WASHINGTON (Reuters) – U.S. President Joe Biden on Wednesday announced a plan to sell 15 million barrels of crude from the nation’s emergency supplies and start refilling reserves as he tries to bring down high gasoline prices ahead of the November 1 midterm elections. . 8.
The move came two weeks after the Saudi-led Organization of the Petroleum Exporting Countries (OPEC) provoked Biden to side with Russia and agree to cut production, raising fears of a new rise in US pump prices.
“With my announcement today, we will continue to stabilize markets and lower prices at a time when the actions of other countries have caused such volatility,” Biden said at a White House event.
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Biden blamed Russian President Vladimir Putin’s invasion of Ukraine for soaring crude and gasoline prices, while noting prices are 30% off their peak earlier this year.
He also repeated an appeal to US energy companies, gasoline retailers and refiners, telling them to stop using record earnings to buy back shares, and to invest in production instead.
He said prices were “not going down fast enough”.
“Families are being hurt,” he added, and gasoline prices are putting pressure on their budgets.
Biden’s plan aims to add enough oil supplies to the market to prevent price hikes that could hurt consumers and businesses, while assuring the country’s drill workers that the government will enter the market as a buyer if prices fall too low.
The president, who is facing criticism from Republicans who accuse him of tapping into the Strategic Petroleum Reserve (SPR) for political reasons rather than an emergency, said he would refill the country’s stocks in the coming years.
Biden already announced the record release of 180 million barrels of Strategic Petroleum Reserve earlier this year to counter a potential supply crisis stemming from sanctions imposed on oil-rich Russia following its invasion of Ukraine in February.
Biden said the Strategic Petroleum Reserve, now at its lowest level since 1984, is more than half filled with more than 400 million barrels of oil, “more than enough for any emergency withdrawal.”
He said his goal would be to replenish stocks when US crude reached around $70 a barrel, a level that would allow companies to profit while still being a good deal for taxpayers. The US benchmark was around $85 on Wednesday.
Biden’s efforts to use federal authorities to balance the US oil market underscore the extent to which the war in Ukraine, rampant inflation and a cut in OPEC have upended the plans of the incumbent president who has vowed to step back from the oil industry and rapidly move the country to a future free of fossil fuels.
“We need to responsibly increase US oil production without delaying or delaying our transition to clean energy,” Biden said on Wednesday.
Gasoline prices hurt
US presidents have little control over oil prices, but the country’s massive gasoline consumption – the highest in the world – means price hikes at the pump can be politically toxic. Retail gasoline prices have fallen from their June highs, but remain above historical averages, a major contributor to inflation.
The management plan was to end the previously announced 180 million barrel sale that began in May, in November. but, Corporate PurchasingIncluding Marathon Petroleum (MPC.N)Exxon Mobil Corporation (XOM.N) Valero Energy Corporation (VLO.N)During the summer, it was slower than expected and about 15 million barrels remained unsold.
A senior US administration official said the weapons would be tendered for delivery in December. Biden said on Wednesday that additional oil could also be provided if needed.
Pushing energy companies to do more
Biden said oil companies should feel more confident about investing in production with a pledge to buy back the new Strategic Petroleum Reserve.
He said, “My message to all companies is: You are maintaining record profits and we are giving you more certainty. So you can act now to increase oil production.”
Companies “shouldn’t use your profits for stock buybacks or for dividends. Not now, not during war,” he said, asking them to lower the prices they charge the pump.
In recent weeks, the oil industry has grown increasingly concerned that the administration may take the drastic step of banning or restricting exports of gasoline or diesel to help rebuild dwindling US inventories. They have called on the administration to take the option off the table, a move officials are unwilling to take.
“We’re keeping all the tools on the table, you know, anything that can help ensure the stability of the domestic supply,” the official said.
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(cover) by Garrett Renshaw and Steve Holland, plus Doina Chiaco and Andrea Shalal; Editing by Lincoln Fest, Heather Timmons, Lisa Shumaker, and Margarita Choi
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