As gasoline prices skyrocket ahead of the major holiday season, President Joe Biden on Tuesday authorized the release of a record 50 million barrels of oil from the Strategic Oil Reserve, complicating the his administration’s goal of switching to cleaner energy sources.
In prepared remarks, Biden said he coordinated the release of Reserve, a four-site complex along the Gulf coasts of Louisiana and Texas, with leaders in Japan, South Korea, India and the UK also reportedly releasing their own reserves.
The effort would not affect gas prices overnight, he said.
RECEIVE MORNING TICKETS IN YOUR RECEPTION BOX
Republican critics recently hammered on Biden for not acting quickly enough to stem inflation and rising energy and consumer goods prices. But the move highlighting oil dependency also comes after Biden and other world leaders at the United Nations Climate Conference pledged to move away from fossil fuels.
The president said that the release of the reserve was intended to relieve high prices in the short term, but that a strategy of transitioning to other sources of fuel would be more effective in the long term.
Energy Secretary Jennifer Granholm echoed the president’s sentiment to reporters during a press briefing following Biden’s remarks. She said the administration aimed to provide short-term relief from oil prices which are at their highest level in seven years.
She said the White House hopes to see domestic oil producers return to pre-pandemic levels, even though Biden has made climate action a central part of its agenda – which would mean greater reliance on it. clean energy rather than oil.
âWe are in a transition, and the transition does not happen overnight,â said Granholm. âIt’s a short-term strategy to make sure people don’t suffer. And the long-term strategy to make sure the country doesn’t suffer in the future is to build clean.
In his prepared remarks, Biden said high gas prices were “a problem, not just here but around the world.”
He criticized oil-rich countries and big business for not increasing supply.
“This coordinated action will help us deal with a supply shortage which in turn will help drive down prices,” he said. âIn summary: Today we are launching a major effort to bring the price of oil down, an effort that will cover the whole world at your fingertips and eventually reach your local gas station, God willing. “
Granholm declined to predict when gasoline and home heating prices would drop due to operation of the reserve, but said consumers should “start to see a drop in the next step.”
A senior administration official told reporters earlier Tuesday that the release of reserve oil would hit markets from mid-December at the earliest.
As Biden’s work with international leaders became public, energy prices have already fallen by around 10%, the official said.
Reserve barrels will be released gradually over the weeks, Granholm said.
A switch to clean energy would be the best thing to protect consumers from “energy price shocks” caused by dependence on oil, said Granholm, a former governor of Michigan.
The administration’s recently enacted $ 1.2 trillion physical infrastructure law, with its funding for electric vehicle charging stations and power grid upgrades, would help the transition to clean energy, he said. she declared.
The second part of the administration’s two-pronged domestic spending plan, a $ 2.2 trillion climate and social spending bill that has been passed by the House and will soon be considered in the Senate, also includes tax credits to help the energy sector move away from fossil fuels for wind, solar and other sustainable energy sources.
But in the short term, the administration is pushing national and international oil suppliers to increase their production.
“We want to encourage them to increase the supply,” she said. “We want the supply to be increased, both in the United States and around the world, so that we can reduce the pressures at the pumps.”
The Energy Information Administration, part of the US Department of Energy, estimates domestic production was around 11 million barrels per day over the past 10 months, up from a peak of nearly 13 million at the end of 2019 and early 2020.
Members of the Senate Committee on Energy and Natural Resources requested more production of oil, gas and coal to fight high prices last week, just days after the climate conference.
Granholm said the oil and gas industry had 150,000 workers below its pre-pandemic level. The industry also holds 9,500 drilling permits on public lands and waters that it does not use, she said.
Oil and gas drilling leases do not always translate into production and can take years to develop.
Last week, Biden tasked the Federal Trade Commission to investigate possible gasoline price manipulation. Granholm said on Tuesday the price of gasoline was higher than expected for the current price of crude oil.
In a statement released through a spokesperson, Frank Macchiarola, the American Petroleum Institute’s senior vice president for economics and regulatory affairs, said the investigation was “a distraction from the fundamental market change underway and misguided government decisions exacerbating this predicament.
Macchiarola agreed with the administration’s view that the uneven recovery in economic fallout from the pandemic has led to demand exceeding supply.
But the executive of the oil and gas industry’s largest group said the administration’s policies were hurting energy supplies.
âThe administration’s continued decision to restrict access to U.S. energy supplies and cancel major infrastructure projects,â he said, likely referring to the ordinance of the day. ‘inauguration for cancel the Keystone XL pipeline, which reportedly crossed eastern Montana between the Alberta oil fields and the Gulf of Mexico.
“Rather than launching investigations into regulated and closely watched markets on a daily basis or advocating with OPEC to increase supply, we should encourage the safe and responsible development of US-made oil and natural gas.”