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Biden to announce release of more petroleum from strategic reserve

The administration faces big political pressures, but it has been criticized for leaning heavily on the reserve as gas prices have largely stabilized

Storage tanks at the Torrance Refining Co. in Torrance, Calif. (Bing Guan/Bloomberg News)
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President Biden will announce on Wednesday that he is releasing 15 million more barrels of fuel from the Strategic Petroleum Reserve, a move aimed at easing gas prices three weeks before voters anxious over rising costs head to the polls as Democrats have been battered by GOP attacks on the economy.

Biden and the Democrats face strong head winds in the upcoming midterm elections, and Republicans have zeroed in on inflation and rising costs as they try to persuade voters that Biden’s economic policies are hurting their pocketbooks. Polls regularly show that the economy and the cost of living are at the top of voters’ concerns by a wide margin.

Biden has largely tried to pin those cost increases on Russia’s unprovoked invasion of Ukraine, and the fuel shortages and supply disruptions that followed. The president has repeatedly called the cost increases “Putin’s price hike,” while working on other measures to bring down prices at the pump.

Prominent among those has been release of batches of oil from the strategic reserve, which was created to protect the United States from oil shortages that affect its national security. The White House has released roughly 165 million barrels of oil from the reserve since announcing a spring drawdown of as many as 180 million barrels, the largest-ever release from the reserve.

This month, OPEC Plus, a coalition of oil-producing nations led by Russia and Saudi Arabia, announced that it will slash oil production by 2 million barrels per day, threatening further price increases in countries already grappling with high costs. The move was especially frustrating to the White House since Biden made a controversial visit to Saudi Arabia in July in an effort to bolster relations.

Biden has also lashed out at energy companies that he said have not lowered prices at the pump as oil prices have gone down. An administration official who spoke to reporters on background ahead of Biden’s announcement said those corporations’ actions are “adding 60 cents to the average gallon of gas, and have kept pump prices higher than they would be otherwise.”

Industry officials respond that the administration is cherry-picking numbers from their balance sheet, ignoring the long stretches early in the pandemic when the firms were losing money. At one point, oil was trading at zero dollars per gallon. Oil executives also warn that placing windfall taxes on the profits they are earning now, as many Democrats have advocated, would discourage investment in infrastructure and drilling, exacerbating shortages.

Critics, including many Republicans, have argued that Biden is misusing the reserve for his own political purposes, rather than limiting its use to a true national crisis as intended. But the administration official, speaking on the condition of anonymity to discuss the move before the official announcement, said the SPR has 400 million barrels remaining.

“That is still a large amount of barrels,” the official said. “This is a bridge. This is a longer bridge. This is trying to use this tool incredibly responsibly.”

The reserve is currently at a 40-year low, but it is far from empty. At capacity it can hold about 714 million barrels.

Even so, the administration has been heavily criticized for its moves in part because gas prices have largely stabilized. The releases continued during the summer as prices at the pump dropped for 99 consecutive days, falling below $4 per gallon and staying there.

Critics argued the administration at that point should have started filling the reserve back up instead of continuing to draw from it. But there was a reluctance to make any moves that would put upward pressure on gas prices.

After OPEC recently announced its cuts in production, the administration vowed it would move to stabilize prices. But before it took any action, prices were already stabilizing on their own. The cost of gas fell this week amid concerns of a looming recession.

The latest move comes against the backdrop of a hard-fought midterm campaign with Election Day just three weeks away.

Biden and his fellow Democrats have struggled to persuade voters they are handling the economy as best they can, while Republicans have made headway citing inflation — especially gas prices — along with immigration and crime to suggest that the country is descending into chaos under Biden.

The president has sought to turn the focus to abortion rights, voting integrity and the swirl of investigations surrounding former president Donald Trump, hoping a critical mass of voters see those as sufficiently stark issues to overcome their economic anxieties.

On the economy, Biden has emphasized the legislation passed by Democrats to tackle prescription drug prices, as well as his move to forgive student loan debt.

But top White House advisers have long believed that their political fortunes in the Nov. 8 congressional elections will depend heavily on the ups and downs of gas prices.

Biden plans to announce several additional moves Wednesday beyond the petroleum release.

He is expected to say that the administration will purchase crude oil for the strategic reserve when prices are at or below roughly $70 a barrel, an effort to ensure the reserve gets replenished and to create more certainty around the future demand for oil.

In addition, Biden will call on oil companies to pass through lower energy prices to consumers. The White House argues that energy refining companies are currently making far more than their usual profit on every gallon of gasoline.

Energy Secretary Jennifer Granholm earlier put oil companies on notice that the administration is considering a temporary ban of exports of refined fuel such as diesel, which will be in particularly short supply in the United States in coming months. But the administration has so far stopped short of implementing such a ban.

White House press secretary Karine Jean-Pierre, in her briefing Tuesday, sought to emphasize that even though the recent streak of gas prices falling has been broken, the overall trend remains good, with prices down $1.15 from their peak.

“Every month, the typical two-driver family saves about $120 at the pump compared to where we were in mid-June,” Jean-Pierre said. “Every day, Americans save about $420 million at the pump compared to mid-June.”

She also noted that gas prices have begun falling again, dropping by five cents over the past week, with sharper declines in states like California, Wisconsin and Oregon.

But even as gas prices have stabilized in parts of the country, they remain quite high in some key battlegrounds, adding to the challenges Democrats face in the upcoming election.

In California, where there are at least eight hotly contested House seats, gas prices remain above $6 per gallon, despite the recent decline.

In Nevada, a state where Democrats are at risk of losing a Senate seat and polls show a tight governor’s race, the price of a gallon of gas is $5.23.

Even if gas prices do not shoot up any further between now and Election Day, drivers could be in for more pain as winter closes in. Europe is planning to implement its full ban of Russian oil in early December, a move that administration officials have long worried will create a price shock worldwide.

American and European leaders are hoping to mitigate the impact of that ban with a price cap on Russian oil that would allow some of it to continue to make its way into the world market. But there is no guarantee that would work.