With the increase in gas prices, Biden hastily tapped in the nation’s strategic oil reserve, approving the release of 50-million barrels of oil.
Biden, facing rising consumer discontent ahead of the Thanksgiving holiday plans, makes to make, including India, Japan, and South Korea, curb increasing energy prices after oil-rich nations rejected repeated calls to increase production as the global economy rebounds from the pandemic and fuel demands rise.
Gas prices in the U.S ahead of Thanksgiving are averaging $3.42 a gallon, the highest since 2014. Parts of the country are experiencing sharper increases, including California, where prices are over $4.50 in some areas. According to predictions by the motorist assistance company AAA, more than 48 million people are expected to travel by car over the Thanksgiving holiday.
The White House has attempted to address gas prices as concerns about inflation have increasingly become a criticism of Biden’s presidency.
“The increase in gas prices has occurred because global oil supply has not kept pace with global oil demand as the economy has recovered from the pandemic and as countries and companies have held back on supplying oil, and because of the declines in oil prices that we have seen have not translated into lower prices at the pump.” A senior administration official said in a call with reporters. Saving face for the president, stating he is taking action on both fronts and is committed to using every tool as needed.
Last week Biden asked the Federal Trade Commission to investigate what he described as “anti-consumer” behavior by oil and gas companies and whether it could have led to increased gas prices.
The Organization of the Petroleum Exporting Countries alliance (OPEC), whose members collectively represent roughly 77 percent of all crude oil reserves, has declined to ramp up production, sticking to their plan for modest monthly increases.
Biden then focused on releasing 50 million barrels of oil to use from the reserve. But the oil market was initially underwhelmed by the details of the package. Much of the oil will need to be returned to the stockpile by the refiners who buy it, and international contributions were smaller than many expected. After an initial dip in prices, oil gained more than $1 a barrel.
This would be Biden administration’s most direct effort to tamp down on high gasoline prices that have become a political headache for the White House amid broader inflation.
Thirty-two million barrels will be released over the next several months and eventually replaced in the coming years. Then 18 million barrels will be part of a sale that Congress previously authorized. The reserve held a total of 604 million barrels of oil as of Nov. 19, according to the DOE.
Under the plan, the U.S. will conduct the exchanges over several months, with oil companies taking possession of the crude now and then returning supplies to the reserve later when prices have eased.
The administration can also make adjustments to the exchanges in the coming months as it deals with a dynamic oil market. The administration has also identified the tools for addressing the current dynamic, as one official states. It has so far rebuffed calls from members of Biden’s party to clamp down on exports of U.S. oil amid warnings that could backfire by actually discouraging domestic products.
It’s unclear whether the release will have any sustained, significant effect on prices, even alongside the other countries’ release.