(WASHINGTON) — President Joe Biden said Tuesday he is authorizing a historic release from the nation’s strategic oil reserve to help offset a surge in gasoline prices.
Facing rising consumer discontent ahead of Americans hitting the road for the Thanksgiving holiday, Biden called it the “largest-ever release” when announcing the action in remarks Tuesday afternoon.
“The bottom line: Today we’re launching a major effort to moderate the price of oil, an effort that will span the globe in its reach and ultimately reach your gas station,” God willing, Biden said.
Other countries, including China and India will release their own reserves in concert with the U.S. move, he said.
“And while our … combined actions will not solve the problem of high gas prices overnight, it will make a difference. It will take time, but before long, you should see the price of gas drop where you fill up your tank. And in the longer term, we will reduce our reliance on oil as we shift to clean energy,” he said. “But right now, I will do what needs to be done to reduce the price you pay at the pump, from the middle class and working families that are spending much too much and it’s a strain, and they’re — you’re the reason I was sent here, to look out for you.”
The White House detailed the U.S. action in a statement earlier Tuesday.
“Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply,” the White House said.
It said the Energy Department would make the release in two ways: 32 million barrels will be an “exchange” over the next several months, releasing oil that it said would eventually be returned to the Strategic Petroleum Reserve, and 18 million barrels that would be an acceleration into the next several months of a sale of oil that Congress had previously authorized.
It said Biden has been working with countries across the world to address the lack of supply.
“And, as a result of President Biden’s leadership and our diplomatic efforts, this release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom. This culminates weeks of consultations with countries around the world, and we are already seeing the effect of this work on oil prices. Over the last several weeks as reports of this work became public, oil prices are down nearly 10 percent,” the White House said.
But Biden claimed the price drop wasn’t showing up in gas prices.
“The fact is the price of oil was already dropping prior to this announcement and many suggest in anticipation of the announcement. The price of gasoline in the wholesale market has fallen by about 10% over the last few weeks. But the price at the pump hasn’t budged a penny. In other words, gas supply companies are paying less and making a lot more. And they do not seem to be passing that on to the consumers at the pump,” he said.
“In fact, if the gap between wholesale and retail gas prices was in line with past averages, Americans would be paying at least 25 cents less per gallon right now, as I speak,” he continued. “Instead, companies are pocketing the difference as profit. That’s unacceptable. And that’s why I’ve asked the Federal Trade Commission to consider whether potentially illegal and anti-competitive behavior in the oil and gas industry is causing higher prices for consumers.”
An industry spokesperson rejected the president’s charge last week.
“This is a distraction from the fundamental market shift that is taking place and the ill-advised government decisions that are exacerbating this challenging situation. Demand has returned as the economy comes back and is outpacing supply,” said Frank Macchiarola, API’s senior vice president of policy, economics and regulatory affairs.
Experts said Americans will see a quick drop in prices almost immediately. But the larger impact won’t hit for about two weeks, when gas stations across the nation lower prices.
It wasn’t clear how the oil-producing nations of OPEC+, which the administration claims has been holding back supply, would respond to the U.S.-led effort by multiple countries to release oil from their reserves.
A senior administration official, citing a low global supply of oil that is contributing to driving up fuel costs, said the decision has been made to ease costs on everyday American consumers as pressures between demand and the easing of the pandemic create unique conditions.
“We think that this is an immediate challenge that we face as we are exiting the global pandemic and supply has not kept up,” the official told reporters Tuesday morning. “We think that this is exactly suited to that.”
Biden also ticked through the other actions he’s taken to get disruptions in the supply chain under control, from actions at the ports of Long Beach and Los Angeles, to appealing to the CEOs of Walmart, Target and other major corporations to ramp up operations.
Ultimately, he made the case that his actions have stemmed shortages, paving the way for a happy holiday season for all Americans.
“And so all of these concerns, a few weeks ago, there would be — there would not be ample food available for Thanksgiving, so many people talked about that, understandably, but families can rest easy, he said. “Grocery stores are well stocked with turkey and everything — else you need for Thanksgiving. And the major retailers I mentioned are — have confirmed that their shelves will be well stocked in stores for this holiday season. That’s good news for moms and dads who worry about whether Christmas gifts will be available,” he assured Americans.
ABC’s Jordyn Phelps contributed to this report.
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