With gas prices rising, U.S. eyes releasing oil from its emergency stockpile
The Biden administration is considering tapping its emergency supply of oil again in coordination with allies to counter a surge in prices brought on by Russia’s moves against Ukraine, according to two people familiar with the matter.
Although no decision has been made, “robust conversations” within the administration are underway, including on potential price point triggers and how to coordinate a release from the reserve with other nations, said the people, who asked not to be identified discussing nonpublic government deliberations. Modeling is being done to determine the size and scope of any potential release, they said.
When asked whether the U.S. is considering another release of the strategic petroleum reserve to stem rising gas prices given the Ukraine crisis, White House Press Secretary Jen Psaki said, “that is certainly an option on the table.”
“What we’re trying to do and focus on is take every step we can working around the world with our counterparts and partners to minimize the impact on the global energy market,” Psaki said.
Oil prices slipped after the close of markets after Bloomberg News reported that the U.S. is considering a potential release from its oil reserves in coordination with allies. West Texas Intermediate futures fell close to $1 after settling at $92.10. Brent crude fell 72 cents, or 0.8%, after settling unchanged. The commodity continues trading at seven-year highs, despite daily fluctuations.
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The deliberations follow a White House move in November to authorize the release of 50 million barrels of crude from the reserve in an effort coordinated with India, Japan, South Korea and China to counter soaring prices as economies recovered from the pandemic.
The White House has credited that action with reducing the price of gasoline around 10 cents a gallon during the holiday driving season. But it remains under pressure to keep costs in check as fuel and consumer prices rise, potentially imperiling Democrats’ hold on the House and Senate.
Analysts have said the U.S. average gasoline price could top $4 a gallon amid the Russia-Ukraine conflict, with the California average climbing above $5 a gallon. The average daily price for a gallon of regular unleaded gasoline was $3.54 nationwide and $4.75 in California on Wednesday, according to AAA.
As geopolitical tensions rise, a chorus of Wall Street banks and oil executives are forecasting a return to $100 oil. On Wednesday, JPMorgan Chase & Co. said Brent crude is likely to average $110 per barrel in the second quarter, assuming Russian escalation is coupled with an Iranian deal.
Americans are experiencing the highest inflation since the early 1980s, which is well outpacing wage growth and further darkening the outlook for the U.S. economy. The Russia-Ukraine conflict may further take a toll on confidence, especially if gasoline prices continue to rise, and surging mortgage rates are making housing that much less affordable.
Russian President Vladimir Putin’s advances in Ukraine have put President Biden and the U.S. economy between a rock and a hard place.
Russia is the largest exporter of natural gas, accounting for 17% of the global share, and produces 12% of the world’s crude exports, on par with Saudi Arabia.
Biden, speaking from the White House on Tuesday, said the administration is “closely monitoring” energy supplies and is preparing to coordinate with big oil producers to secure supply and “blunt” gas prices.
“I want to limit the pain the American people are feeling at the gas pump,” he said.
