President Joe Biden will order the release of up to 1 million barrels of oil per day from the nation’s strategic petroleum reserve for the next six months, the White House announced Thursday, in a bid to control energy prices that have spiked as the U.S. and allies have imposed steep sanctions on Russia over its invasion of Ukraine.
Senior administration officials described the historic release as a “bridge” while the U.S. maintains restrictions on Russian oil and while the Biden administration makes efforts to ramp up domestic oil production in the meantime.
“After consultation with allies and partners, the President will announce the largest release of oil reserves in history, putting one million additional barrels on the market per day on average – every day – for the next six months,” the White House said in a release.
“The scale of this release is unprecedented: The world has never had a release of oil reserves at this 1 million per day rate for this length of time,” the White House added. “This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up.”
President Biden will announce the historic release as part of a two-part plan he’ll speak about at the White House on Thursday afternoon, which includes efforts to boost oil supply immediately and broader efforts to move the U.S. toward energy independence.
“We want to address that lack of supply. We know and believe that will then translate into helping to provide relief to American consumers,” a senior administration official told reporters Thursday.
The barrels will be coming to market “soon,” they said.
In the meantime, Biden is also expected to call on domestic oil producers to ramp up their output, citing the 9,000 unused production permits granted to companies across the United States.
“Congress should make companies pay fees on unused wells on federal lands and on acres of public land that they’re sitting on without producing,” a senior administration official said.
The steady release from the reserves would be a meaningful sum and come near to closing the domestic production gap relative to February 2020, before the coronavirus caused a steep decline in oil output.
The Biden administration in November announced the release of 50 million barrels from the strategic reserve in coordination with other countries. And after the Ukrainian war began, the U.S. and 30 other countries agreed to an additional release of 60 million barrels from reserves, with half of the total coming from the U.S.
High oil prices have not coaxed more production, creating a challenge for Biden. The president has seen his popularity sink as inflation reached a 40-year high in February and the cost of petroleum and gasoline climbed after Russia invaded Ukraine. Crude oil on Wednesday traded at nearly $105 a barrel, up from about $60 a year ago.
Still, oil producers have been more focused on meeting the needs of investors, according to a survey released last week by the Dallas Federal Reserve. About 59% of the executives surveyed said investor pressure to preserve “capital discipline” amid high prices was the reason they weren’t pumping more, while fewer than 10% blamed government regulation.
According to the Department of Energy, which manages it, more than 568 million barrels of oil were held in the reserve as of Mar. 25.
News of the administration’s planning was first reported by Bloomberg.
The second part of Biden’s plan is to move the U.S. toward energy independence from other nations, officials described.
He will call on Congress to pass his climate plan, which has so far stalled with other facets of his domestic agenda but includes a transition to clean energy.
And he is also expected to invoke the Defense Production Act to boost U.S. supply of the materials and minerals used to make large capacity batteries, which can be used for things like electric vehicles.
