With energy prices hitting multiyear highs ahead of the holiday season, President Joe Biden on Tuesday ordered the release of a record 50 million barrels of oil from the nation’s Strategic Petroleum Reserve.
The release is being coordinated with China, India, Japan, South Korea, and the United Kingdom as part of an effort to put downward pressure on oil prices on a global level. Experts expect a total of roughly 100 million additional barrels to be brought to market worldwide in the coming weeks, the largest single release from reserves in history.
Gasoline prices are at about $3.40 per gallon on average in the U.S., an increase of more than 50% from a year ago. The release from the U.S. strategic reserve, which currently holds about 605 million barrels, should have a noticeable effect on gasoline prices within a few weeks, GasBuddy.com analyst Patrick DeHaan told Bloomberg News, with a decrease of 5 cents to 15 cents per gallon.
But the effect of the release, which will cover about two-and-a-half days of use in the U.S., could be short-lived. “The problem is that everybody knows that this measure is temporary,” Claudio Galimberti of Rystad Energy told the Associated Press. “So once it is stopped, then if demand continues to be above supply like it is right now, then you’re back to square one.”
Inflation looms large: In comments at the White House, Biden highlighted positive economic news such as strong growth and a low unemployment rate while portraying the recent surge of inflation in the U.S. — including higher gas prices — as temporary problems that his administration is acting to solve. “I will do what needs to be done to reduce the price you pay at the pump,” Biden said.
In addition to the release of oil, Biden discussed the “port action plan” the White House announced earlier this month that is intended to clear up the supply chain congestion at the nation’s ports, a key factor in the recent wave of price hikes. Most of the funds for the effort were provided by the bipartisan infrastructure package Biden signed into law last week, which set aside $17 billion for port improvements.
The president also said that he had spoken to executives at retailers and shipping firms, including Walmart, Target, UPS and FedEx, to make sure that store shelves are fully stocked for the holidays.
Still, the president’s ability to affect significant changes in prices is limited, especially when it comes to energy. With gasoline prices, opening the strategic oil reserve “is the only thing within policy control at the moment,” Anastasia Amoroso of iCapital Network told Bloomberg.
More broadly, the White House could have a tough time bringing down the level of inflation, which is hurting Biden politically. Inflation hit a 30-year high in October by one measure, rising 6.2% on an annual basis – a statistic that will be used to push back against the Build Back Better bill that contains much of the president’s domestic agenda.
