U.S. sells oil reserves as Biden tackles pump prices ahead of elections
Send a link to a friend
[October 20, 2022]
By Nandita Bose, Jarrett Renshaw and Steve Holland
WASHINGTON (Reuters) - U.S. President Joe
Biden announced a plan on Wednesday to sell off the rest of his release
from the nation's emergency oil reserve by year's end and begin
refilling the stockpile as he tries to dampen high gasoline prices ahead
of midterm elections on Nov. 8.
Biden is seeking to add enough supply to prevent near-term oil price
spikes that could punish Americans, and assure U.S. drillers that the
government will enter the market as a buyer if prices plunge too low.
He said 15 million barrels of oil will be offered from the Strategic
Petroleum Reserve (SPR) - part of a record 180 million-barrel release
that began in May, and added the United States is ready to tap reserves
again early next year to rein in prices.
“We’re calling it a ready and release plan,” Biden said at a White House
event. “This allows us to move quickly to prevent oil price spikes and
respond to international events.”
![](http://archives.lincolndailynews.com/2015/May/02/images/ads/current/guzzardo_lda022609.png)
Biden's use of the federal government's reserve to manage oil price
spikes and attempts to increase U.S. production underscore how the
Ukraine crisis and inflation have changed the policies of a president
who came into office vowing to cut U.S. dependence on the fossil fuel
industry.
The White House had an added sense of urgency after the Saudi Arabia-led
Organization of the Petroleum Exporting Countries rankled Biden by
siding with Russia and agreeing to a production cut, prompting the
president to declare that the U.S.-Saudi relationship needs a
revaluation.
"With my announcement today, we're going to continue to stabilize
markets and decrease the prices at a time when the actions of other
countries have caused such volatility," Biden said.
Biden blamed Russian President Vladimir Putin’s invasion of Ukraine for
higher crude and gasoline prices, while noting prices had fallen 30%
from their peak earlier this year.
He also repeated a plea to U.S. energy companies, gasoline retailers and
refiners, asking them to stop using record-breaking profits to buy back
stock, and to invest in production instead.
Prices “are not falling fast enough,” he said.
“Families are hurting,” and gasoline prices are squeezing their budgets,
he added.
The president, facing criticism from Republicans who charge he is
tapping the SPR for political reasons and not because there is an
emergency, also said he would refill the nation's stockpiles in the
upcoming years.
He said his aim would be to replenish stocks when U.S. crude is around
$70 a barrel, a level he said would still allow companies to profit
while being a good deal for taxpayers. The U.S. benchmark was around $85
on Wednesday. [O/R]
[to top of second column]
|
![](../images/102022PIX/news_s91.jpg)
U.S. President Joe Biden calls for a
federal gas tax holiday as he speaks about gas prices during remarks
in the Eisenhower Executive Office Building's South Court Auditorium
at the White House in Washington, U.S., June 22, 2022. REUTERS/Kevin
Lamarque
![](http://archives.lincolndailynews.com/2022/Oct/20/images/ads/current/castlemanor_sda_FINANCIAL_2017.png)
The SPR, which is now at its lowest levels since 1984, is more than
half full with more than 400 million barrels of oil, Biden said,
“more than enough for any emergency drawdown.”
The administration's plan was to end the sale of the 180 million
barrels in November. However, purchases by companies, including
Marathon Petroleum Corp, Exxon Mobil Corp and Valero Energy Corp,
were slower than expected over the summer and some 15 million
barrels remained unsold.
Those will be put up for bidding for delivery in December, a senior
administration official said.
PUSHING ENERGY COMPANIES TO DO MORE
U.S. presidents have little control over petroleum prices, but the
country's massive gasoline consumption - the highest in the world -
means high prices at the pump can be political poison. Retail
gasoline prices have fallen from a high in June, but remain above
historical averages, and are a major contributor to inflation.
The gap between wholesale and retail prices has grown, too, spurring
White House warnings against price-gouging.
Biden said oil companies should feel more confident about investing
in production with the new SPR repurchase pledge, and stop pushing
stock buybacks.
"So my message to all companies is this: You're sitting on record
profits and we're giving you more certainty. So you can act now to
increase oil production," he said.
Companies "should not be using your profits to buy back stock or for
dividends. Not now, not while a war is raging," he said, asking them
to bring down prices they charge at the pump.
In recent weeks, the oil industry has grown increasingly concerned
the administration might take the drastic step of banning or
limiting exports of gasoline or diesel to help build back sagging
U.S. inventories. They have called on the administration to take the
option off the table, a move officials are unwilling to do.
![](http://archives.lincolndailynews.com/2022/Oct/20/images/ads/current/castlemanor_sda_FINANCIAL_2017.png)
"We are keeping all tools on the table, you know, anything that
could potentially help ensure stable domestic supply," the official
said.
(Reporting by Jarrett Renshaw and Steve Holland, additional
reporting by Doina Chiacu and Andrea Shalal; Editing by Lincoln
Feast, Heather Timmons, Lisa Shumaker and Marguerita Choy)
[© 2022 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |