President Joe Biden announced a plan on Thursday to release roughly 1 million barrels of oil per day from the nation’s strategic petroleum reserve over the next six months in an effort to combat what he calls “Putin’s price hike.”
Biden told Americans that “no firm answer” exists as to when gas prices will fall, but that they will fall “fairly significantly.”
“Today, I’d like to discuss one aspect of Putin’s war that directly affects and has real consequences for Americans: Putin’s price hike, which Americans and our allies are experiencing at the pump. I understand how much it hurts “Biden took the stage first. “As you’ve heard me say I grew up in a family, like many of you, where the price of gasoline was discussed at the kitchen table. None of it should hinge on whether a dictator declares war.”
Biden attributed the high energy costs to “two roots”: Russian President Vladimir Putin’s ongoing invasion of Ukraine and COVID-19’s lingering economic effects.
“When COVID struck, demand for oil fell precipitously, causing global production to slow. Demand for oil increased much faster than supply due to the strength and speed of our recovery. That’s why gas prices started to rise last year. Vladimir Putin is the second root “he stated
Biden predicted that Americans would pay “anywhere from 10 cents to 35 cents a gallon” less at the pump, putting the national average below $4. Gas Buddy’s head of petroleum analysis, Patrick De Haan, pointed ABC News to a tweet in which he raised some skepticism.
“I do believe the national average will fall below $4/gal in the weeks ahead, but I don’t necessarily believe this SPR release will be the primary catalyst,” he said in a tweet on Thursday. “If anything, it might help us get there faster, but at the expense of long-term stability.”
Biden made the announcement during a planned event to discuss steps his administration is taking to control rising energy prices, which have risen even more since Russia’s invasion of Ukraine.
The first barrels from the announcement are expected to hit the market in May, with delivery scheduled for the following month. Officials stated that all proceeds from the oil sale will be used to replenish reserves. “We expect that to occur once the oil price has come down, we are no longer in an emergency,” an official told reporters.
According to the International Energy Agency, about 3 million barrels per day of Russian oil will be taken off the market in April as a result of Western sanctions, and this plan could help ease the pain at the pump by helping to replace that loss.
Biden would be forced to use the strategic petroleum reserve for the third time. As gas prices soared ahead of the holidays in November, he authorized the release of 50 million barrels, and the US, along with 30 other countries, released 30 million barrels following the start of the war in Ukraine, though this did little to alleviate skyrocketing prices.
According to the Department of Energy, there were more than 568 million barrels of oil in the reserve as of Friday. Given the oil market’s complexity and volatility, many geopolitical and economic factors influence oil prices, and there is no guarantee that this release will keep prices low for a long time.
As a result of Biden’s expected announcement, crude oil prices fell by about 5% overnight, implying that the price at the pump may also fall in the coming days.
According to AAA, the current national average for a gallon of gas is $4.23, up $1.35 from this time last year.