President Joe Biden on Tuesday ordered 50 million barrels of oil released from the strategic reserve to help bring down energy costs, in coordination with other major energy-consuming nations, including China, India and the United Kingdom.
The move is aimed at global energy markets, but also at voters who are coping with higher inflation and rising prices ahead of Thanksgiving and winter holiday travel. Gas prices nationwide are averaging $3.40 a gallon, more than 50% higher than their price a year ago, according to the American Automobile Association.
President Biden has scrambled to reshape much of his economic agenda around the issue of inflation, saying that his recently passed $1 trillion infrastructure package will reduce price pressures by making it more efficient and cheaper to transport goods.
Republican lawmakers have hammered the administration for inflation hitting a 31-year high in October. The consumer price index soared 6.2% from a year ago — the biggest 12-month jump since 1990.
Senate Republican Leader Mitch McConnell tore into the White House in a floor speech last week, saying the victims of higher prices were middle-class Americans.
"The three biggest drivers of the staggering 6.2% inflation rate we logged last month were housing, transportation and food," the Kentucky senator said. "Those aren't luxuries, they're essentials, and they take up a much bigger share of families' budgets from the middle class on down.”
The Strategic Petroleum Reserve is an emergency stockpile to preserve access to oil in case of natural disasters, national security issues and other events.
Maintained by the Energy Department, the reserves are stored in caverns created in salt domes along the Texas and Louisiana Gulf Coasts.
There are roughly 605 million barrels of sweet and sour petroleum in the reserve.
The Biden administration has argued that the reserve is the right tool to help ease the supply problem. Americans used an average of 20.7 million barrels a day during September, according to the Energy Information Administration. That means that the release nearly equals about two-and-a-half days of additional supply.
The pandemic made energy markets — like everything else — haywire on multiple fronts. As the closures began in April 2020, demand collapsed and oil futures prices turned negative. Energy traders did not want to get stuck with crude that they could not store. But as the economy recovered, prices jumped to a seven-year high in October.
U.S. production has not recovered. Energy Information Administration figures indicate that domestic production is averaging roughly 11 million barrels daily, down from 12.8 million before the pandemic started.
The U.S. Department of Energy will make the oil available from the Strategic Petroleum Reserve in two ways: 32 million barrels will be released in the next few months and will return to the reserve in the years ahead, the White House said. Another 18 million barrels will be part of a sale of oil that Congress had previously authorized.
The White House decision comes after weeks of diplomatic negotiations, and the release will be taken in parallel with other nations. Japan and South Korea are also participating.
Additional reporting by The Associated Press.
