President Biden may release more oil from the United States Strategic Petroleum Reserve — even though a similar move from the administration had a negligible effect on gas prices.
Amos Hochstein — the White House’s Senior Advisor for Energy Security — told CNBC’s Hadley Gamble that releasing oil from the reserve “is a tool that was available to us and will be available again.”
“Remember, this was not a 50-million-barrel release, 30 million barrels were an exchange where companies and traders can take the oil now and return it over a scheduled period of time. That means the Strategic Petroleum Reserve will be replenished,” Hochstein explained. “And therefore, we have more flexibility to be able to do this again in the future if the need arises. I think we wanted to do something that was impactful for the market and that also had the ability and the flexibility to allow us to do that again should the need arise for the American economy.”
Amid rising gas prices, the Biden administration announced plans last week to tap 50 million barrels of oil from the strategic reserve. Biden said that 32 million “will be an exchange over the next several months, releasing oil that will eventually return to the Strategic Petroleum Reserve in the years ahead,” while the other 18 million would be authorized for sale via Congress.
According to the United States Energy Information Administration, however, the United States consumed roughly 18.19 million barrels of petroleum per day in 2020 — meaning that the release of 50 million barrels would only equate to 2.5 days’ worth of consumption. As Reuters explained, “Analysts have warned an SPR release would only produce a short-term effect in the market, as it would not increase U.S. production capacity.”
Nevertheless, Democratic leadership — including Senate Majority Leader Chuck Schumer (D-NY) — praised the President’s move.
“President Biden’s announcement is good news for American families and will strengthen our economy,” he said. “Tapping the SPR will provide much-needed temporary relief at the pump and will signal to OPEC that they cannot recklessly manipulate supply to artificially inflate gas prices. Of course, the only long-term solution to rising gas prices is to continue our march to eliminate our dependence on fossil fuels and create a robust green energy economy.”
Indeed, prices have risen over the past week following volatility stemming from the omicron coronavirus variant.
“Oil prices rose on Monday, following the biggest one-day pullback since April last year late last week,” CNBC reported. “International benchmark Brent crude futures traded at $74.60 a barrel on Monday, up more than 2.5% for the session, while U.S. West Texas Intermediate futures stood at $70.62, around 3.6% higher.
After the Biden administration authorized the release of reserve oil, Energy Secretary Jennifer Granholm failed to demonstrate knowledge of the American economy’s daily oil consumption.
“How many barrels of oil does the U.S. consume per day?” asked a reporter during a press briefing.
“I don’t have that number in front of me,” Granholm responded.