Joe Biden has called on oil companies to pass on their massive profits to consumers as he announced the release of 15m barrels of oil from the US strategic petroleum reserve.
Biden is fighting to keep gas prices in check ahead of November’s midterms. He blamed Vladimir Putin’s invasion of Ukraine for the global spike in oil prices and said his administration was doing all it could to keep prices in check.
“Gas prices have fallen every day in the last week,” said Biden. “That’s progress, but they’re not falling fast enough. Gas prices are felt in almost every family in this country. That’s why I’ve been doing everything in my power to reduce gas prices.”
He called on US oil companies to help. In the second quarter of 2022, the six largest US oil companies reported profits of $70bn, said Biden.
“So far, American oil companies are using that windfall to buy back their own stock, passing that money on to shareholders, not consumers,” he said. “My message to all companies is this: you’re sitting on record profits. And we’re giving you more certainty. You can act now to increase oil production. You should not be using your profits to buy back stock or for dividends – not while the war is raging.”
The announcement of the latest oil release speeds up the sale of the last of the 180m barrels that Biden announced in March would be sold. The announcement comes after the oil-producing Opec+ nations said they would cut oil production, driving up prices, in a move that angered White House officials.
Established in 1975 to help mitigate shocks in US oil supply, the strategic petroleum reserve (SPR) is thought to be the largest emergency supply in the world. Stored in underground tanks in Louisiana and Texas, the SPR has capacity for 714m barrels of oil and is currently at its lowest level since 1984.
The reserve now contains roughly 400m barrels of oil and Biden said more oil could be released if the situation does not improve. The administration has called the situation a “bridge” until domestic production can be increased and said the US will restock the strategic reserve when oil prices are at or lower than $67 to $72 a barrel.
Biden faces political headwinds because of gas prices. AAA reports that gas is averaging $3.87 a gallon, down slightly over the past week, but up from a month ago. The recent increase in prices stalled the momentum that the president and his fellow Democrats had been seeing in the polls ahead of the November elections.
An analysis Monday by ClearView Energy Partners, an independent energy research firm in Washington, suggested that two states that could decide control of the evenly split Senate, Nevada and Pennsylvania, are sensitive to energy prices. The analysis noted that gas prices over the past month rose above the national average in 18 states, which are home to 29 potentially “at risk” House seats.
The hard math for Biden is that oil production has yet to return to its pre-pandemic level of roughly 13m barrels a day. It’s about a million barrels a day shy of that level. The 15m-barrel release would not cover even one full day’s use of oil in the US, according to the Energy Information Administration.
The oil industry would like the administration to open up more federal lands for drilling, approve pipeline construction and reverse its recent changes to raise corporate taxes. The administration counters that the oil industry is sitting on thousands of unused federal leases and says new permits would take years to produce oil with no impact on current gas prices.
Environmental groups, meanwhile, have asked Biden to keep a campaign promise to block new drilling on federal lands.
Because fossil fuels lead to carbon emissions, Biden has sought to move away from them entirely with a commitment to zero emissions by 2050. When discussing that commitment nearly a year ago after the G20 leading rich and developing nations met in Rome, the president said he still wanted to also lower gas prices because at “$3.35 a gallon, it has a profound impact on working-class families just to get back and forth to work”.
The Associated Press contributed to this story.
