WASHINGTON — President Biden is considering a plan to release one million barrels of oil per day from the Strategic Petroleum Reserve over 180 days, a move that would add a large amount of oil to the global market, according to a person familiar with the deliberations of the United Nations. White House on the matter.
Biden could announce the plan to tap the reserve as early as Thursday, the official said, who requested anonymity because the plan was not ready to be announced Wednesday night. The idea would be to counter rising prices at the pump.
The president’s public schedule, released Wednesday night, said he would make comments Thursday afternoon on the “government’s actions to mitigate the impact of Putin’s price hike on energy prices and lower gas prices at the pump for American families,” a reference to President Vladimir V. Putin of Russia.
The price of West Texas Intermediate, the US crude oil benchmark, fell about 4 percent late Wednesday night after the plan was reported by Bloomberg News. The price of Brent oil, the global benchmark, also fell about 3.5 percent.
If fully implemented, the president’s plan would release 180 million barrels from the reserve, which is intended to help the United States weather spikes in demand or dips in supply. About 550 million barrels are in the reserve, with a reported total capacity of approximately 714 million barrels.
Understanding inflation in the US
Biden has been under mounting political pressure for months as gasoline prices have steadily risen, in part due to the instability created by the Russian invasion of Ukraine and five weeks of fighting there.
This month, the average price of a gallon of gasoline peaked at $4.17, surpassing the previous peak of $4.11 in 2008, which has not been adjusted for inflation. The rising cost of gas has underscored broader inflation in the United States, which has hurt the wallets of Americans already struggling to recover from the two-year pandemic.
In November, Biden released 50 million barrels from the petroleum reserve, an amount many experts believe was too small to significantly increase global oil supplies or lower prices at the pump. On March 1, Mr. Biden announced the release of an additional 30 million barrels, in coordination with the release of an additional 30 million barrels from other countries around the world.
But the gas price has continued to rise and the political pressure does not stop.
Republicans have hammered Mr. Biden for weeks, making it clear that they intend to use the specter of inflation — including rising gas prices — as a political cudgel against Democrats who face voters in this fall’s congressional midterm elections.
White House officials have repeatedly said they believe inflation is a serious concern, but have argued that Republicans are blocking the president’s legislative efforts to cut costs on things like childcare, health care, education and other core spending.
Frequently asked questions about inflation
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar won’t go as far tomorrow as it did today. It is usually expressed as the annual price change for everyday goods and services such as food, furniture, clothing, transportation, and toys.
They have also blamed domestic oil companies for failing to expand production to meet demand and ease price pressures. Jen Psaki, the White House press secretary, made that point during a briefing for reporters two weeks ago.
“The oil and gas industry is currently receiving profits – unexpected gains. We’ve seen that,” she said, adding: “Instead of keeping up with current demand, too many of these companies, in our view, are making the calculated decision to return money to investors and shareholders through buybacks.” and dividends, rather than expanding production sufficiently in the short term, that’s what we need.”
The United States consumes about 20 million barrels of oil per day. High energy prices have contributed to high inflation and prompted OPEC Plus, the cartel of oil producers including the Organization of the Petroleum Exporting Countries, Russia and others, to pump more oil.
Mr Biden’s release of 50 million barrels barely dented the market. The world consumes about 100 million barrels per day and prices are set on this global market. When this oil was released, it was in conjunction with other world governments, including Britain, India, Japan and South Korea.
The emergency supplies are stored in underground caves in Texas and Louisiana. Established after the 1973-74 oil embargo by Arab members of OPEC, the reserve has been used in emergencies such as the build-up to the Persian Gulf War in 1991 and the aftermath of Hurricane Katrina in 2005, when much of the oil infrastructure along the Gulf of Mexico was damaged.