge” as US and world oil production surges after the coronavirus pandemic. The decision was made in coordination with US allies abroad, including in Europe, though officials declined to say whether other countries were also releasing barrels from their reserves.
“Together, our combined efforts will supply more than a million barrels per day. The nations [se están] uniting to deny Putin the ability to weaponize his energy resources against American families and democracies around the world,” Biden said.
The United States will replenish barrels in the reserve when oil prices decline, the president said, which could help further fuel production in the future.
Still, officials declined to say how quickly or by how much gasoline prices might drop as a result of the statement. And they said they would not address “immediate short-term price movements” in the tanker market. Instead, they said their goal was to address supply shortages due to the exit of Russian oil from the market, adding that it would bring relief to American consumers.
The president warned oil companies not to take advantage of the situation to increase their profits.
“No American company should take advantage of a pandemic or the actions of Vladimir Putin to enrich themselves at the expense of American families. Invest those profits in production and innovation, that’s what they should do. Invest in your customers,” Biden said.
US energy independence
Biden said the second part of his plan to address rising prices is to create long-term American energy independence.
“Ultimately, we and the entire world need to completely reduce our reliance on fossil fuels. We need to choose long-term security over energy and climate vulnerability,” Biden said.
Biden announced earlier this month a coordinated release of oil from reserves along with other nations. He also released about 50 million barrels in November, which he said at the time was the largest reserve release in US history.
Neither move had a significant effect on gasoline prices, which have continued to rise as global limits on Russian energy exports have caused prices to soar.
The United States consumes about 20 million barrels of oil per day, and world consumption is around 100 million barrels. Biden’s planned releases would put more oil on the global market, potentially lowering costs.
The president will also ask Congress to “make companies pay fees for wells on their leases they haven’t used in years and for acres of public land they are hoarding without producing.” For months, the Biden administration has publicly pushed back against the idea that regulations are preventing oil producers from producing more in the country, pointing to millions of acres of land with approved permits for oil and gas production.
“Companies that are producing from their leased acres and existing wells will not face higher tariffs,” the fact sheet says, “but companies that continue to sit on non-producing acres will have to choose whether to start producing or pay a tax. for every idle well and unused acre.”
Biden addresses a major political issue
Tap into the reserve, the reserve of 600 million barrels of crude oil stored in underground salt caverns in Louisiana and Texas, generally only has a limited effect on gas prices due to the amount of oil that can be released at one time, but it would act as a political signal that Biden continues to deal with the problem.
Following the Russian invasion of Ukraine, the US price of regular gasoline soared, hitting a record high of $4.33 a gallon in early March.
However, the current cost increases began months ago, as demand for oil increased while the coronavirus pandemic abated. The White House has expressed frustration that oil companies have not returned their production to pre-pandemic levels, focusing instead on paying dividends to investors.
There has been an internal debate among administration officials about the harshness of going after oil and gas companies for failing to increase production. Biden has rebuked them in previous comments, but some officials believe a full-throttle campaign against the companies could backfire.
The Russian invasion of Ukraine has provided Biden with another contrast. In comments earlier this month, Biden tried to pin blame for the price hike on the Russian president: “Make no mistake: the current rise in gasoline prices is largely the fault of Vladimir Putin.” He has repeated the phrase “Putin’s price hike” ever since.
US governors have attempted to lower gasoline prices at the state level.
Last week, Democratic California Governor Gavin Newsom introduced a $9 billion proposal to provide $400 debit cards to drivers in the state to help soften the impact of higher gas prices on the country. In Georgia, Republican Governor Brian Kemp, facing one of the toughest re-election races in the country, signed a bill that will give tax refunds of $250 to $500 to Georgians, a move that several of his rivals criticized as politicking.
And as Democratic Governor Janet Mills faces a competitive re-election campaign in Maine, she has proposed some of the most generous relief for qualified taxpayers in her state, in the form of $850 checks, to cushion the blow of inflation and gasoline prices.