On Tuesday, the Biden administration announced plans to release one million barrels of gasoline from Northeastern reserves in an effort to stabilize rising fuel costs. The stated intent is to lower fuel costs for Americans as demand spikes over the next several months.
Based on a release from the U.S. Department of Energy’s (DOE) Office of Petroleum Reserves, the fuel sale stems from storage facilities situated in New Jersey and Maine. Gasoline will be moved around 100,000-barrel batches and has been “timed and structured to maximize its impact on gasoline prices, helping to lower prices at the pump as Americans hit the road this summer.”
“The Biden-Harris Administration is laser focused on lowering prices at the pump for American families, especially as drivers hit the road for summer driving season,” said U.S. Secretary of Energy Jennifer M. Granholm. “By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state and northeast at a time hardworking Americans need it the most.”
From the Department of Energy:
The volumes will be allocated in quantities of 100,000 barrels. This approach will ensure a competitive bidding process that both fuel retailers and terminal holders can participate in – ensuring this product can flow into local retailers ahead of the Fourth of July 4 holiday and that it will be sold at competitive prices, helping lower costs for American families and consumers.
Bids for the solicitation are due no later than 11:00 a.m. Central Time on May 28, 2024. Revenues from the sale will be deposited to the Treasury.
The sale of this Government controlled stock will release nearly 1 million barrels (42 million gallons) of gasoline blendstock into the commercial market for use at their discretion. Contracts resulting from this sale shall be subject to contract price adjustment as set forth in the Supplements and Amendments to the Standard Sales Provisions (SSP).
This happens to be an election year and you’ve undoubtedly noticed pump prices that have been flirting with (or surpassed) four dollars per gallon. The Biden administration has placed a strong emphasis advancing vehicular electrification via subsidies that oil futures spiked immediately after the 2020 election. It has likewise claimed to be combating oil companies on behalf of the environment.
In truth, the White House has talked a big game about handcuffing the oil industry while actually approving 50 percent more oil and gas drilling permits for wells on federal land since taking office than Donald Trump ever did. The oil and gas sector has enjoyed blockbuster profits in recent years. While some of that is simply in contrast to the leaner-than-average profits witnessed at the start of the pandemic, today’s profits are setting records independent of any previous economic issues. Western oil companies have also rolled back production on their own accord and have even been accused of price fixing with OPEC.
While that would seem to absolve the Biden administration from some amount of responsibility, the White House has been pretty hard on running new pipelines which route petroleum between regions — often lowering prices at the pump. As previously mentioned, Biden has also been criticized for tapping into the United States’ Strategic Petroleum Reserves.
America’s oil reserve is authorized to hold more than 720 million barrels of emergency crude oil (situated primarily along the Gulf Coast) that can be released under certain conditions. It was created in 1975 as a response to the oil embargo that kicked off the Oil Crisis in 1973.
The Biden administration sold off more than 40 percent of the Strategic Petroleum Reserve in 2022 to help Europe combat rising prices following the Russo-Ukrainian War. Conversely, some foreign nations have accused the United States of covertly destroying the Nord Stream pipeline and creating an energy crisis where Western oil purveyors could profit at Russia’s expense. It’s a plausible claim. But one we are unlikely to ever see settled due to the fact that all sides are probably bending the truth somewhat.
What we do know is that U.S. oil reserves are currently at their lowest point since 1980 and the Biden administration has held back on refilling them, breaking an earlier promise to do so. The argument was that it has not been economically feasible — this is despite the fact that the United States now exports more crude and petroleum products than it imports with local demand remaining relatively flat.
As you might have imagined, the latest sale of U.S. energy is being criticized as purely political by Biden’s opponents. But gasoline doesn’t stay good forever and would need to be cycled out eventually. Joe Biden is also hardly the only president to authorize tapping into the country’s petroleum reserves. Trump used it as a tactic to bargain with Saudi Arabia in 2019 and Obama sold off millions of barrels to help soften the domestic blow after Libya went sideways in 2011.
That said, the Biden administration’s sale is the largest the nation has ever seen and does not appear to have been sufficient to keep fuel prices low. It’s not even clear if that’s even something that’s consistent with the White House’s goals if it’s still focused on swiftly pivoting American toward all-electric vehicles.
Regardless, White House press secretary Karine Jean-Pierre told the media that the latest initiative is part of Biden’s larger broader agenda “to lower gas and energy costs — including historic releases from the Strategic Petroleum Reserve and the largest-ever investment in clean energy.”
Checking the trajectory of energy prices over the last few years, it might be worth reexamining that particular agenda. It also has to be said that this initiative probably isn’t going to make much of a difference in the long run. The United States runs through about 368 million gallons per day and the million barrels being released would only account for 42 million gallons according to the Department of Energy.
[Image: Maridav/Shutterstock]
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