WASHINGTON, Oct 19 (Reuters) – U.S. President Joe Biden announced on Wednesday plans to sell 15 million barrels of crude oil from the country’s emergency supply and begin replenishing reserves in an effort to curb high gasoline prices ahead of the Nov. 2, 2017 midterm elections. . 8.
Two weeks after the Saudi-led Organization of the Petroleum Exporting Countries sided with Russia, it rankled Biden by agreeing to production cuts that raised fears of a fresh increase in U.S. pump prices.
“With my announcement today, we will continue to stabilize markets and lower prices at a time when other countries’ actions have caused such volatility,” Biden said at a White House event.
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Biden blamed Russian President Vladimir Putin’s invasion of Ukraine for high crude and gasoline prices, while prices have fallen 30% from their peak earlier this year.
He repeated a plea to U.S. energy companies, gasoline retailers and refiners, asking them to stop using record profits to buy back stock and instead invest in production.
Prices “didn’t fall that fast,” he said.
“Families are suffering,” and gasoline prices are squeezing their budgets, he added.
Biden’s plan aims to add enough oil supplies to the market to prevent price spikes that could hurt consumers and businesses, while assuring the nation’s drillers that the government will step into the market as a buyer if prices fall too low.
The president faces criticism from Republicans who accuse him of tapping the Strategic Petroleum Reserve (SPR) for political reasons, not because of an emergency, and said he would replenish the country’s reserves in the coming years.
Biden already announced the release of 180 million barrels from the SPR earlier this year to counter a potential supply crisis caused by sanctions on oil-rich Russia following its February invasion of Ukraine.
The SPR, now at its lowest level since 1984, is more than half full with more than 400 million barrels of oil, “more than enough for any emergency pull,” Biden said.
He said his goal would be to replenish stocks when U.S. crude oil hits $70 a barrel, which would be a good deal for taxpayers while still allowing companies to turn a profit. The US benchmark was at $85 on Wednesday.
Biden’s efforts to use federal powers to balance the U.S. oil market underscore how much the war in Ukraine, rampant inflation and OPEC’s cuts have boosted the plans of a president who came into office vowing to move the country quickly to rid the oil industry. A future without fossil fuels.
“We must responsibly increase U.S. oil production without delaying or postponing our transition to clean energy,” Biden said Wednesday.
Petrol price impact
US presidents don’t have much control over the price of petroleum, but the country’s massive gasoline consumption — the highest in the world — means higher prices at the pump can be political poison. Retail gasoline prices fell to their highest level in June, but remained above historical averages and were a major contributor to inflation.
Management’s plan was to begin selling the previously announced 180 million barrels in November in May. however, Procurement of companiesIncluding Marathon Petroleum Corp (MPC.N)Exxon Mobil Corp (XOM.N) and Valero Energy Corp (VLO.N)The summer was slower than expected and about 15 million barrels remain unsold.
They will be auctioned for delivery in December, a senior executive said. Biden said Wednesday that additional oil could be made available if needed.
Pushing energy companies to do more
Biden said oil companies should be more confident in investing in production with the new SPR repurchase pledge.
“So my message to all companies is this: You are sitting on record profits, we assure you. So you can act now to increase oil production,” he said.
Companies “shouldn’t use your profits for stock buybacks or dividends. Not now, not when war breaks out,” he said, asking them to lower the prices they charge at the pump.
In recent weeks, the oil industry has grown concerned that the administration could take drastic action, such as banning or restricting gasoline or diesel exports, to help rebuild the decline in U.S. inventories. They have called on management to take the option off the table, a move officials are unwilling to make.
“We have all the tools on the table, you know, to help ensure stable domestic supply,” the official said.
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Reporting by Jared Renshaw and Steve Holland, additional reporting by Doina Chiaku and Andrea Shalal; Editing by Lincoln Feist, Heather Timmons, Lisa Shumaker and Marguerita Choi
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