Biden says the US will release 1 million barrels of oil per day to lower gas prices

The United States will release 1 million barrels of oil per day from the country Strategic Petroleum Reserve President Biden announced Thursday that the next six months, in an effort to mitigate rising gas prices. The move comes as Americans face gas prices north of $5 in some parts of the country, due to factors such as declining domestic oil production and Russia’s invasion of Ukraine.

The president said he can’t provide definitive answers about how much gas prices will go down, or when they’ll go down, but he estimates prices could drop between 10 and 35 cents a gallon. The White House hopes the release of reserves will help fill the gap until US oil producers ramp up production later this year.

“I think we’ll see it go down and keep going down, but how far, I don’t think anyone can say,” he said. “And there’s going to be a slight delay, because if you go out there and you’re a gas station and you buy an ‘X’ amount of gas at a certain price, you won’t lower the price at the pump until you can get back what you invested. And I’m talking about days and weeks, but it’s hard to tell. … But it’s going to go down. And it can go down quite a bit. It goes down, the best part, anything from 10 cents to 35 cents a gallon. It’s unknown at this point.”

Reports that Mr. Biden was planning to tap into the reserves sent oil prices down nearly $5 a barrel in overnight trading. On Thursday, US oil was traded at $101.65 a barrel. But the overall economic impact on the engines remains unclear. The national average for gas is $4.23 a gallon, according to AAA, compared to $2.87 a year ago and $3.61 a month ago.

The president criticized US oil companies for failing to produce the oil the country needs while maintaining “record profits”. Domestic oil production declined during the pandemic, failing to reach pre-pandemic levels. Biden has proposed a “use it or lose it” policy to incentivize companies to produce more oil in the short term with the resources they already have, and has encouraged Congress to make companies pay fees for unused wells on federal lands. Some companies are progressing, he said, but others owe the credit to investors.

“The bottom line is if we want lower gas prices, we need more oil supplies right now,” the president said. “For US oil companies that are posting their biggest oil profits in years, they have a choice. First, they can put those profits to productive use by making more oil, restarting idle wells, or producing on sites they already lease, Or give the American people a break by passing on some of the savings to their clients and lowering the price at the pump. Or they can, as some do, take advantage of the situation, sit back, and ship those profits back to investors while families struggle to make ends meet.”

The Department of Energy will use the proceeds from the sale of the barrels of the Strategic Petroleum Reserve to restock the reserves when prices fall. The United States is coordinating with allies and partners around the world to eventually supply more than 1 million barrels per day. The release of 1 million barrels per day represented the largest reserve release in US history.