Biden orders drawdown of emergency US oil reserves to lower fuel prices

By Beatriz Pascual Macias

Washington, Mar 31 (EFE).- US President Joe Biden on Thursday ordered the release of 1 million barrels per day of government oil reserves over the next six months, a record drawdown aimed at lowering fuel prices that have skyrocketed due in part to Russia’s invasion of Ukraine.

Biden made that announcement in remarks to reporters at the White House, linking high gasoline prices of more than $4 a gallon – and even higher on the United States West Coast – to Russia’s military action.

“Our prices are rising because of (Russian President Vladimir) Putin’s actions. There isn’t enough supply. And the bottom line is if we want lower gas prices we need to have more oil supply right now,” the US head of state said.

The move marks the largest-ever drawdown of the country’s emergency oil stockpile, which was created in 1975 after an embargo by Arab countries and currently amounts to around 600 million barrels.

The plan will add 180 million barrels (1 million bpd for 180 days starting in May) to the global market, but the impact may be limited considering the amount being released is only sufficient to cover 1 percent of global demand.

By way of comparison, Russia’s oil exports have fallen by around 3 million bpd due to sanctions by the US and its allies.

Biden also said he is coordinating with US allies around the world and estimated that those countries could release between 30 million and 50 million gallons from their reserves.

The president had already drawn down the US’s Strategic Petroleum Reserve twice since taking office early last year, releasing 50 million barrels in November and an additional 30 million on March 1, a few days after Russia invaded Ukraine.

Neither action had a significant impact on the price of gasoline, diesel and other petroleum-derived fuels.

Biden said the oil release would act as a “wartime bridge” until the US is able to increase its domestic production.

He also said in a tweet Thursday that lawmakers need to pressure American oil companies to boost their production.

“The oil and gas industry has nearly 9,000 unused permits for drilling on federal lands. I’m calling for a ‘use it or lose it’ policy,” the president said. “Congress should make companies pay fees on idle wells on federal leases and on public lands they’re hoarding without producing.”

US crude oil production plummeted by 8 percent in 2020 due to a pandemic-triggered plunge in demand, falling from a record annual average high of 12.2 million bpd in 2019.

But Biden said demand for crude has recovered with the end of Covid-driven disruptions to markets and accused companies of taking advantage of the situation to boost profits.

“I say enough. Enough of lavishing excessive profits on investors with payouts and buybacks. The American people are watching, the world is watching. US oil companies made nearly $80 billion in profit last year,” he told reporters.

The Biden administration wants domestic production to rise by 1 million bpd this year and by an additional 700,000 bpd in 2023.

Even so, the president reiterated his commitment to combat climate change and reduce the US’s dependence on fossil fuels.

To that end, he has invoked the Defense Production Act to intervene in the private sector to ramp up production of minerals that are essential for the transition to clean technologies such as electric vehicles, wind turbines and solar panels.

Specifically, the Biden administration wants to boost the domestic output and processing of minerals and materials used for large-capacity batteries, including lithium, nickel, cobalt, graphite and manganese.