2 years ago
President Joe Biden will order the release of 1 million barrels of oil per day from the nation's strategic reserves and urge Congress to press the oil industry to increase drilling on federal lands in bid to tame high gasoline prices.
The move is the latest attempt by the White House and Democrats to temper the volatile oil markets that drove gasoline prices to all-time highs in the weeks since Russia invaded Ukraine. Those skyrocketing prices and the inflation they have fanned sparked criticism from voters ahead of the mid-term elections in November.
While U.S. oil production has climbed since Biden entered the White House, the rate of growth has not been as quick as energy experts typically project when crude prices top $100 a barrel.
“We think these companies need to be stepping up,” a senior administration official said in a background call with reporters. “There is nothing standing in their way.”
The news: The U.S. will once again tap the Strategic Petroleum Reserve as it did twice before, with limited effectiveness. But this new effort will be a sustained released for six months, putting as much as 180 million barrels onto the market. The addition of 1 million barrels per day represents and increase in U.S. supply of 8.5 percent.
The White House also said Biden will use the Defense Production Act to develop domestic supply chains for key minerals used in batteries for the power grid and electric vehicles as it seeks to jump-start clean energy manufacturing, in turn reducing reliance on foreign supply chains and volatile energy markets.
Context: The White House said it coordinated with allies in its decision to open the reserves, noting gasoline prices have eclipsed $4.20 per gallon after averaging $3.30 to start the year. Those rising costs are a result of supply chain bottlenecks in the oil and gas sector and the U.S. move to ditch Russian imports in response to its invasion of Ukraine.
Biden has had to balance his campaign promises to combat climate change — which is largely caused by burning fossil fuels — with energy market fluctuations hitting Americans’ pockets.
As such, the White House’s war against gas prices and the political problems that they bring has put Biden in the position of hectoring oil companies to increase production at least in the short term. The White House is asking Congress to impose fees on oil companies for any federal acres they have leased but are not using to produce oil — citing the fact that companies are sitting on 9,000 unused permits for drilling on federal land.
The White House stuck to Biden’s message that rising fuel costs underscored the need to quickly shift away from fossil fuels. But many of the resources used in clean energy are also under foreign control. China and Russia are major producers of key clean energy production minerals.
The White House said Biden would use the Defense Production Act to foster a domestic supply of critical minerals such as manganese, lithium, cobalt, graphite and nickel, which are used to make large capacity batteries for the power grid and electric vehicles. The White House said the effort would not circumvent environmental reviews and permitting.
Some Democrats have come around to support efforts to speed mining, including a look at permitting rules, as the U.S. looks to boost manufacturing jobs and speed its transition to lower-emitting energy. But Republicans and industry contend regulations have hamstrung the U.S. from developing a robust domestic mining field, leaving it dependent on China and other nations.
“Unless the president streamlines permitting, we should not expect to see any meaningful increase in American mineral production,” Sen. John Barrasso (R-Wyo.), the ranking member of the Senate Energy and Natural Resources Committee, said during a Thursday hearing.
Kelsey Tamborrino contributed to this report.
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