The Biden administration continues to tap into strategic oil reserves to lower prices, at the risk of national security.
Key Details
- Despite gas prices improving, President Joe Biden is continuing to release gas from the Strategic Petroleum Reserve (SPR) through the end of the year.
- The U.S. Energy Department announced last week that 10 million additional barrels will be released in November.
- AAA reports the current National Average is $3.80, down from a $5.02 peak in June.
- Biden issued emergency orders in March that released millions of oil to relieve skyrocketing prices in the aftermath of the Russian invasion of Ukraine, overseeing the largest SPR release ever and selling thousands of barrels to China and Europe.
- “To date, Mr. Biden has allowed over 200 million barrels to be withdrawn—more than 30% of the total reserve he inherited, intended to be used in case of urgent need,” says The Wall Street Journal.
- “But even though oil prices have fallen sharply from their peak, the administration is not ready to start refilling the reserve. Instead, rather than ending the releases in October as planned, it has decided to extend them, at a lower rate, for at least another month,” says The New York Times.
Why it’s important
The SPR is reaching its lowest levels since 1984, which creates a danger that the U.S. may deplete its reserve in the event of another crisis. The current reserve will only meet oil consumption for one to two months.
“America consumes about 20 million barrels of oil and other petroleum products each day. It produces 11.3 million barrels of crude oil domestically and imports another 8.5 million barrels of oil and petroleum products,” says The Wall Street Journal.
“Mr. Biden’s rapid SPR depletion, however, means the current supply would cover only about 50 days if imports suddenly ceased, putting America’s economy and security at risk.”
Key takeaways
The release of 10 million barrels will coincide with the midterm elections in November.
“This could perhaps be an attempt to tamp down gasoline prices before the midterm elections,” says The Wall Street Journal.
“Energy experts have estimated that the reserve releases have shaved 40 cents off the gasoline price,” says The New York Times.
It is not clear how or when the administration will restock the depleted reserves. Replenishing the stock could take years and require extensive negotiations with oil companies to meet affordable pricing rates.
“Industry executives say that while the reserve sales have helped lower prices, they are a short-term remedy and did nothing to encourage production of new supplies,” says The New York Times.