Biden taps oil reserve in attempt to curb gas prices
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Gas prices are displayed at a Chevron gas station on Oct. 3, 2022, in Mill Valley, California. Photo: Justin Sullivan/Getty Images
President Biden announced on Wednesday that he is authorizing the release of more oil from the Strategic Petroleum Reserve in December in an effort to bring down gas prices.
Why it matters: The move comes at the close of a campaign season in which high gas prices — while far lower than their June peak — put Dems in political jeopardy.
What we're watching: The administration is calling on the Department of Energy to be ready to move forward with additional significant SPR sales this winter if needed due to Russian or other actions disrupting global markets.
Driving the news: 15 million barrels will be released in December as part of the 180 million barrels the administration had announced earlier this year, according to officials.
- "I've told my team behind me here to be prepared to look for further releases in the months ahead if needed," Biden said in his remarks Wednesday.
- This would occur "if needed due to Russian or other actions disrupting global markets," a White House summary states.
The intrigue: Biden also announced that the administration intends to repurchase crude oil for the SPR when prices fall to $70 per barrel.
- "That means oil companies can invest to ramp up production now with confidence they'll be able to sell their oil to us at that price in the future," Biden said.
- "We're giving you more certainty, so you can act now to increase oil production now," Biden said, addressing oil companies.
- Biden also called on oil companies to pass on savings to consumers.
- "My message to the American energy companies is this: you should not be using your profits to buy back stock or for dividends. Not now. Not while a war is raging. You should be using these record-breaking profits to increase production and refining. Invest in America. For the American people," Biden said.
The big picture: The planned December release, and the prospect of even further releases this winter, is the latest of several attempts by the Biden administration to try and tame gas prices via the SPR.
- Current U.S. average gasoline prices are $3.87 per gallon, which is far below the peak of $5 per gallon in June. But gasoline prices, a driver of wider inflation, are still up overall this year.
Catch up fast: The administration's announcement arrives roughly two weeks after OPEC+ announced it would ease output by 2 million barrels per day (though the real-world amount will be smaller).
- The coalition's move angered the White House, which had appealed to Saudi Arabia — OPEC's dominant producer — not to slash output. The White House says it's now reevaluating its relationship with the kingdom.
- Crude oil prices — the biggest factor in pump prices — have fallen back significantly after jumping around the OPEC+ move.
- Gloomy economic signs have cooled the market, but prices remain volatile amid Russia's war on Ukraine.
Editor's note: This story has been updated with additional reporting.
