WASHINGTON — President Joe Biden on March 31 announced a plan to address high gasoline prices—which he blamed on pandemic oil demand recovering faster than supply and Russian President Vladimir Putin’s war on Ukraine—by increasing the supply of oil immediately and encouraging more U.S. energy independence to reduce demand for petroleum in favor of clean energy.
“I want to talk about one aspect of Putin’s war that affects and has real effects on the American people: Putin’s price hike that Americans and our allies are feeling at the pump,” the president said in his remarks. “I grew up in a family, like many of you, where when the price of a gallon of gasoline went up, it was discussed at the kitchen table. Our family budgets, your family budgets to fill a tank—none of it should hinge on whether a dictator declares war.”
“The bottom line is: If we want lower gas prices, we need to have more oil supply right now,” he said.
Here are the details ...
Crossing the SPR ‘Bridge’
The first part of Biden’s plan is to immediately increase supply by encouraging domestic production now and through a release from U.S. Strategic Petroleum Reserve (SPR) “to serve as a bridge to greater supply in the months ahead.”
In November 2021, the president authorized the release of 50 million barrels of crude oil from then SPR in response to already high retail gasoline prices related to the pandemic and other factors. In early March, the president authorized the release 30 million barrels of oil from the SPR to address market and supply disruptions.
Now, Biden has authorized the release of approximately 1 million barrels of oil per day from the SPR for six months, starting in May. It is the largest release of oil reserves in history, the administration said. The U.S. Department of Energy (DOE) will use the revenue from the release to restock the SPR.
‘Use It or Lose It’
Biden also called on Congress to make oil companies that are leasing more than 12 million acres of federal land with 9,000 unused but already-approved permits for production to pay fees on nonproducing wells on public lands that they are “hoarding without production.” Companies that are producing from their leased acres and existing wells will not face higher fees, he said. “But those sitting on unused leases and idle wells will either have to start producing or pay the price for their inaction,” he said.
To help execute his plan, Biden said he is calling for a “use it or lose it” policy regarding those leases.
Biden went after oil companies, citing record profits. “They have a choice,” he said. “One, they can put those profits to productive use by producing more oil, restarting idle wells or producing on the sites they already are leasing—giving the American people a break by passing some of the savings on to their customers and lowering the price at the pump. Or they can, as some of them are doing, exploit the situation: sit back, ship those profits to their investors, and — while American families struggle to make ends meet.”
He acknowledged that some companies have increased production and investment in clen energy technology. But he said some companies “don’t want to increase supply because Putin’s price hike means higher profits.”
“No American company should take advantage of a pandemic or Vladimir Putin’s actions to enrich themselves at the expense of American families,” he said.
Biden’s Gas Guess
Biden said “there’s no firm answer” to how much these moves would save at the pump. The retail price of gasoline has already come down because of the previous SPR releases, according to the president. “My guess is we’ll see it continue to come down. But how far down, I don’t think anyone can tell. And there’s going to be a slight delay, because if you go out there and you’re a gas station and you purchased X amount of gas at a certain price, you’re not going to lower the price of the pump until you’re able to get back what you invested. I’m talking a matter of days and weeks. But it’s hard to tell.”
But he did hazard a guess. “It will come down. And it could come down fairly significantly,” between 10 cents and 35 cents per gallon (CPG), he speculated.
EVs and Fuel Economy
The president also said he will authorize the use of the Defense Production Act to secure U.S. production of critical materials to bolster the clean energy economy, including minerals to make electric-vehicle (EV) batteries, and is reviewing other potential uses of the DPA.
And Biden also talked about new fuel economy standards for cars and trucks that the administration said will save drivers money at the pump through more efficient vehicles.
“It’s time to deliver true long-term energy independence in America once and for all, Biden concluded. “And I’m going to continue to use every tool at my disposal to protect you from Putin’s price hike. This is not time for politics. Americans can’t afford that right now. So let’s meet this moment together.”
“There are many factors behind rising energy costs, from geopolitical volatility and supply chain constraints to policy uncertainty, and the American people deserve real solutions,” API President and CEO Mike Sommers said in a response to the president’s remarks. “The SPR was put in place to reduce the impact of significant supply chain disruptions, and while today’s release may provide some short-term relief, it is far from a long-term solution to the economic pain Americans are feeling at the pump.”
API also responded to what it called “the administration’s continued misleading claims on unused leases.” Companies already begin paying rent on leases to the federal government as soon as leases are granted, according to the association.
“The administration once again has a fundamental misunderstanding of how leases work,” Sommers said. “The percentage of producing leases is at a two-decade high, with nearly two out of three leases producing natural gas and oil. With nearly 5,000 permits awaiting approval from the administration and thousands more tied up in litigation, we stand ready to work with the administration to expand domestic production and ensure the U.S. and our allies have access to the affordable, reliable energy that’s needed not only today but for years to come.”
API analysis shows that in the first 14 months of the Obama administration, the Department of the Interior held 47 federal lease sales, while the Biden administration has held only a single lease sale since January 2021, which was later invalidated. Leases are issued prior to exploration, and not every permit on leased land has resources, despite substantial investments by developers.
The U.S. Bureau of Land Management approved 95 permits to drill in January 2022, compared with 643 in April 2021, API said, citing Energy & Environment News.
“This is the ‘Biden gas hike’,” said Republican National Committee (RNC) Chair Ronna McDaniel in a statement released following Biden’s remarks. “Biden can try to shift blame for his record-high gas prices, but Americans know the Democrats’ anti-U.S. energy agenda is costing them more at the pump.”
In March, the RNC launched a nationwide initiative to register voters at gas stations. The initiative began with registration drives in Arizona and North Carolina, with more planned in battleground states across the country including California, Colorado, Florida, Iowa, Michigan, Maine, Ohio, Texas and Wisconsin.
“The Biden gas hike is a product of his own doing, and Americans have faced record high gas prices as a result. The RNC is mobilizing at gas stations across the country to register voters and remind folks that the anti-American energy of Biden and the Democrats is costing them more,” said McDaniel.