By Nandita Bose, Jarrett Renshaw and Steve Holland
WASHINGTON (Reuters) – U.S. President Joe Biden announced a plan on Wednesday to sell off 15 million barrels of crude oil from the nation’s emergency supply and begin refilling the reserve as he tries to dampen high gasoline prices ahead of midterm elections on Nov. 8.
The move came two weeks after the Saudi Arabia-led OPEC+ organization rankled Biden by siding with Russia and agreeing to a production cut, raising fears a of a new spike in U.S. pump prices.
“With my announcement today, we’re going to continue to stabilize markets and decrease the prices at a time when the actions of other countries have caused such volatility,” Biden said at a White House event.
Biden blamed Russian President Vladimir Putin’s invasion of Ukraine for higher crude and gasoline prices, while noting prices had fallen 30% from their peak earlier this year.
But prices “are not falling fast enough,” he said.
“Families are hurting,” and gasoline prices are squeezing their budgets, he added.
The plan aims to add enough supply to prevent oil price spikes that could hurt consumers and businesses, while also assuring the nation’s drillers the government will swoop into the market as a buyer if prices plunge too low.
Biden, facing criticism from Republicans who charge he is tapping the reserve for political reasons and not because there is an emergency, also said he would refill the SPR reserve in the upcoming years.
The White House said his aim would be to buy crude oil prices are at or below $67-$72 a barrel.
Biden’s efforts to use federal powers to balance the U.S. oil market underscores just how much the war in Ukraine, rampant inflation and the OPEC production cut have upended the plans of a president who came into office vowing to undo the oil industry and move the country swiftly to a fossil-fuel free future.
U.S. presidents have little control over petroleum prices, but the country’s massive gasoline consumption – the highest in the world – means high prices at the pump can be political poison. Retail gasoline prices have fallen from a high in June, but remain above historical averages. (Graphic: The gap between retail and wholesale gasoline prices The gap between retail and wholesale gasoline prices, https://graphics.reuters.com/USA-BIDEN/GASPRICES/lbvgnbmyqpq/chart.png)
Earlier this year, Biden decided to sell 180 million barrels out of the Strategic Petroleum Reserve (SPR) to combat a potential supply crisis brought about by sanctions on oil-rich Russia following its February invasion of Ukraine.
While the initial plan was to end those sales in November, purchases by companies, including Marathon Petroleum Corp, Exxon Mobil Corp and Valero Energy Corp, were slower than expected over the summer and some 15 million barrels remain unsold.
Those will be put up for bidding for delivery in December, a senior administration official said, and extra oil could also be made available if needed.
“The president’s going to keep a careful eye on announcing today that whatever we’re doing today could continue and see additional SPR releases – if necessary,” senior U.S. energy adviser Amos Hochstein said on Wednesday.
REPLENISHING THE SPR
Biden plans to refill the SPR in the upcoming years, but only at prices at or below a range of $67 to $72 dollars a barrel for West Texas Intermediate , the U.S. oil benchmark, the senior administration official said.
“There’s no imminent threat of oil collapse,” Hochstein said on CNBC later.
Biden’s hope is to send a signal to both consumers and producers.
“He is calling on the private sector in the United States to do two things. One is take this signal and increase production, increase the investment, and No. 2 is to make sure that as they are taking these profits, as they are benefiting from these markets, that they are continuing to give the consumer the appropriate price,” the official said.
In recent weeks, the oil industry has grown increasingly concerned the administration might take the drastic step of banning or limiting exports of gasoline or diesel to help build back sagging U.S. inventories. They have called on the administration to take the option off the table, a move officials are unwilling to do.
“We are keeping all tools on the table, you know, anything that could potentially help ensure stable domestic supply,” the official said.
(Reporting by Jarrett Renshaw and Steve Holland, additional reporting by Doina Chiacu; Editing by Lincoln Feast, Heather Timmons, Lisa Shumaker and Marguerita Choy)