High energy prices are continuing to put pressure on American consumers. Now a top political concern for the Biden administration, new reports are suggesting that the President is preparing to release even more oil from the strategic reserves to help push gas prices down.
According to anonymous resources closed to the administration, Biden is expected to deliver remarks on Thursday about further efforts to lower energy costs. Up until recently, there was some hope that a ceasefire might emerge in Ukraine, with a potential peace deal following suit. While initial reports suggested that both parties made progress, the conflict is continuing to unfold, which has only made energy markets even more volatile.
During the earlier stages of the conflict, Biden banned the import of oil, gas, and other energy commodities from Russia. This included the acknowledgement that this will certainly lead to higher prices for Americans in the short-to-mid term.
In response, the Biden administration has relied on tapping into the Strategic Petroleum Reserve as a way to keep prices under control. The U.S. initially released 50 million barrels of oil from its reserves back in November, when prices were closer to $80 per barrel. This was followed by the release of another 30 million barrels of oil earlier in March. Though these moves provided some relief to high energy prices, it didn’t do much in the long term. After a brief decline back in November, prices were back up again by January.
This new decision to tap oil reserves would follow a slightly different strategy. Instead of releasing all this oil at once, the administration would release just one million barrels per day over a sustained period, for a grand total of over 180 million barrels. Unfortunately, even this likely won’t have too much of an impact on prices in the long-term unless Russian oil returns back to the market.
To put it in context, this would be the largest deployment of strategic oil in the entire 50-year history of the Strategic Petroleum Reserve. Investors will be awaiting further updates on Thursday. Other strategies for increasing oil quantities to market include striking a deal with Iran, as well as encouraging domestic energy companies to ramp up production. The Saudis appear to be either unwilling to increase production or are simply unable to at the moment.
With midterm elections looming soon over the horizon, high energy prices and rising inflation have become a major political issue for the Biden administration. Inflation figures, which are now at 40-year highs, are being pushed up mainly by soaring energy costs.
The International Energy Agency (IEA) also said it plans to hold an international meeting this Friday to consider a collective oil release as well.
“The amount of the potential collective release has not been decided. That meeting will set a total volume, and per country allocations will follow,” said one national spokeswoman.
In the long-term, tapping strategic reserves is just putting a bandage around a bleeding wound. Some countries, like Germany, have since promised to go fully green with renewable energy instead. Others are looking to Uranium as an alternative source as well.
