President Joe Biden will announce the release of 15 million more barrels from the US strategic petroleum reserves to continue stabilising oil prices ahead of the colder winter months.
A senior administration official said Mr Biden will announce that release of reserves — completing the 180 million barrel release announced earlier this year — and other actions were meant to “promote market stability and down prices and encourage near-term production”.
The official said Mr Biden is prepared to authorise “significant” future releases from the strategic reserve if needed “due to Russian or other actions disrupting global markets”.
Mr Biden will also announce plans to repurchase oil reserves once prices are “at or below” a range of $62 to $72 per barrel, the official said.
“We will be adding to global demand when prices are around that range, which will provide industry with certainty about future demand, encourage near term production, and also secure a good deal for taxpayers,” said the official, who added that the president will also chide the oil industry to continue to “do its’ part ... in responding to Putin’s price hike”.
The senior official, who briefed reporters late Tuesday on condition of anonymity, explained that refining companies are currently “capturing” a level of profit per gallon of gas that is double normal levels.
“Tomorrow, the President will reiterate that outsize profit margins are inappropriate, especially at a time of war. And we'll call on companies to tap their savings through to consumers,” he said.
A second official told reporters the 15 million barrels to be released will complete a 280 million barrel delivery from the SPR over the course of the year, but stressed that the release will not diminish the strategic reserve compared with the reserves of other countries.
“The SPR still remains the largest strategic reserve with more than 400 million barrels remaining,” the official said.
A White House fact sheet said the remaining US reserves are still greater than any previous reserve release since the SPR was established after the oil crisis which rocked world economies in the late 1970s.
Officials also announced the finalisation of a new Department of Energy rule which will let the government enter into fixed-price contracts through competitive bidding to replenish US strategic reserves.
The White House called the new rule “a win for taxpayers” that will let the government replenish reserves for less money than it paid for the oil it previously released, as well as a “win for energy security” because it will give US oil producers “more certainty of continued oil demand”.
“We want to make sure that every step necessary is taken to make sure that there is enough supply to bring down the prices, and that’s why it’s a combined effort of making sure that the US government is putting supplies out in the short term and taking the necessary steps ... to ensure that the private sector can now be incentivized to invest in additional production,” the official said.
