Attempting to combat what’s he’s labeled as “Putin’s price hike,” President Joe Biden announced a plan on Thursday to release roughly 1 million barrels of oil per day from the nation’s strategic petroleum reserve over the next six months to reduce energy and gas prices.
“Today I want to talk about one aspect of Putin’s war that affects and has real effects on the American people: Putin’s price hike that Americans and our allies are feeling at the pump. I know how much it hurts,” Biden began. “As you’ve heard me say I grew up in a family, like many of you, where the price of gasoline was discussed at the kitchen table. None of it should hinge on whether a dictator declares war.”
Biden blamed the cost of gas both on Russian President Vladimir Putin’s ongoing invasion of Ukraine and the lingering economic effects of COVID.
“Now Putin’s price hike is hitting Americans at the pump which brings me to the first part of my plan, to immediately increase the supply of oil, our prices are rising because of Putin’s action,” Biden said.
“The action I’m calling for will make a real difference over time, but the truth is, it takes months not days for companies to increase production. That’s why the next part of my plan is so important,” he said. “Today I’m authorizing the release of one million barrels per day over the next six months.”
Biden announced the major step during a scheduled event to discuss actions his administration is taking to rein in soaring gas prices that have spiked even further following Russia’s invasion of Ukraine.
He also called on “Congress to make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing,” the White House said in a release.
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Senior administration officials also addressed the delayed relief at the pump.
“We’re not focused right now on sort of the immediate short-term price movements,” an official said on a call with reporters earlier Thursday, adding that the focus is on addressing the gap in supply as Russian oil comes off the market.
“Obviously, United States banned Russian imports, others also are not purchasing, we know that there’s a reduction in supply and we are focused on — on the difference that deficit — between supply and demand. And that this historic action a million barrels per day will help to address that in coordination with other countries around the world.”
Biden said the release was coordinated with allies and partners around the world.
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The first barrels from the announcement are set to come to the market in May for delivery that month. Officials said all the funds from the sale of the oil will go to restocking the reserves.
“We expect that to occur once the oil price has come down, we are no longer in an emergency,” an official told reporters.
Biden went on to propose a “use it or lose it” policy the White House said “will charge companies if they’re sitting on wells that aren’t producing and leases that they’re not developing.”
About 3 million barrels a day of Russian oil will come off the market in April due to Western sanctions, according to the International Energy Agency, and this plan could help alleviate pain at the pump by helping to replace that loss.
This would be the third time Biden has had to tap into the strategic petroleum reserve. In November, he authorized the release of 50 million barrels as gas prices surged ahead of the holidays, and along with 30 other countries, the U.S. released 30 million barrels following the start of the war in Ukraine, though that did little to ease skyrocketing prices.
As of Friday, there were more than 568 million barrels of oil in the reserve, according to the Department of Energy.
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Given the complexity and volatility of the oil market, many geopolitical and economic factors feed into oil prices and there is no guarantee this release will keep prices down for an extended period of time.
Overnight, crude oil prices were down roughly 5% in reaction to this plan, which means the price at the gas pump could also dip in the coming days.
The current national average for a gallon of gas is $4.23, according to AAA, $1.35 higher than this time last year.
Biden announces plan to reduce energy, gas prices originally appeared on abcnews.go.com
