The U.S. will be releasing one million barrels of oil a day from the country's Strategic Petroleum Reserve for the next six months, in an effort to mitigate high gas prices, President Biden announced Thursday. The move comes as Americans face gas prices north of $5 in some parts of the country, due to factors like low domestic oil production and Russia's invasion of Ukraine.
The president said he can't offer firm answers on how much gas prices will dip, or how soon, but estimates prices could come down between 10 and 35 cents a gallon. The White House hopes the release from the reserves will help bridge the gap until U.S. oil producers ramp up production later this year.
"My guess is we'll see it come down and continue to come down, but how far down, I don't think anyone can tell," he said. "And there's gonna' be a slight delay, because if you go out there and you're a gas station and you purchase 'X' amount of gas at a certain price, you're not going to lower the price at the pump until you're able to get back what you'd invested. And I'm talking a matter of days and weeks, but it's hard to tell. ... But it will come down. And it could come down fairly significantly. It could come down, the better part of, anything from 10 cents to 35 cents a gallon. It's unknown at this point."
Reports that Mr. Biden was planning to tap the reserves pushed oil prices down nearly $5 a barrel in overnight trading. U.S. oil on Thursday traded at $101.65 a barrel. But the overall economic impact to drivers remains unclear. The national average for gas is $4.23 a gallon, according to AAA, compared to $2.87 a year ago and $3.61 a month ago.
The president criticized American oil companies for failing to produce the oil the country needs, while sitting on "record profits." Domestic oil production dipped during the pandemic, and has failed to reach pre-pandemic levels. Mr. Biden proposed a "use it or lose it" policy to incentivize companies to produce more oil in the short term with the resources they already have, and encouraged Congress to make companies pay fees on unused wells on federal lands. Some companies are stepping up, but others, he said, are too beholden to investors.
"The bottom line is if we want lower gas prices, we need to have more oil supply right now," the president said. "For U.S. oil companies that are recording their largest oil profits in years, they have a choice. One, they could put those profits to productive use by producing more oil, restarting idle wells, or producing on the sites they already are leasing, giving the American people a break by passing some of the savings on to their customers and lower the price at the pump. Or, they can, as some of them are doing, exploit the situation, sit back, ship those profits to the investors while American families struggle to make ends meet."
The Department of Energy will use revenues from the sale of Strategic Petroleum Reserve barrels to restock the reserve when prices are lower. The U.S. is coordinating with allies and partners around the world to eventually provide more than the 1 million barrels per day. The release of 1 million barrels per day marks the largest reserve release in U.S. history.