WASHINGTON — President Joe Biden said he will release roughly 1 million barrels of oil a day from the Strategic Petroleum Reserve for about six months in an effort to drive down record oil prices in what he called a "wartime bridge."
The move could free up as much as 180 million barrels of oil, the largest release of U.S. reserves in history, with the first barrels coming on the market in May. The U.S. consumes more than 7 billion barrels of oil a year.
U.S. consumers have been hit with record gas prices as a result of disruptions to the oil market caused by the pandemic and the U.S. ban on Russian oil imports following its invasion of Ukraine. The surge in prices has helped push inflation to its highest point in decades, with oil prices affecting everything from the cost of plastics to food.
"I know how much it hurts, as you’ve heard me say before, I grew up in a family like many of you, where when the price of a gallon gasoline went up it was discussion at the kitchen table," Biden said. "Our family budgets, your family budgets to fill a tank, none of it should hinge on whether a dictator declares war."
Biden said he didn't know how soon or by how much prices at the pump would drop based on this action and said it would also depend on how much other countries stepped up their supply given the global nature of the market. But he suggested it could be as much as 35 cents a gallon.
Biden's announcement Thursday is expected to be a "bridge" to fill the gap left in the market until domestic oil producers can ramp up production, said a senior administration official.
Oil companies have been pumping out more oil since supply tumbled during the pandemic, and the White House anticipates domestic production to increase by 1 million barrels per day this year. But the White House is also looking to ramp up pressure on U.S. oil producers to do more.
"I say enough, enough of lavishing excessive profits on investors and payouts and buybacks," Biden said. "The American people are watching, the world is watching U.S. oil companies."
Biden urged Congress in remarks Thursday from the White House to make oil companies pay fees on wells from federal land leases that they aren't using, accusing the companies of "hoarding without producing" the White House said.
"Those sitting on unused leases and idle wells will either have to start producing or pay the price for their inaction," Biden said.
The administration has said oil companies are choosing not to drill for more oil and returning profits to shareholders instead. The oil industry has said it isn’t actively producing oil on all of its federal land leases because projects can take years to develop and some land ends up not being viable to drill on.
Biden also issued a directive authorizing the use of the Defense Production Act to secure U.S. production of materials used in large capacity batteries, like those used in electric vehicles, including lithium, nickel, cobalt, graphite and manganese.
"By reducing our reliance on China and other countries for the minerals and materials that will power our clean energy future," the White House said in a statement.
The news comes several weeks after Biden announced the U.S. was banning the import of Russian energy products, including oil, liquified natural gas and coal, as part of an effort to increase pressure on Russia's economy through a range of sanctions. The president and other administration officials made clear that they anticipated the move would lead to a rise in already-high gas prices.
In November, Biden announced the release of 50 million barrels from the reserve, which at the time was considered the biggest release in U.S. history.
The price of oil futures fell about 5 percent on the news Thursday.
Biden sought to directly link the high gas prices to Russia's invasion of Ukraine while Republicans have tried to blame it on the Biden administration's policies. The price of gas began increasing in the summer of 2020 and was at its highest level since 2014 prior to Russia's invasion. But the price then shot up more than 70 cents this month to the highest price since at least 1994.
"As I said from the start, Putin's war is imposing a cost on Americans, our allies and democracies around the world," Biden said.
The Strategic Petroleum Reserve serves as a tool presidents can rely on in emergencies. The U.S. has previously conducted emergency drawdowns from the reserve three times: during the Gulf War in 1991, after Hurricane Katrina in 2005, and following disruptions in 2011 in the supply of crude oil because of Libya’s civil war.
The reserve has a storage capacity of 714 million barrels stored in "huge underground salt caverns at four sites along the coastline of the Gulf of Mexico," according to the Department of Energy.