Biden to tap oil reserve to control gas prices

UNITED STATES President Joe Biden was on Thursday preparing to order the release of up to one million barrels of oil per day from the nation’s strategic petroleum reserve, according to two people familiar with the decision, in a bid to control energy prices that have spiked as the U.S. and allies have imposed steep sanctions on Russia over its invasion of Ukraine

The announcement was expected on Thursday during Biden’s remarks on his administration’s plans to combat rising gas prices. The duration of the release had not been finalised up to Wednesday, but it could last for several months. The people spoke on the condition of anonymity to preview the decision.

High oil prices have not coaxed more production, creating a challenge for Biden. The president has seen his popularity sink as inflation reached a 40-year high in February, and the cost of petroleum and gasolene climbed after Russia invaded Ukraine. Crude oil on Wednesday traded at nearly US$105 a barrel, up from about US$60 a year ago.

Still, oil producers have been more focused on meeting the needs of investors, according to a survey released last week by the Dallas Federal Reserve. About 59 per cent of the executives surveyed said investor pressure to preserve “capital discipline” amid high prices was the reason they weren’t pumping more, while fewer than 10 per cent blamed government regulation.

The steady release from the reserves would be a meaningful sum and comes near to closing the domestic production gap relative to February 2020, before the coronavirus caused a steep decline in oil output.

The Biden administration in November announced the release of 50 million barrels from the strategic reserve, in coordination with other countries. And after the Ukrainian war began, the US and 30 other countries agreed to an additional release of 60 million barrels from reserves, with half of the total coming from the US.

According to the Department of Energy, which manages it, more than 568 million barrels of oil were held in the reserve as of March. 25.

News of the administration’s plan was first reported by Bloomberg.

AP US President Joe Biden speaks about status of the country’s fight against COVID-19 in the South Court Auditorium on the White House campus on Wednesday, March 30, in Washington, DC.