3 takeaways from Biden's latest oil reserves release
On Tuesday, President Biden announced the U.S. will release an additional 15 million barrels of oil from the Strategic Petroleum Reserve (SPR) in December in an effort to lower the price of gas at the pump.
The largely anticipated move comes after the Saudi-led OPEC+ decided to cut oil production in a bid to raise prices.
“This repurchase approach will protect taxpayers and help create certainty around future demand for crude oil," the White House said in a press release. "That will encourage firms to invest in production right now, helping to improve U.S. energy security and bring down energy prices that have been driven up by Putin’s war in Ukraine.”
The Biden administration said it plans to replenish the strategic reserve when crude oil prices fall between $67 and $72 per barrel. Currently, oil prices are trading around $85 per barrel.
Gas prices
Despite gas prices falling from record highs over the summer, fuel costs for Americans still remain elevated.
The U.S. national average gas price was $3.85 per gallon as of Oct. 19, according to AAA. That’s up 20 cents from a month ago and 56 cents compared with a year ago.
Higher fuel prices have been one factor contributing to high inflation, which reached 8.2% in the U.S. year over year and 10.1% in the UK.
The Biden administration said the Department of Energy would be willing to hold additional oil sales this winter should energy markets remain disrupted by the Russian invasion of Ukraine.
Midterm elections
Polls suggest that rising gas prices could help Republicans in the November midterm elections.
Republicans have made the issue of high gas prices a major part of their attacks on Democrats in key races, arguing that the Biden administration should allow for more domestic oil production instead of tapping into the strategic oil reserves.
“Our oil reserves do not exist to win midterms,” Florida Senator Marco Rubio said in a debate against Democratic challenger Val Demings on Tuesday, E&E Daily reported.
In contrast, the Biden administration has targeted large oil companies over their record profits in its messaging around energy policies. Biden and the Democrats are trying to ease the impact of inflation without provoking the progressive base, which is calling for more action on climate change.
U.S.-Saudi relationship
Lawmakers in both parties are now questioning the U.S.-Saudi relationship after OPEC+ decided to move forward with production cuts, PBS News reported.
Over the summer Congress passed significant Saudi arms deals, but high energy costs have strained the relationship, leading some lawmakers to call for the end of that agreement.
“They are far more reliant on us," Rep. Ro Khanna (D-CA) told PBS News last week. "In fact, the defense agreements that we have, the joint defense initiatives, are more extensive than almost any other major ally. And that's all to the Saudis' benefit. The production is there. The jobs are there. So they are far more dependent on us. And they already are making these drastic cuts.”
- Kevin Cirilli is a visiting media fellow at the Atlantic Council's Global China Hub and the Krach Institute for Tech Diplomacy at Purdue. Follow him on LinkedIn.
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